MAKING THE DECISION TO ENTER AGED CARE CAN BRING WITH IT A LOT OF FINANCIAL QUESTIONS - WE ARE HERE TO HELP, OUR MANAGER, CORPORTATE AND HOSPITALLITY SERVICES IS AN EXPERT IN THE FIELD AND CAN ASSIST WITH ANSWERING ALL YOUR QUESTIONS.
New rules governing accommodation payments initially became effective on 1 July 2014 for those entering permanent aged care and various amendments and reforms have occurred since. You may be required to pay an accommodation payment, in addition to the basic daily care fees and means tested care fee (if applicable).
Residents who enter permanent care with Chaffey Aged Care, with an Aged Care Assessment Team approval for residential care AFTER 1 July 2014 have the choice of paying a Refundable Accommodation Deposit (RAD) or a Daily Accommodation Payment (DAP) or a combination of both.
Your personal financial situation will determine the level of accommodation payment you may need to pay. People with limited assets and income may have their accommodation payment fully or partially subsidised by the Government. A combined asset and income assessment form (SA457) should be completed and sent to Centrelink or the Department of Veteran Affairs before entering permanent care to ensure the correct accommodation payment and or other associated eligible fees is determined for you by the Deparment before entering the aged care home.
The accommodation payments (if applicable to you) are payable as either Refundable Accommodation Deposits (RAD) or Daily Accommodation Payments (DAP) or a combination of both. Accommodation payments are capped at the maximum RAD or DAP equivalent for the available room as shown on our website, see below. Or alternatively you can also access the advertised rates on the My Aged Care website.
At Chaffey Aged Care, our aim is to provide the highest possible quality of care to all people with an assessed need, regardless of their financial circumstances. This means that your financial situation will not affect you applying for a place at Chaffey Aged Care.
Daily Care Fees:
All residents pay a Basic Daily Care Fee which goes towards care needs and living expenses such as meals, cleaning and laundry.
From 20 September 2019, the maximum basic daily fee for new residents (including respite residents) is up to $51.63 per day. This rate increases on 20 March and September each year respectively in line with changes to the Age Pension.
For all new residents from 01 Oct 2019 - 31 Dec 2019 the Maximum permissible interest rate (MPIR) that may be charged is 4.98% pa.
From 01 Jul 2019 – 30 Sep 2019 the Maximum permissible interest rate (MPIR) that may be charged on outstanding amount of daily payment is 5.54% pa and from 01 Oct 2019 - 31 Dec 2019 is 4.98% pa.
You may pay different rates depending on your situation, including when you entered an aged care home.
When you enter an aged care home you will receive a letter from the Department of Social Services confirming your maximum basic daily fee, eligible accommodation costs/subsidy contribution and or your eligible means test care fee if it applies to your current financial situation.
Refundable Accommodation Deposit (RAD):
A refundable accommodation deposit is a lump sum paid or payable by a resident for entry to residential care.
The balance of the refundable accommodation deposit (after any agreed deductions have been drawn down) will be refunded to the resident or their estate on termination of the agreement for residential services.
The maximum RAD for one of our deluxe rooms is Tier One is $375,000. Tier Two is $425,000 and Tier Three is $475,000.00.
Daily Accommodation Payment (DAP):
A daily accommodation payment (DAP) is an amount calculated by converting the refundable accommodation deposit into a daily charge using the maximum permissible interest rate (MPIR) applicable at the time of admission.
Under the previous accommodation bond rules, this was known as a periodic payment. The method of calculating the daily amount has not changed under the new rules.
The maximum DAP for one of our Tier One rooms for example is $51.16 per day based on the MPIR as at 01/10/2019.
The maximum DAP for one of our Tier Two rooms for example is $57.99 per day based on the MPIR as at 01/10/2019.
The maximum DAP for one of our Tier Three rooms for example is $64.81 per day based on the MPIR as at 01/10/2019.
Available Accommodation Payment Options examples:
Four payment options will be available to eligible residents post 1st July 2014.and further reforms are:
Residents will be able to choose to pay for their cost of accommodation through, one of the options listed below.
You will have 28 days from date of admission to decide how you wish to pay the refundable accommodation deposit.
Option 1 – Refundable Accommodation Deposit (RAD) or Lump Sum Option:
If you choose to pay your RAD as a lump sum, the entire amount is due from your date of admission and will be refunded in full to your estate. We allow up to six months for you to pay the refundable accommodation payment if your financial circumstances require you to do so. Any amount not paid at the end of the six month grace period will be charged interest from the date of entry. Interest charges will be invoiced monthly until paid. We may reserve the right to ask for a minimum 10% deposit on admission or some other collateral where necessary.
A RAD is essentially an interest free loan from the Resident to the provider, refunded after the resident leaves the facility.
Choosing a full lump sum RAD, is electing to pay the full price set for the accommodation as a lump sum.
For example: Jim enters into care and has been asked to pay $375,000 for a room at Chaffey. Based on his individual circumstances, he elects to pay the entire $375,000.00 as a lump sum.
Option 2 – Daily Accommodation Payment (DAP)
If you do not wish to pay a lump sum amount, you have the option to pay a DAP.
The DAP is calculated from the RAD at a government set interest rate, which as at 1 Apr 2018 was 5.77% pa.
In this example, Jim instead decides to pay his $375,000.00 as an equivalent DAP which would be $59.28per day. ($375,000 X 5.77% / 365=$59.28).
Option 3 – Part RAD & Part DAP or Combination Option:
This is determining an amount payable by way of RAD and the remainder payable by DAP.
In this example, Jim instead decides to pay for his $375,000 full priced room, with $250,000 as an upfront lump sum (RAD) and then converts the remaining $125,000.00 to a DAP, which in this case would equate to $21.03 per day.
Upon leaving the facility, Jim will have the RAD balance refunded to his estate, less any charges outstanding.
Option 4 – A combination RAD & DAP with draw downs:
In addition to choosing to pay by way of a combination of RAD and DAP, residents may further elect to have their daily accommodation payment (DAP) drawn down from their lump sum RAD on a monthly basis.
In this example, Jim provides a $250,000 RAD and pays the remaining $125,000 as a DAP. However, rather than physically pay the DAP each month, Jim elects to have the DAP drawn down from the existing RAD held by the aged care organisation.
This means each month, an entry is made against the outstanding RAD balance for the amount owing from the DAP; i.e. For a 30-day month, DAP=$592.81 (30 X $19.76)
Therefore, after the first month, the existing RAD now totals $249,407.19 ($250,000 - $592.81).
However, due to the diminishing balance of the RAD as a result of the DAP being drawdown from the RAD, the DAP will increase each month relatively to ensure the total agreed original market price is continuing to be paid by Jim.
In the example above, after the first month the calculation of the DAP will be as follows:
$375,000 (Original Room Price) - $249,407.19 (RAD held)=$125,592.81 (new base for calculating DAP payable). Interest would be adjusted for the next month $125,592.81 x 5.77% / 365 x 30=$595.62.
Means Tested Care Fee (MTCF):
If you are not a full pensioner or returned prisoner of war you may be asked to pay a means tested fee from the date of entry.
The Australian Government asks aged care residents to pay a further contribution towards the cost of their care relative to their capacity to do so. The Department of Social Services determines the means tested fee based on your individual circumstances and income information provided by Centrelink and the Department of Veterans Affairs.
Annual and lifetime caps will apply to the means tested fee and contributions made by people receiving home care will be taken into account when calculating the lifetime cap.
The Department of Human Services will notify you and your aged care home of the maximum fees you can be asked to pay.