Target Audience: A family member of someone entering care who has very little in the way of assets.
Note: All rates quoted are as of June 28, 2024, however they change in March and September each year. Do not rely on the rates quoted.
The Australian My Aged Care system, while complex, ensures that every Australian can afford to enter a quality care facility, with the main difference being what they need to contribute. This blog will provide key steps for when your parent needs to enter a residential aged care facility but doesn't own a house and has very little in the way of assets.
Being Low Means or Partially Supported in Aged Care
A low means person is someone whose income and assets fall below specific thresholds set by the Australian government. This status allows individuals to receive more substantial government support, reducing their out-of-pocket costs for aged care services. There are two thresholds that are often confused: Low Means and Partially Supported.
A Low Means Person:
Has income below $32,819.80 and
Assets below $59,500
A Partially Supported Person:
Has income between $32,819.80 and $82,425.75 and
Assets between $59,500 and $201,231.20
In either case, your parent would be considered 'Supported', which is different from any financial hardship they may need to claim.
What Are the Aged Care Fees When You Are Low Means or Partially Supported?
There are some slight changes to the fees you pay:
Basic Daily Fee: Everyone pays this fee, which is calculated at 85% of a single person's aged pension.
Means Tested Care Fee: Given your means, this will be zero.
Accommodation:
For a full fee-paying entrant, there's a RAD (Refundable Accommodation Deposit) to pay, which is a quoted lump sum (you may see a figure like $450,000).
When you qualify for low means, the accommodation amount is means tested and changes depending on your asset position. This is known as the Refundable Accommodation Contribution (RAC). Like the RAD, this can be paid as a lump sum or through regular payments known as the Daily Accommodation Contribution (DAC).
The RAC is calculated based on your means, the proportion of the facility's low means residents, and the timing of the facility's last refurbishment, making the exact fee difficult to determine.
This fee can change if the resident receives an inheritance, and it is possible for a calculated RAC to be higher than the advertised RAD.
Additional Services Fees: These may still apply depending on your facility and usually fall between $1-$20 per day, but can be higher.
For low means individuals, care remains affordable as they are likely to receive the full aged pension, of which 85% can go towards paying for their care, food, and accommodation.
Notifying Centrelink
It is not uncommon for people with very few assets, living on the full aged pension, to neglect updating their Centrelink information frequently. Centrelink provides the residential facility with the calculation of fees, so it is crucial to update their situation once your parent enters care, even if it is identical. This triggers Centrelink to send a letter to the facility with the breakdown of fees, allowing the facility to receive appropriate government funding.
Failing to do this may result in a shock from the first invoice, with $416.05 per day in costs, representing the full Means Tested Care Fee. Most facilities are reasonable and will accommodate this in the short term, but Centrelink processes the letters mid-month, so it's important to address this promptly.
To notify Centrelink of the situation:
Homeowner: Complete the SA485 (Residential Aged Care Property Details for Centrelink and DVA Customers) form.
Non-Homeowner: Updating your parent's information on the Centrelink portal will trigger an automatic calculation.
Other Tips for Aged Care
Ensure Your Parent Has an Enduring Power of Attorney (EPOA) An appropriate Power of Attorney is crucial in the aged care process. It allows you to act on your parent's behalf for Centrelink, service and utility providers, or their banking, making organizing and consolidating their affairs much easier. Consult with an estate planning lawyer to get one properly drafted, especially with older parents, to flag any risks such as capacity, duress, conflicts, or the need for a secondary or alternative POA. If your parents cannot appoint someone as EPOA, you will need to apply to the courts, which can take time, so address this early.
Register as Centrelink Nominee With a Power of Attorney or your parent's signature, they can grant one person to be their Correspondence Nominee, allowing you to update Centrelink on their behalf and make organization easier. If you work with me as your financial adviser, I take on this role temporarily, passing it back once my work is finished.
Ensure Their ACAS Assessment Allows “Entering Care” To enter care and be funded, your parent will need to have completed an ACAS assessment, with the ‘Respite’ and ‘Residential Care’ boxes checked. If unsure, contact My Aged Care, and if necessary, organize another assessment. If they are in hospital, speak with your social worker—they can usually organize an assessment within 48 hours, instead of the 4-6 week wait time for a normal assessment.
Watch out for changes: Where there are changes to their situation, such as a substantial inheritance, or if their spouse enters care at a later date this can cause some unwanted changes and potentially higher costs. Be aware that is a possibility, and seek advice if they occur.
In closing
This blog was designed to help where advice is quite expensive and the options are fairly straightforward.
By following these steps, you can ensure that your parent receives the necessary support and care they need without undue financial stress, or confusion around care costs.
Resources
For more information or to book an assessment visit MyAgedCare: https://www.myagedcare.gov.au/
If you suspect a loved one may be experiencing elder abuse contact the Eldar Abuse Phone Line on 1800 353 374.
If you think they are in immediate Danger Ring 000 or make a non urgent report to Crime Stoppers in your state.
