22nd Mar 2018
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Centrelink Q&A: Pam’s fears on nursing home fees
Author: Janelle Ward
Pam’s fears on nursing home fees

Pam and her husband are approaching their 80s and rely on the Age Pension only. They need a plan should one of them need to enter a nursing home. 

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Q. Pam
As my husband and I approach our 80s and as we rely on the Age Pension only, we need to have some sort of plan should one of us need to enter a nursing home. The family home is in my husband’s name only. If he entered a nursing home, would our home have to be sold to cover the bond? Or would he be eligible to be covered by the 85 per cent of his pension plus the additional daily charge? I believe the additional charge is about $55 per day, which we would not be able to afford.

 ...

A. Before a person enters aged care, Centrelink will assess their combined income and assets to determine if that person can receive help with accommodation fees.

Centrelink will add up the value of assets in Pam’s name, her partner’s name and both names, and divide the total by two. The same process applies for any income earnings.

The family home will be exempt from the assets test if the partner of the aged care recipient remains living there. However, if that person moves out, the home may start to count as an asset.

Centrelink advises Pam to contact them to request an aged care means test for residential care and to complete an additional assessment with an Aged Care Assessment Team (ACAT) to determine their suitability for entering aged care. They can apply for an aged care means test with Centrelink at any time, and don’t need to wait until they’ve completed an ACAT test.

Centrelink advises that regardless of the value of the family home, when it’s counted as an asset, its value will be capped at $162,815.20 (as at 20 September 2017).

Pam refers to the basic daily fee, which is set at 85 per cent of the single pension rate of the Age Pension, and covers day-to-day living costs, such as meals and laundry, according to Centrelink. The basic daily fee is the same for everyone, whether or not they receive an Age Pension.

People entering aged care may need to pay an additional means-tested care fee towards their day-to-day personal care and nursing costs. To determine if they are eligible for subsidised aged care fees, Centrelink will conduct a means test assessment.

The means-tested care fee will be based on a person and their partner’s combined income and assets, regardless of who earns the income or owns the assets. Annual and lifetime caps are also in place to limit the amount of the means-tested care fee they can be asked to pay.

As well, people may be required to pay accommodation costs, which are set and charged by the aged care home. Aged care entrants can receive government subsidised accommodation costs up to a maximum of $55 per day. The result of their aged-care means test will be valid for up to 120 days.

All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

If you have a Centrelink question, please send it to newsletters@yourlifechoices.com.au and we’ll do our best to answer it for you.

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    COMMENTS

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    Jorgo
    26th Mar 2018
    10:38am
    Still very confusing - can we get some examples? Like a sample person of assets, income and then how their total costs would be calculated?
    purplejan88
    26th Mar 2018
    5:11pm
    the Income and Asset Assessment done by the govt assesses your income and your assets. the assets are assessed to give an outcome of which decides how much you will pay towards your accommodation/roof over head in a facility. Assets under $48500 - you will be fully supported by the govt. Assets between 48500 and 165273 you will be partially supported by the govt and required to pay a contribution towards your accommodation , the amount will be disclosed in the assessment - could be as low as $2.00 a day or as high as $55 a day. Assets over $165273 you will be deemed non supported meaning you will need to pay for your accommodation. just from that alone you can work out if you need to pay for accommodation. also the assessment works out if you need to pay a means tested care fee and this usually applies to people with fairly high asset levels. then everyone regardless of how they need to pay for their accommodation will need to pay %50.16 a day for their basic daily care fee. - does this help?
    GrayComputing
    26th Mar 2018
    10:46am
    A pension is not welfare.
    NO ASSET TEST FOR A PENSION EVERV AGAIN!
    For your retirement do you really look forward and want 100++ visits to/from Centrelink and be part of 3 million waiting queues and lost calls?
    Do some of you like being part of the abuse of the elderly? If so get your head examined for saw dust.
    Call your MP (yes the very same one who lets this Centrelink abuse happen at taxpayers’ expense) and tell them they will lose their job unless all asset tests for a pension are dropped
    Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules
    NO ASSET TEST FOR A PENSION EVER AGAIN!
    Call your MP (yes the very same one who lets this Centrelink abuse happen at taxpayers’ expense) and tell them they will lose their job unless all asset tests for a pension are dropped
    NO ASSET TEST FOR A PENSION EVER AGAIN!
    tams
    26th Mar 2018
    11:38am
    Hello Pam,
    There are two elements to the cost of residential care
    1) Care - this consists of
    - Daily Bed fee currently $50.16 per day (85% of the base pension - doesn't include applicable pension supplements)
    - Additional Services fee - some facilities charge a fee for additional services, such as Foxtel, beer wine etc. You would need to discuss with facility. Can be $10 up to $120 per day
    Means Tested Care fee - this fee is calculated from the income and assets form submitted to Centrelink/DVA. If your husband goes into care, and his share of assets is less than $48,500/ income less than $26,192, he will be fully supported by Government. If his share of assets is between $48,500 and $165,271, he will be asked to pay an Accommodation Contribution up to $56.14 per day.

    2) Accommodation - if his share of assets are greater than $165,271, he would be asked to pay for his accommodation. This could be between $250,000 to $1,000,000 plus

    There are a various ways of paying for the accommodation - as a lump sum, as a daily rate, or a combination of both.

    If you have fees which your assets or income cannot afford, you can choose to apply for an Aged Care loan, which would allow for the costs associated with the choice of facility to be paid

    Paul Dwyer
    Aged Care Finance Solutions
    Funding aged care needs
    Old Geezer
    26th Mar 2018
    12:49pm
    Age care is such a gold mine these days.
    Linda
    26th Mar 2018
    1:08pm
    I find the names of things very confusing.

    Quote from above article: The family home will be exempt from the assets test if the partner of the aged care recipient remains living there. However, if that person remaining out of residential care moves out, the home may start to count as an asset.

    Care is a bed fee - which I presume relates to staffing costs and perhaps meds? It is subject to optional additional services being extra. This fee can be means tested and will be assessed according to both assets and income.

    Accommodation - ? another fee?? for the what, the room? The building, the overheads and management, real estate? This fee is assessed according to assets (I presume if a partner remains in the home the 165,271 asset for the home is exempt?) In this case for a couple and one person remains in their residence, the assets they count are 1/2 of all assets except the family home.

    The language around all this is very confusing. The first one should be called something that separates it better from the accommodation fee.

    Care and accommodation are two separate costs. That makes sense.

    As I understand it, if one is in a home and needs medical care they must go with the Dr. that has agreements with the home for providing medical services. That is an important consideration. We all need to know, if we are facing these decisions the full implications of placement in residential care, both the financial and the practical.

    Thanks so much tams for the clear nitty gritty details.
    Let me know if my logic fails, as I am just beginning to understand how these things are calculated.
    Old Geezer
    26th Mar 2018
    5:05pm
    You don't need to know the names of things you just have to know that they will fleece you of anything you have by keeping you alive as long as your money lasts.
    purplejan88
    26th Mar 2018
    5:17pm
    Linda - the basic daily care fee is to cover food, laundry, incontinence aids, toiletries, basic physio, dietician, OT and possibly podiatrist - things about the care needs of the resident BUT doesn't cover things like medications, hairdressing, outing etc.

    every home is different in terms of GP's - if your GP will not visit the facility then you will need to access one of the GP's that does attend that home - the home should be able to assist you with this.

    Hope this helps somewhat Linda
    Old Geezer
    26th Mar 2018
    12:48pm
    Centrelink should not be involved in this process at all as it is between you and the aged care facility what you pay. It is simply wrong that those who have money pay where as those who have nothing don't pay. I have seen enough of these places and I certainly will not be going into such a place myself. I have no desire to play bingo in god's waiting room waiting for my number be called. I'd much prefer I chose when my number was called myself.
    McDaddy
    26th Mar 2018
    3:06pm
    You don't have to involve Centrelink if you don't wish to disclose your assets and income, you'll pay the max rate though.
    Old Geezer
    26th Mar 2018
    3:27pm
    Probably will work out a lot cheaper as you can negotiate without the other party knowing your financial situation.
    McDaddy
    26th Mar 2018
    3:34pm
    No incentive for the facility to do that as they currently get the Gov subsidy plus money from resident, if you don't disclose then they just get your money.
    purplejan88
    26th Mar 2018
    4:57pm
    if you don't wish to do the Centrelink Income and Asset Assessment you will be required to pay the full means tested fee of $215 a day plus you will pay the daily care fee of $50.16 a day - this will soon add up if you don't have gazillions of dollars - best to do the Centrelink assessment and also find a financial advisor who specialises in aged care to get the best deal for your financial situation.
    purplejan88
    26th Mar 2018
    5:02pm
    on top of paying the means tested care fee of $215 a day and the care fee of $50.16 a day you will need to pay for your accommodation ie the room and you could be up for anything from $265000 to a million dollars for a room depending on the facility and what they have to offer. the govt sets the interest rate for the daily accommodation fee or DAP if you don't want to pay the lump sum for the room and at present that interest rate is 5.77% from 1/4/18 - so to give an example the DAP on a $265000 room is $41.89 a day.
    Rae
    26th Mar 2018
    1:13pm
    Isn't it a very good thing our assets and incomes aren't used to decide how much we pay for our weekly food shop? Then again the odd CEO might just allow great savings for the rest of us if that was the case.

    Who came up with this loopy idea to charge based on saving ability. You'd be crazy to have any assets or income at 80 wouldn't you?
    purplejan88
    26th Mar 2018
    5:19pm
    it pays to have under $48500 or have a lot of money ie over $500,000 but nothing in between - very hard for those assessed as partially supported.
    Sundays
    26th Mar 2018
    8:48pm
    On the other hand, my 89 year old father was very stressed when my 87 year old mother had to go into a Nursing Home (where she was well cared for). It was a bit of relief for him that they just took,85% of her pension, and he wasn’t forced to sell the family home to pay for Mums care.
    Rae
    26th Mar 2018
    1:18pm
    Why aren't assets and income used to decide who pays how much for childcare. It's a similar sort of situation or is it just the elderly being discriminated against these days?
    McDaddy
    26th Mar 2018
    3:05pm
    Child Care Benefit is means tested as well.
    johnp
    26th Mar 2018
    1:23pm
    Agree entirely with GrayComputing. We have at present a very insidious, abusive and unjust system especially to those over the asset limit. Plus as stated it would save taxpayers money by dropping asset testing due to massive overheads cost and the 10,000 conflicting rules
    Linda
    26th Mar 2018
    2:09pm
    It makes little sense to plan ahead because the rules will probably change. Those with more assets but low income currently will face some big bills as things are currently. The total they can use for the house asset (with no partner living in the property), is fairly low considering how much these homes go for in the major cities. Looks like the nursing home will get the proceeds of the value of the home value, up to the cap unless one's assets are low enough. The option to stay at home and receive home care package may be the best option for many. The packages can be used to offset care costs, (provided there is one available), making it way less expensive and perhaps getting better personal care. As they are now, most nursing homes are institutions and many work for profits while providing care and safety. There are so many issues with nursing homes that would cause me to look at the at home option if at all feasible. It takes courage and fortitude to age.
    froggy
    26th Mar 2018
    4:14pm
    Still waiting for an example(s)..are alll aged care homes the same in regard to rooms and meals, care, staff, facilities?..how does one choose an aged care home?..still a work in progress Pam??
    Pierre
    Jannie
    26th Mar 2018
    4:30pm
    Confusing...........................
    Sundays
    26th Mar 2018
    8:57pm
    Froggy, in my mothers case, she had an ACAT assessment test which gave her highest priority. However, she languished for 3 months, in hospital befor a bed became available in NSW. Yes, 3 months. The hospital would not release her as no one to give her the care required at home. Fortunately, we were then given a couple of places to visit and make our choice. However if there hadn’t been two options, Mum would have to go to the first available place. If you are not that sick, you might be able to turn down the first offered.
    Jannie
    26th Mar 2018
    4:29pm
    When I get to the stage of having to go into a care facility I will be looking at a way to leave this god forsaken place called earth. No way do I wanted to be treated in a non caring situation especially carers who cannot communicate in proper English. Also I refuse to pay the excessive amounts they are asking for a bond and daily fees. We need an escape plan put in place.
    Triss
    26th Mar 2018
    9:10pm
    You are so right, Jannie. It almost seems as though the hoops we have to jump through and the expensive and inferior care are deliberate to make people decide to take their own way out of life and save the government money.
    Jannie
    27th Mar 2018
    11:03am
    You are right Triss the government does not give a shit about us.
    tams
    26th Mar 2018
    5:38pm
    Hi Linda,

    It is important to also understand that the Government contributes to the cost of Care. For example, when a new resident enters care, the facility will assess the resident for the amount of care that will be needed for the resident, and that is translated into dollars under what is called the Aged Care Funding Instrument (ACFI). This figures is then given to he Government. Centrelink/DVA will then calculate the capacity of the resident to contribute to the cost of care.
    eg Let's use the example of a resident requiring care amounting to $120 per day, and Centrelink says the residents has the capacity to contribute $35.27 per day (selling former home for $750,000 with $400,000 paid as a lump sum, leaving $350,000 at the bank).
    The Government will pay the facility $120 less $35.27, and the facility will invoice the resident the $35.27.
    It is also important to understand that you don't have to sell the former home to pay for aged care, and that the former home is exempt as an asset for 2 years for age pension calculation.

    Paul
    purplejan88
    26th Mar 2018
    6:36pm
    and that is why Linda in my previous replies to try and help out i suggested you contact a financial advisor who specialises in aged care like Paul - they really can help you maximise your money and minimise your expenditure legally. do not think you can fool Centrelink by misappropriating the truth as it will come back to bite you on the posterior - seek advice!!
    Radish
    27th Mar 2018
    10:53am
    i also found it confusing
    BAT
    27th Mar 2018
    11:45am
    No one knows how our health will be in later years. Mum didn't go into a Residential Care Facility(no longer called Nursing Homes}until 95 due to constant falls.She is now nearly 98 & bedridden but what wonderful care & facilities she has at the Estia Residential Care in SA. Most of the care staff are not Australian born but wonderful carers. Not everyone has someone to look after them at home & if you have so many assets/funds then pay for care at home.We had a choice of 5 Residential Care facilities to choose from but as the population gets older this won't be so.The government prefers people to stay in their homes with care not Care places as beds are quickly filled & people are living longer but not always healthy.Don't be under the illusion your children will look after you either at their home.Enjoy life while you have good health as we don't know what is around the corner.


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