What care will cost under the Aged Care Act
It is undeniable that non-supported residents will pay more for care under the Aged Care Act when it comes into force on 1 July 2025.
Consumers received a taste of what is to come on 1 January 2025 when the cap on Refundable Accommodation Deposits (RAD) was lifted from $550,000 to $750,000. The RAD is the lump sum that a facility can charge for a room. Many facilities can and do charge more than the cap but need approval from the Aged Care Pricing Commissioner to do so.
Once your assets are over $206,663 you need to pay the RAD. Any amount not paid as a lump sum is charged as a daily accommodation payment (DAP). The government set rate for the DAP is currently 8.17 per cent per annum.
After 1 July 2025
From 1 July 2025, RADs will attract an exit fee of 2 per cent a year (capped at 10 per cent) and the DAP will be indexed twice a year in line with CPI.
Residents with assets over $238,000 also must pay a hotelling supplement of 7.8 per cent. The hotelling supplement covers items such as meals, utilities and cleaning. Under the income test, a resident will pay 50¢ per dollar once their income exceeds $95,400 a year. The hotelling supplement is capped at $5,694 a year.
Wealthier residents, those with assets above $502,981 or income above $131,279, will also be liable to pay a non-clinical care contribution. This also is calculated on 7.8 per cent of assets and 50¢ per dollar of income above the thresholds. There is a daily cap of $101 per day and lifetime cap of $130,000 or four years, after which you no longer pay this fee.
Current vs future comparison
The Department of Health, Disability and Ageing has just released its new estimator tool. We ran some figures through the estimator to get an idea of what a resident is paying now and what they will have to pay after 1 July.
The mythical man on the Clapham Omnibus (Mr C.) is our example:
- · He is single and no longer has a partner or protected dependents.
- · He owns his home valued at $1,500,000.
- · He has financial assets (Bank accounts etc.) of $300,000.
- · He has superannuation and other non-financial assets (e.g. car, house contents) of $500,000.
- · He has no debts.
Currently
Mr C. will currently have to pay:
· Basic Daily Fee of $63.82; and
· Means Tested Fee of $65.71 per day.
· He will also have to pay the RAD and any Additional Services Fee that the provider might charge.
Post 1 July
After 1 July 2025 Mr C. will have to pay:
- · Basic Daily Fee of $63.57
- · Hotelling Supplement of $13.46 per day
- · Non-clinical Care Contribution of $101.16 per day.
- · The RAD and any Additional Services Fee that the provider might charge.
Conclusion
The additional charges that come into effect soon are certainly going to increase the costs payable by financial aged care residents very significantly. In the case of Mr C. by $17,761 per year.
Please contact All About Aged Care if you have any questions or concerns regarding the issues raised. All About Aged Care are a part of the Home Visit Network.
