Tips

The means tested care fee, is another fee which has income and asset implications. The principal home if assessed, has a component assessed as an asset for the means tested fee. The aged care means test and the aged care homeownership exemptions are different from Centrelink’s/DVA means test and homeownership exemptions. Be careful, the means tested care fee can change significantly when you sell the principal home.

From 1 January 2016, residents who entered care in that year will have the rental income assessed from the home under the aged care means tests.

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YES, you can negotiate a RAD (formerly Bond) with any facility but it will be up to the facility to accept your offer. RAD's are usually based on the location and the size of the room, views etc. Be careful with aged care facilities who request to see your assets assessment before you know the RAD or DAP amount.

This is like showing a shop keeper how much you have in the bank before they determine the price of the article. You would not accept this from the shop keeper, so why would you accept these requirements from the the aged care facility!
 
Most daily fees are negotiable with the facility apart from the means tested care fee, which has a set formula and is determined by a person's income and assets after threshold are applied. 
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Yes, moving into an aged care facility can have an impact on a family member's Centrelink or Department of Veteran Affairs (DVA) entitlements.

Did you know that the rules changed for the former home regarding the Centrelink's assets test and rental income?

You also need to understand the impact of selling or retaining the family home – this does require specialist financial advice as all scenarios need to be reviewed prior to making this important decision. The home for new residents entering aged care from January 1, 2017 will be assessed after 2 years by Centrelink. This can change the affordability of keeping the family home substantially.

If you rent the home, this will also count towards the pension income test effect your Age Pension payment.

$$$$$$ Thousands of dollars can be lost or gained if you make financial choices without understanding Centrelink/DVA implications.

Do you know the impact on Centrelink/DVA payments if you keep, rent or sell the family home?

PrimeCare specialise in illustrating these differences to you.

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 A tax offset is available for taxpayers who have net medical expenses over certain limits. As the costs for aged care can accumulate to a significant amount during the year and if the resident is also paying the means tested care fee, tax relief is available. This is particularly relevant for self funded retirees.

The tax offset can include a range aged care fees,but does not include the accommodation deposit. 
 
Please call PrimeCare Financial Planning on 1300 853 875, for more information on this tax offset.
 
Disclaimer: The information above is for general use only. It is not intended for personal financial advice. 
  
 
 
 

 

To keep or sell the family home is a very personal decision and sometimes the best financial outcome may not suit the family - so you should not feel pressurised to keep or sell the home.

If you do decide to keep the family home, then the amount you need to borrow for the room has to be considered.

Lump sum RAD's (bonds) are usually hundreds of thousands of dollars. If you do not have enough savings to pay the RAD off, you can pay the DAP (aged care term for interest). The periodic interest rate is set by the government and is quite high. You may have a substantial deficit, where your income will not cover your aged care invoices. So, you need to be very careful on how you manage this situation. If you do decide to rent the home, the Government introduced significant changes for all new residents entering aged care from January 1, 2017, which could impact on your Centrelink or DVA pension. After two years the home will count as an asset.

If you decide to go to a third party lender, then the compounding interest and fees can be significant over just a couple of years. Often the family home is in disrepair and may not be rentable without spending a lot of money. Some family members may also have had bad experiences with tenants and do not wish to worry about a rental property. If these are concerning issues, then sale of the home may just be the best for the family.

Prior to making such a large financial transaction such as selling the family home, you should know the implication on your Centrelink/DVA payments and the means tested care fee.

PrimeCare Financial Planning will ensure that you do not make a costly financial mistake, which can have significant implications on the longevity of your loved ones capital.

Call PrimeCare today on (03) 9006 1736 your Aged Care Specialists!

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