Navigating Aged Care

The types of care available

There are a number of categories of care available. These include:

  • Home care
  • Granny Flat residence with home care
  •  Independent self-contained unit at a retirement Village (over 55’s style village)
  •  Residential Aged Care (Nursing Home)

The office of the Public Advocate or social workers are empowered to conduct an investigation into the suitability of a person’s accommodation needs. Usually this is based on medical and social worker reports provided by the Aged Care Assessment Team (“ACAT”). Based on the level of the assistance required, a recommendations are made as to the appropriate level of care. If the investigation shows that a person is not being suitably cared for proceedings may initiated in the State Administrative Tribunal.

Financial issues in respect of residence: How will tenure be secured?

Access to residential care is means tested.[1] The means test determines whether or not the resident is required to make a lump sum entry contribution to the home.[2] There are two main types of entry contribution.[3]  The first is 100% of the means tested payment paid as a lump sum deposit. With no interest accruing on the payment. The second is a percentage of the means tested deposit coupled with an ongoing daily interest accrual on the unpaid part of the deposit. The interest component is ultimately taken from the lump sum on death or on vacating the facility.

If a person’s assets are less than the threshold limit obligating them to pay either of these in-going contributions, then they may only have to make a small concessional contribution with the remaining in-going contribution being funded by the Commonwealth Government.[4]

Financial issues in respect of care: How is a person’s residential aged care funded?

Usually the costs of the resident’s care needs are paid the resident. This ongoing daily liability is distinctly different to the costs of securing occupancy within the facility. To calculate the daily cost of care whilst in residence different means test applies[5]. The test is based on an aggregate of the represented person’s income and assets.[6]

There are a number of statutory thresholds, exemptions and concessions that apply in the calculation of daily care liability. The daily cost of care can be increased depending on whether the resident seeks premium or additional services to those provided under the standard residence contract.

If a person’s assets are less than $159,423.20[8] then they only pays the $48.25 per day.[9]If a person’s annual income is less than $25,000.00 or their assets are less than $46,500.00 then they do not need to make an additional contribution to his care[10]. If a person’s assets exceed $159,423.20 or their income is above $46,500.00 then they will need to make an additional daily co-contribution[11].

Where the asset tested co-contribution is less than the actual costs of the care provider (capped at $54.29 per day) then resident pays the asset tested co-contribution and the Commonwealth Government pays the balance[12]. Where the asset tested co contribution is more than the cost of care the resident pays the cost of care.[13]

Note: the law in this area is frequently changing and it is prudent to seek independent financial advice before dealing with your assets.

[1] Sch 3 s 149, inserting s 52G-2(a) Aged Care (Living Longer Living Better) Act 2013 (Cth) (“ACA”).

[2] Fees and Payments Principles 2014 (No.2) s 19(3).

[3] Ibid.

[4] Ibid

[5] Ibid Sch 3 s 149, inserting s 52C-3(3)(a) for Means tested care fee.

[6] ACA Sch 3 s 110, inserting s 44-22(1), and s 44-22(2) for income and Sch 3 s 110, inserting s 44-22(3) for assets.

[7] ACA Sch 3 s 149.

[8]ACA Sch 3 s118, inserting s 44-26A(7) and s 44-26B(1), definition of ‘maximum home value’.

[9]ACA Sch 3 s 149, inserting s 52C-4.

[10]ACA Sch 3 s 110, inserting s 44-22(1).

[11] This is the converse of ACA Sch 3 s 110, inserting s 44-22(1).

[12] Commonwealth Department of Social Services (“DSS”) sets this amount, Dept. of Health, Living Longer, Living Better, Attachment A – Summary of means testing arrangement for residential care subsidy and fees, Step 3C, Step 1: DSS ‘Aged care subsidies and supplements as from 1 July 2014.

[13]ATA Sch 3 s 110, inserting s 44-21(2).

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