FAQ

New Aged Care Legislation

From 1 July 2014, there are changes to how you charge new residents for accommodation. These changes will only affect new residents who enter Residential Aged Care after that date.

The distinction between high-level and low-level care will be removed, giving new residents the choice to pay their accommodation costs as a lump sum, a daily payment amount or a combination of both. They will also be able to select extra services for an additional daily fee in participating facilities.

Residents will be required to pay a basic daily care fee.

If the resident is not receiving the full Age Pension, they will generally be required to pay an additional daily fee based on their level of income and assets.

Those already in aged care can continue with their current arrangements unless they leave care and re-enter after a period of 28 days, or if they change facilities and decide to re-enter under the new rules.

Importantly, the current income-tested care fee, which is based on assessable income, will be replaced with a means-tested care fee, which will be based on assessable income and assets.

Accommodation can be paid in three ways: as a refundable accommodation deposit (lump-sum payment), a daily accommodation payment (daily payment) or a combination of both in all facilities. 

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Residents will be means tested to determine the financial contribution they need to pay towards their aged care. There are three components to the total fee payable which comprise of a:

  • Basic daily fee of 85% of the single basic pension
  • A care fee
  • An accommodation payment

In regard to the Care Fee, annual and lifetime fee caps will apply. From 1stJuly 2014, care fees for age care residents will be capped at a maximum of $25,000 per annum and $60,000 over their lifetime.

Residents will have up to 28 days after entering a facility to decide on their payment method. Accommodation costs will be determined by a resident’s assessable income and assets. The prices of rooms must be published on the ‘myagedcare’ website. 

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  • Full age pensioners will pay no means-tested fee 
  • Annual cap of $25,000 (indexed) and lifetime cap of $60,000 (indexed) on means-tested fees. 
  • Residential care recipients can be asked to pay: 
    • A basic daily care fee of up to 85 per cent of the single basic age pension  
    • A means-tested fee (if applicable) that covers the accommodation payment and care fees 
    • A residential payment can be paid as a refundable deposit (lump sum), a daily payment or a combination of both 
    • An extra service fee

Any other amounts agreed between the care recipient and the approved provider (eg, for provision of pay TV, wine, newspapers and hairdressing services). 

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The new arrangements will only apply to residents entering care on or after 1 July 2014. 

Current residents will remain on their current arrangements. However, if a resident leaves care formore than 28 days, they will be subject to the new provisions when they re-enter care. A resident will also be given the option to change to the new system if they move to a new aged care service. 

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When moving to aged care, you need to decide whether to sell or keep your home. While there are a number of factors that will influence this decision, it is important to know that keeping or selling your home can affect your ongoing care fees if you enter a facility on or after July 1 this year.

If you enter aged care on or after 1 July 2014, the value of your assets, which may include your home, will be used in the calculation of your ongoing care fees.

If you decide to keep your home, it is important that your accommodation costs are structured correctly in order to continue to receive favourable Centrelink treatment.

For over 50% of people, it can take more than a month after receiving an aged care assessment to enter a subsidised residential aged care facility, so it may be best to act sooner rather than later.

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Everyone entering an aged care home in Australia is assessed by a government representative from the Aged Care Assessment Team (ACAT). Your doctor, the Dept of Health & Family services, a social worker or a community nurse can arrange an assessment. After the assessment ACAT will recommend the level of care required and provide advice on what the assessment means.

The distinction between high-level and low-level care no longer exists a. ACAT assessments will simply be used to determine that any form of care is needed.

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From 1 July, you will have 28 days after entering a facility to decide whether to pay for your accommodation as a refundable accommodation deposit or a daily accommodation payment.

Your choice can have an impact on your financial assets, which can therefore influence how much you pay for your ongoing care fees.

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Your financial assets are assessed when determining your ongoing care fees, so an appropriate investment strategy may reduce the amount you pay.

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An adviser specialising in aged care can help you understand the changes and what the impact may be. Tulich is able to recommend several Aged Care Experienced Advisors to assist if required.

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New residents will have the choice to pay for their accommodation either as a refundable deposit (a lump sum, also known as a refundable accommodation deposit or ‘RAD’), an equivalent daily payment (a periodic payment, also known as a ‘daily accommodation payment’ or ‘DAP’) or a combination of both.

A new resident will have up to 28 days from entering care to choose whether to pay the agreed accommodation price by a refundable deposit or daily payment or some combination of both. The daily payment is paid unless and until a refundable deposit is paid. Daily payments must not be required more than one month in advance. 

Daily payments can be paid by the resident or drawn down from a refundable deposit the resident has paid to the provider, if the resident has elected to pay a combination of a refundable deposit and a daily payment.

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Refundable Accommodation Deposit (RAD)

The daily fee is comprised of 3 possible components. They are: Basic Daily Care Fee ‚calculated by the Government on the basis of your income‚ an Extra Service fee ‚for the additional services provided and a Means Tested Fee ‚ for part-pensioners and non-pensioners.

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This fee is paid by all residents entering into an aged care facility and the amount is determined by the Dept of Social Services. (DoSS).

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This fee is paid by those who have chosen to avail themselves of the extra services that Blue Hills provides to residents. This fee is approved by the DoSS and will vary depending on the services provided.

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The amount that consumers contribute towards the cost of residential aged care will depend on a care recipient’s individual circumstances.

From 1 July 2014, the Government will combine the current income and assets test to ensure a consistent fees policy for anyone entering residential care after this date. 

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The Commonwealth Government Means Tests all residents permanently entering any residential aged care facility.  This fee is determined by Centrelink and is based on a calculation of non-pension income and is capped by Commonwealth government regulations.

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The family home is currently exempt from the aged care assets test if occupied by a spouse or other protected person. This will continue under the new means testing arrangements.

Where the resident’s former home is included as an assessable asset, its value for the purposes of the test will be capped at $144,500 (March 2012 prices).

The family home will continue to be exempt from the Aged Care assets tests if occupied by a spouse or a protected person.

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Yes, there is a detailed Resident Agreement that outlines your rights and entitlements and all conditions of residency.

If you are interested in accommodation at The Manor at Blue Hills or if you have any other questions, the Admissions Coordinator or Administration Officer would be delighted to assist you.

Please give them a call on: 02 4634 8000

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Residents can choose to draw down daily payments from their refundable deposit.

However this may lead to an increase in the daily payment amount in order to compensate Blue Hills  for the lower earnings caused by a decreasing refundable deposit balance.

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Most aspects of the operation of Refundable Accommodation Deposits are closely regulated by the Commonwealth Department of Health and Ageing. Blue Hills' extra service facilities have determined the RAD amount as per the table below. The amount of the RAD relates to the type accommodation available at Blue Hills e.g. single or double rooms.

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Yes, there are advantages in paying a RAD. Amounts placed in accommodation bonds are not deemed to be an asset and therefore provide significant taxation and pension benefits. It may be helpful to contact a financial advisor before making a decision.

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The Government has legislated that the maximum amount of a refundable deposit a resident can pay must leave the resident with at least the minimum permissible asset level.

This is calculated as 2.25 times the basic age pension amount at time of entry. The amount is determined quarterly. 

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The Manor at Blue Hills will hold the bond in a secure and accessible form which meets the Commonwealth Government Department prudential arrangements. We deduct a small amount each month for the administration of your bond.

The RAD is refunded on discharge, less retention fees charged under your Resident Agreement.

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If you need to transfer to another facility, the balance of your RAD will be transferred to the other facility as per the requirements of the Aged Care Act.

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To calculate the equivalent daily payment of a refundable deposit, the refundable deposit is multiplied by the maximum permissible interest rate (MPIR), currently 6.59% as at 28 January 2014, and divided by 365 days. 

For example, a refundable deposit of $400,000 would have an equivalent daily payment of $72.21 per day. 


(Refundable deposit x MPIR)/365 = ($400,000 x 6.59%)/365 = $72.21 per day

An example of a combination payment for a $400,000 price may be a combination of a refundable deposit of $300,000 and a daily payment of $18.05 per day, with the daily payment determined as follows.

(Balance of price x MPIR)/365 = [($400,000 - $300,000) x 6.59%]/365 = $18.05 per day

How will we know the maximum permissible interest rate (MPIR)?

The MPIR will be available on the Department of Social Services website and will be updated every three months. We will ensure that any changes in the MPIR is reflected in our published prices. 

The MPIR at the date of publishing this fact sheet is 6.59% (January to March 2014) and will be adjusted each quarter as the Government publishes the new MPIR.

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Blue Hills Blue Hills RADs & DAPs

Inclusions:

  • Couples room
  • Kitchenette
  • Individual balcony
  • TV
  • Kettle
  • Toaster
  • Adjustable electrical bed low/high
  • Locked dressing table
  • Quality bedspread, bed linen & towels
  • Telephone
  • Individual room keys
  • Spacious room
  • Air conditioning
  • Ability to bring own furniture
  • Ensuite
  • Patio light

Pricing:

RAD = $400,000

DAP = $72.66

RAD/DAP Combo = RAD $400,000 + DAP $36.33

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Inclusions:

  • Kitchenette
  • Individual balcony
  • TV
  • Kettle
  • Toaster
  • Ensuite
  • Adjustable electrical bed low/high
  • Locked dressing table
  • Quality bedspread, bed linen & towels
  • Telephone
  • Individual room keys
  • Spacious room
  • Air conditioning
  • Ability to bring own furniture
  • Patio light

Pricing:

RAD = $350,000

DAP = $63.58

RAD/DAP Combo = RAD $200,000 + DAP $27.25

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Inclusions:

  • Individual single room
  • Kitchenette
  • TV
  • Kettle
  • Toaster
  • Ensuite
  • Adjustable electrical bed low/high
  • Locked dressing table
  • Quality bedspread, bed linen & towels
  • Telephone
  • Individual room keys
  • Quality window furnishings
  • Emergency call bell
  • Individual balcony
  • Patio light

Pricing:

RAD = $300,000

DAP = $54.59

RAD/DAP Combo = RAD $200,000 + DAP $18.16

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Respite Care

Respite services can be provided as daily care in a program run in an adult day care centre or as a short-term stay in a residential setting. Respite is designed to give the carer of an aged person time to rest, attend to domestic or social duties, or have a holiday.

To access respite, the client must usually be assessed and approved by the Aged Care Assessment Team (ACAT) in NSW. The Manor provides respite care services for stays of up to 63 days. Please take the time to discuss your requirements with us.

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Accreditation

Accreditation is an external evaluation process that all aged care facilities must undergo in order to be recognised as approved providers under the Aged Care Act 1997. For more information on accreditation, visit the Aged Care Standards & Accreditation Agency website online.

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