A simple guide to the finance issue

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A simple guide to the finance issue

Is there some genius who can help with a simple guide, please?eg  Refundable Accommodation Amount ..and how this relates to a "monthly retention"?  What is left to be refunded after say 2, 5, 10 years?  Maybe a few theoretical balance sheets for those in various circumstances would help ..so we can get a grip on how it works, please?
 
 

Jill_Donaldson

Hi Noisy,

We understand your frustration and will try to help. We assume you have read sections 4.1 and 4.2 and 4.7 on agedcare101.com.au under the Aged Care tab.

You ask about retention of the Refundable Accommodation Deposit (RAD). This is the lump sum you may elect to pay rather than a weekly fee and it is usually a big figure, like anywhere from $250,000 to $750,000 or more. And it is fully refunded to you when you leave the aged care home - meaning you get it all back. There may be a very small admin fee in the hundreds of dollars but the rest you get back in full. The government also governs the return of the cash to you so you dont have to worry about it being lost in any way.

As an example, if you pay a RAD of $500,000 up front you will get back your $500,000 when you leave - in full.

If you dont want to or cant pay this luimp sum of money uop front you can choose to pay a weekly fee instaed that is calculated as a percentage of the RAD (e.g the $500,000)

 

Please go to Tab 4.7 for the information below:

About the RAD

 

As the name indicates, a refundable accommodation deposit or RAD is a lump sum payment made to the aged care home (nursing home) that is fully refunded to you or your family when you leave the home.

When you pay a RAD to a home it is like a loan. The purpose of the RAD is to provide the aged care home (nursing home) with money that they can invest and earn interest on in order to build and improve the home’s facilities and accommodation and contribute to ongoing maintenance.

 

How the refund works:

When you leave the aged care home (nursing home), the aged care provider is required to refund your deposit to you or your family within the following set timeframes:
If you give:

  • More than 14 days notice of leaving – your lump sum balance must be refunded to you on the day you the day you leave.
  • Within 14 days of leaving – your lump sum balance must be refunded to you within 14 days of you giving notice
  • No notice of leaving – your lump sum balance must be refunded within 14 days of your leaving
  • In the event of your death, the aged care home (nursing home) must refund the lump sum balance within 14 days of the day on which they were shown evidence of probate or letters of administration (for someone who has died without leaving a will).

If the lump sum is not refunded by the end of these legislated time frames, the aged care home (nursing home) will be charged a Maximum Permissible Interest Rate on the owing amount until the lump sum is fully refunded.

About the DAP

 

The Daily Accommodation Payment (DAP) is simply a refundable accommodation deposit (RAD) converted to a daily payment. This payment is not refundable.  For some people, it might be a better or easier option than paying a lump sum up front.

A Daily Accommodation Payment is calculated from a RAD by dividing the lump sum figure by 365 days. However, the RAD is first multiplied by the maximum permissible interest rate (MPIR).

It is calculated in the following way:
DAP = (RAD x MPIR) ÷ 365 

Below is an example using a RAD of $350,000 and a MPIR of 6.28% (current at 1 April 2016) 
DAP = ($350,000 x 5.76%) ÷ 365 
DAP = ([$350,000 ÷ 100] x 5.76) ÷ 365 
DAP = ($3,500 x 5.75) ÷ 365 
DAP = $ 20,160 ÷ 365 

DAP = $ 55.23

A combination of RAD and DAP payments

 

If you decide to make a combined RAD and DAP payment, the DAP payment will decrease because you have paid some money up front with the RAD payment.

Below is an example of a combined RAD and DAP payment based on a RAD of $350,000. In this example the resident has $125,000 available for a RAD. This means that the DAP is worked out on the remaining amount of $225,000.

DAP = ($225,000 x 5.76%) ÷ 365 
DAP = ([$225,000 ÷ 100] x 5.76) ÷ 365 
DAP = ($2,250 x 5.76) ÷ 365 
DAP = $ 12,960 ÷ 365 

DAP = $ 35.51

So here instead of paying the full RAD of $350,000 you would pay a RAD of $125,000 as well as a DAP of $35.51.

I hope this helps. You will be aware when you read the Section 4 under Aged Care that the RAD and DAP fees  come un der the Accommodation Fee for an aged care home and there are additional fees as well.

You will also lerarn that if you are a full pensioner you may not be liable for these fees.

Regads, Jill

 

 

 

 

noisy

Thanks, Jill.

That answers that. I did read about monthly retentions, but that may have been a past arrangement.
Now we just need to sort out how the other two payments are "assessed"?
It appears that the Basic Daily fee of $48.44 (as at Sept '16) is the standard for all.
THEN we ADD onto that a "Means Tested Care fee" AND pay a RAD as well, which is also means tested.
I have breifly looked at the form one completes for a financial assessment.

What we are NOT given are the assessment parameters so we have some idea whether or not it is actually worth going through this trauma.

Do you have any links or refernces we can use to access this information, please? It must be publicy available, surely?

 

Jill_Donaldson

Hi Noisy,

Here is a website that explains the schedule of fees and charges based on  income thresholds for both Residential Aged Care and Home care as of 1 January 2017.

https://agedcare.health.gov.au/sites/g/files/net1426/f/documents/12_2016/schedule-of-fees-and-charges-for-post-reform-residents.pdf

With regards to Residential aged care homes if you choose not to complete the Income and Assets test you will be asked to pay the maxium means tested fee which  is currently capped at $26,041.09 for the year and at $62,498.66 per lifetime. If you receive a home care package before moving to an aged care home, any income tested care fee you pay for that home care will count towards your annual and lifetime caps in the nursing home.

If you have not already looked at it, Section 4 of Aged Care Category on this website explains in detail what is required in the Income and Assets test.

Hope that helps

Kind regards

Jill 

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