The Residential Care Fee Estimator doesn't tell you the whole story
The Australian Government’s My Aged Care website provides a Residential Care Fee Estimator to help you understand aged care costs.
The Residential Care Fee Estimator requires specific information to determine government support, such as income and asset information, your relationship status, and details about your home. This is a simplified version of the information you will need to provide in the Request for a Combined Asset and Income Assessment form.
Once you have provided this information, the Residential Care Fee Estimator performs some basic means testing calculations to help you on your way.
Unfortunately the calculator only offers limited help - as there is little scope to look at the range of choices a resident may have when working out how to pay for care, and there is limited explanation of how the fees work.
The Residential Care Fee Estimator does not help you understand or compare your options
The reason the Residential Care Fee Estimator is of limited use lies in the way the means testing system works.
The decision to sell or rent out the former home, or pay a large sum for a Refundable Accommodation Deposit (RAD) will impact the age pension and aged care costs. The Residential Care Fee Estimator is unable to help the aged care resident understand the impact of these changes, and is also unable to help with a useful comparison.
Good financial advice will take into account different pathways the resident may be able to take and offer a straight forward way to compare options.
Once there is an understanding of how things will look financially, residents and their families can then consider the practical side of some of the options available. For example, it may make good financial sense to rent out the former family home, yet the reality of being a landlord may not suit the situation.
Means Testing and the family home
Deciding what to do with the former home is the most common challenge for family and residents.
Selling the former home can result in some big changes in how the government assesses the ability of the resident to contribute to the cost of care, and the rate of age pension paid.
Also - the decision to rent out the home should be considered with the impact to means testing taken into account. The rental income may decrease the age pension payment, and increase care costs. The result can be only a small improvement in cashflow to the resident.
Confused? You shouldn’t be. These are important decisions, and the financial outcome should be clearly understood. Practical and concise advice will really help.
Make sense of all the moving parts and make the most of the situation
Your assets, how you pay for care and what you do with the home are all related - and it’s not easy to work out how. The Residential Care Fee Estimator has nothing to offer in helping understand this.
Good financial advice will seek to strike a balance between making the most of opportunities to maximise entitlements, and keeping enough funds aside to address any shortfalls over time.
This will require consideration of what the overall financial position is now, and how it may be in future.
Get the whole story
Older Australians need to take into account how they are treated by “the system” when working out how far their savings will take them.
In the case of residential aged care the system is more than means testing for the age pension and the aged care fees - there may also be the Pharmaceutical Benefits Scheme to consider as well as some tax outcomes.
Whether it be help in filling the forms, or a comprehensive (and fast) assessment of financial options, we can help.