Aged Care Accommodation Payment Negotiations – A Case Study

When it comes to the Aged Care maze, we find that payment for accommodation tends to cause our clients and their families the most angst. For most this is mainly derived from trying to understand how the system operates, its complexities and what options for payment they have available to them.  For example – did you know you can negotiate a lower price than what is published by a facility?

Our case study explains more.

Peter’s Journey – A Case Study

After several falls, it has become clear that 80 year old widower Peter cannot continue living at home. His son Jeff contacts Peter’s local Aged Care Assessment Service (ACAS) who assesses him and agrees that residential aged care is the best option going forward and they provide a letter of approval so Peter can access government funded care.

Jeff would like his father to move into a facility nearer his home so he can visit regularly and after investigating some providers has found a care home he thinks his father will like.  The accommodation payment (known as a refundable accommodation deposit or a RAD) is listed by the facility at $650,000 – $800,000 depending on the room.

Now comes the hard part, determining whether Peter can actually afford the accommodation payment and working out if he is eligible for any subsidies.

Peter’s only assets are his home in rural Victoria, valued at around $400,000 and $50,000 in the bank. His home contents are valued at $10,000. Peter and Jeff fill out the Centrelink paperwork to have his assets and income assessed.

As Peter lives alone his home is assessed at the capped value of $159,423.20.  This puts his assessable assets at $219,423.20. He receives a letter from Centrelink stating that he does not qualify for supported status as he’s not a low-means resident (assessable assets would need to be below the cap of $159,423.20). This means the government will not subsidise the cost of the accommodation payment but they will subsidise his daily care fees. Peter will need to fully fund any accommodation costs.

This is not what Peter and Jeff want to hear and they think they may have to find another facility with lower rates that Peter can afford.

Jeff talks to his financial advisor

Jeff’s financial advisor has helped a number of clients make the transition to Aged Care. What Jeff didn’t realise is there’s still a number of options available to his father. Firstly his advisor takes the stress off Peter and Jeff and liaises with the aged care facility directly and is able to negotiate the RAD down from $650,000 to $580,000. Just like buying a home, it is possible that the seller will accept a lower price. Next his advisor explains the RAD doesn’t need to be paid in a one lump sum – it can be broken down into a daily accommodation payment or DAP or they could do a combination of both.  Furthermore there are other strategies available to Peter such as drawing down on the lump sum RAD to fund the DAP amount to reduce the impact of Peter’s cashflow.

Once Peter’s house was sold his advisor contacted Centrelink to make sure they were aware of this as it has an impact on Peter’s Age Pension and also the means tested Aged Care fees he pays.

With their advisor’s help Peter is able to break down his accommodation payments into the installments he can afford and after selling his home, is living comfortably close to Jeff with the care he desperately needed.

Contact Morrows to understand your options

If you wish to understand what options you have available to you and your loved ones in order to make the best decision possible, then please contact our Aged Care specialist Allison Hyland on 9690 5700 or email ahyland@morrows.com.au