Understanding Aged Care Terminology
As a result of the changes to Aged Care (1 July 2014) people who move into an aged care facility home for the first time, will come across new aged care terminology about the ways accommodation costs can be charged.
1. Refundable Accommodation Deposit (RAD)
A lump sum payment for accommodation in an aged care home. This lump sum covers the price of a room that residents have agreed with their aged care home to pay. Residents can pay their accommodation price in full by RAD or they can pay via combination of a smaller RAD and Daily Accommodation Payment (DAP) or they can pay in full by DAP (discussed below).
2. Daily Accommodation Payment (DAP)
The daily payment for accommodation in an aged care home. The aged care facility will work out the DAP based on a formula that converts the RAD (lump sum) price to a DAP (daily) price. A component of the formula is an interest rate (the Maximum Permissable Interest Rate – MPIR). The resident makes this payment on a regular basis, up to a month in advance, similar to paying rent.
The DAP is not refunded when the resident leaves the aged care home or decides to pay a RAD.
The resident can choose to pay a combination of a RAD and a DAP for their accommodation costs.
Health Care Costs
1. A Basic Fee
Similar to the current fee arrangement – a daily fee paid by all people who receive residential care.. It is calculated as 85% of the single person rate of the basic Age Pension.
2. Means Tested Care Fee
A means tested care fee – an extra contribution towards the cost of care that residents may need to pay, on top of the basic fee, depending on income and assets.
The formula for the calculation of the means tested fee takes into account; your income from all sources, deemed income from financial assets, your assets, which may include the former residence (limits apply) and lump sum accommodation payments made to enter the facility.
There are annual & life time caps on these fees.
We aim to empower the individual to achieve their life goals through innovative financial solutions
Level 3, 54 Foveaux Street Surry Hills NSW 2010
PO BOX 1899 Bondi Junction NSW 2022
Ph: (02) 9211 0111