Experience shows confusion is rife when it comes to aged care. There are families making mistakes, decisions with huge price tags, and potentially putting themselves into positions where they could end up footing a very large bill each and every month.
I recently met with a lady who told me I was being interviewed – to check my knowledge, skill and suitability before she made a decision on whether to engage my services. I was totally fine with being interviewed.
I just wish she’d applied the same philosophy to deciding to accept an aged care place that I knew the family couldn’t afford after chatting for about five minutes. Unfortunately she’d made a decision to accept the place out of desperation and overwhelm, unable to see an alternative – yet without understanding the true cost of her mum’s care. She had no idea of the far-reaching implications of what she’d agreed to!
That decision came with a HUGE, and totally unexpected price tag! Unless it can be undone, that decision will cause both her and her brother financial stress and hardship for as long as her mother lives.
She’d thought there was only a single fee, and had been unaware there can be as many as five or six fees charged for permanent aged care. They can afford the one fee she knew about, but they can’t afford the rest!
Let’s look at some of the fees you can expect to pay when a loved one enters permanent care:
• The Daily Care Fee (DCF) effectively pays for food, rent, care, laundry etc. Every permanent resident pays this base fee.
Then we need to add in:
• The Refundable Accommodation Deposit (RAD) which is almost like buying a life interest/right to live in the facility. This is generally required as a lump-sum contribution and can be combined with a Daily Accommodation Payment (DAP) if you can’t pay the RAD in full.
• A Daily Accommodation Payment (DAP) is a daily charge applicable where you’re not able to fully pay the RAD. Currently (as at 28/8/16) the DAP is calculated at 6.01% pa of the outstanding RAD amount and is chargeable on a daily basis.
• Then there’s the Means Tested Care Fee (MTCF) which takes into consideration all sources of income and assets available to your loved one. That information is used to calculate a MTCF your loved one will have to pay on top of other fees.
• Many providers have an Extra/Premium Service Fee (ESF/PSF) which provides premium services to the resident such as pay TV, newspapers, hairdressing, snacks, menu choices and linen.
• Plus a number of providers have recently introduced a monthly retention charge to cover ‘refurbishment’ of the facility after your loved one checks out.
If you’ve ever wondered what a specialist aged care financial adviser does; a small part is helping families understand the real cost of care and ensuring they’re able to make sound decisions about the long term care of a loved one.
Imagine the peace of mind knowing you have someone who can help guide you through the emotional and financial mine field called aged care.
You can call me on 0407 159 298 if you’d like to chat.