Aged care homes charge a range of fees to cover care, accommodation costs and living expenses. These can vary enormously between facilities and from resident to resident. The following are the four basic fees associated with aged care:
Importantly, the client has full control over whether they pay their accommodation costs by a lump sum (known as a Refundable Accommodation Contribution/Deposit), via daily payments (knows as Daily Accommodation Contribution/Payment) or a combination thereof. An aged care provider cannot force the client to make their accommodation payments in any specific way.
Renting out the family home
Retaining and renting the family home could provide an exemption for social security purposes, provided:
If these criteria are satisfied, the asset value of the family home and the income (rent) will be exempt from age pension assessment. However, the value of the property will remain assessable up to a cap (currently $157,987.20) for the calculation of aged care fees. The rental income will also be included for aged care income testing if the person moved into care after 1 January 2016, whilst residents in care before this date benefit from the rental income being excluded in calculation of their aged care costs.
It should be noted the current Government has shown an intention to remove this exemption from social security means testing – however no legislation has been introduced to implement this change at the time of writing.
When retaining and renting the family home, it is important to consider the income tax impact (as the rental income is assessable for tax purposes), the capital gains implications and whether renovations are required.
Seeking advice from your financial planner or an aged care specialist will ensure that you can make the right financial decisions. This could make a difference to your or a loved one’s overall quality of life by being able to afford the standard of care that is required.