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image of a prominent For Sale sign in a suburban street: sign is in white block lettering on a black background - depicting the myth that moving into residential aged care default requires selling your home

Debunking more Aged Care myths

This is the final instalment of our articles debunking some of the urban myths surrounding Aged Care decisions being made by or for those in need of it. This article deals with two such myths, which are that:

  • the family home needs to be sold as a default; and
  • means-tested care fee is a simple one-size fits all calculation.

Sale of the family home as a default

It is often the case that clients come to this conclusion following preliminary discussions with a residential aged care provider. ‘By default’ means that the client assumes that by going into a residential facility, they must sell their home.  It is unclear where this myth starts, whether by urban understanding or misinterpretation of information received.
The decision to sell the family home is a significant financial one. It is a course of action that is often accompanied by stress and anxiety. And it is a decision that should not be taken as the default option.  Like most substantial financial decisions, there are usually alternative options to consider. Financial decisions should be taken in the light of prevailing personal circumstances and those circumstances will vary by the individual.
The funds arising from the sale of the home will result in a better financial outcome for some residents.  For others, time may be available for them to move into the residential facility before finalising the decision to sell.

Means tested care fees

At this stage of life, cashflow budgeting is often a critical exercise. In that regard, the Means Tested Care Fee (MTCF) needs to be assessed and computed. It is common, particularly amongst the High Net Worth residents, that the annual cap and daily cap are misunderstood. The misconception is that the annual cap, divided by the days of the year is the way the MTCF is calculated.  At its simplest, that would result in a daily fee of around $91 – whereas the actual calculation is based on a means tested cap, divided by the days.  This method could potentially result in a daily fee in excess of $365. This is a complex calculation: see the elements on this government Aged Care website page.
The daily fee will be payable until the annual cap is reached. That cycle will repeat until the lifetime cap has been met. As at the date of this article being drafted the caps were set as follows:

Caps on means tested care fees – Residential care*
Means tested care fee caps Rate
Lifetime cap $79,942.44
Annual cap $33,309.29

*These rates were determined as at 20 March 2024, to take effect from 1 July 2024
Source: Australian government Department of Health and Aged Care website. 

Getting Aged Care financial decisions right

The Continuum Financial Planners experienced advice team can work with you to help you make financial decisions in your best interests. Our Accredited Aged Care Adviser can help you with all financial aspects in evaluating your aged care arrangements. To arrange a meeting with our team, call our office (on 07-34213456), or click to Book A Meeting.
You may wish to refresh your understanding of the earlier matters we published in this series: they are available on our website: Aged Care myths debunked – RADs; and Debunking Aged Care myths. For more information about our Aged Care service, go to this Page on the website.

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