Placing a loved one into aged care is a stressful and emotional process. The journey is made all the more difficult because of the large amounts of money involved.
Across Australia the average bond, formally known as a Residential Accommodation Deposit ('RAD'), is $402,000. In our major metro cities, the RAD can come closer to $1 million.
Families need to be careful when making a choice about their preferred aged care provider. Comparisons should be made on service quality, staff quality, and how your loved one feels about the facility.
A clear comparison should also be made on the fees that will be charged.
Recap: How Aged Care Fees Work
Before we turn to the hidden new fee that could trap families, its useful to recap how aged care fees work.
There are four types of fees that a new resident may be liable to pay:
1. Basic daily fee. Everyone entering residential aged care is asked to pay the basic daily fee. This fee is used for covering the day-to-day livings costs of residents such as meals, heating, cleaning. The maximum daily fee which can be requested by a provider is $47.86.
2. Means-tested care fee. This fee may be payable, after an assessment is done by Centrelink or DVA of income and assets of the new resident. Limits are in place to cap the cost of the means tested care fee, if it is payable.
3. Accommodation costs. When does this apply, this can be a lump sum (called a residential accommodation deposit) or a daily amount (called daily accommodation payment), or a combination of RAD and DAP. Most families assume the full RAD amount is refunded upon leaving an aged care home.
4. Extra Service Fees. This is an additional fee payable for extra services such as satellite TV, hairdressing, special therapies).
The Not So Refundable RAD
Over the past twelve months some aged care providers have introduced a new charge which is deducted from the Refundable Accommodation Deposit.
This fee, which can be as much as $20 per day (or $7,300 per year), is deducted from the lump sum bond that is paid upon arriving in aged care.
This fee can carry many names – such as “Asset Replacement Fee”, “Capital Refurbishment Fee” or “Asset Replacement Contribution Fee”.
Whatever the name, this fee is hidden – it is not publicly displayed in their RAD amounts displayed on MyAgedCare or on a providers website. It is often a footnote in marketing brochures, and even then the amount of the fee is often not disclosed.
Haggle, Haggle, Haggle
The lesson for families is clear. With aged care vacancies on the rise, aged care operators are increasingly desperate to secure new residents.
When you or a loved one is doing a tour of an aged care facility prior to entry, make sure you ask whether the provider charges a fee that is deducted from the lump sum bond/RAD.
If one of these hidden deductible fees is charged, ask for it to be removed. You may be surprised at the result.
And when comparing aged care options, make sure your decision fully understands the amount your family will have to pay now, and how much you will get back.
About the Author: Ken Ray is the Co Founder & CEO of Aged Care Reviews.