For many retirees, this 37-page aged care ‘test’ is a waste of time
There comes a time in everyone’s aged care journey when someone hands them a 37-page document and says “you need to fill this out”. This calculation of your maintenance cost form is spoken as if it were mandatory. Hospital discharge planners, assessors and even aged care homes will tell you that you should complete this, but you shouldn’t.
Income assessment is not mandatory; In fact, in the 14th question you will be asked whether you wish to disclose your assets and income. If you choose not to complete, you will pay the maximum cost-based fee, which includes the hotel fee and non-clinical care contribution.
For some, especially self-funded retirees, choosing to fill out this form may be a complete waste of time.
On the surface the form looks extensive but manageable. It asks questions about your home, bank accounts, retirement and investments. If your finances are simple, this could be the end of it.
But if you check “yes” to own an investment property, family trust or private company, the paperwork increases. Tax returns, financial statements, balance sheets and depreciation schedules may be requested for each entity. Each additional build can trigger more forms, sometimes nearly as long as the original 37 pages.
Many self-funded retirees enlist their accountants to collect and prepare information, adding cost to an already expensive life transition – only to discover the outcome is inevitable.
It often makes sense to complete the assessment for full retirees who are in an easy financial situation.
An income assessment looks at both your assets and your income to determine how much you will pay. There are thresholds and ceilings, but as a general rule of thumb, if your assessable assets are close to $1 million, you’ll likely pay the maximum means-tested fees.
And what often surprises people is this: the Refundable Accommodation Deposit (RAD) is among your assessable assets for aged care. So $750,000 RAD plus $250,000 investment pushes you to $1 million; This means that even someone on a full age pension can pay maximum wages.
It often makes sense to complete the assessment for full retirees who are in an easy financial situation. If you claim that your financial situation is low, evaluation is mandatory. If your information is already up to date with Services Australia, you may be verifying the information they already have and your home details.
But if you’re a self-funded retiree, you need to ask: is the juice worth the squeeze?
Some aged care homes will provide an estimate of how much your costs will be. Accept if offered; but make sure it reflects your position on the day you move and consider what happens if circumstances change, such as selling the house to pay the RAD.
The means test is not a negotiation. It’s a formula. And sometimes this formula will reach its maximum no matter how many documents you provide. Sometimes the smartest decision is to know that filling out the form will not change the outcome and choose not to fill it out.
Written by Rachel Lane. Minification Made SimpleA book and website that aims to shed light on degrowth.
- The advice given in this article is general in nature and is not intended to influence readers’ decisions about investments or financial products. They should always seek their own professional advice, taking into account their personal circumstances, before making any financial decisions.
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Rachel Lane, bestselling Elder Care, Who Cares? He is the author of the book. and Downsizing Made Simple with financial expert Noel Whittaker.
