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Cashflow planning is important when moving into aged care, but plans can be thrown into chaos if your first invoice shows much higher fees than expected. Don’t panic – your starting fee may only be temporary. This article sheds light on interim fees.
The first statement you receive when you move into residential aged care can be a shock, as fees might be far higher than expected – possibly even hundreds of dollars a day higher. This might not be an error but rather be just a matter of understanding how “interim fees” are applied.
If you are required to pay a means tested fee as a contribution towards the cost of your care, how much you are asked to pay is determined by Services Australia based on their assessment of your affordability.
Essentially, they review your assessable assets and income and conduct a means test assessment. The problem is that you start paying fees from the day you move in, but it may take 6-8 weeks (or longer) for the assessment to be done and your fee to be advised. In the interim, your care provider will be unsure how much to charge you.
This is where interim fees come in. While waiting for Services Australia to calculate and advise the fee, your care provider can set an “interim means-tested fee” and charge this amount. Each provider decides how they will set this interim fee. They might:
Whichever option the care provider chooses, if they charge you too much, the excess does come back to you (as a refund or a credit) once Services Australia have advised the results of their assessment.
While the higher-than-expected fee might only be a temporary glitch, it can still cause considerable stress and cashflow problems in the first few months. Three practical tips to help your situation include:
If you are making the move into residential care (or helping a family member), we can provide advice to remove the uncertainty and help you choose the best strategy for you. Very often aged care providers will accept the fees that we calculate in our advice document and use them to set your interim fee – making it a fee that is more affordable and closer to your expected actual fee.
Make an appointment with our aged care experts to discuss your situation and find out how we can help. Call us on 07 3228 4000.
Disclaimer: The information in this article is based on our understanding of the relevant legislation at the time of writing. The information is of a general nature only and has been prepared without consideration of your individual objectives, financial situation or needs. Before making any decisions, you should consider the appropriateness for your personal investment objectives, financial situation or individual needs. We recommend you see a financial adviser, registered tax agent or legal adviser before making any decisions based on this information.
Vincents Private Wealth Pty Ltd ABN 63 658 402 021 is a Corporate Authorised Representative of Vincents Advisory Pty Ltd ABN 79 125 596 349 AFSL No. 320580
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