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Self-funded residents and means-tested fee assessment
Article published on: 15-11-2022
My self-funded client is moving into residential aged care. What will happen if they fail to disclose their financial details by not completing form SA457?
Answer
Clients in residential aged care have their income and assets assessed to determine the level of fees they are required to pay. These assessments are generally completed upon entry and quarterly thereafter.
If your client receives a means-tested payment from Centrelink or Department of Veterans’ Affairs , most of the information needed is already on file, so they just need to ensure their details are up to date. They won’t need to complete any forms, unless they own a home, where they will need to provide additional details using form SA485.
If your client is a self-funded retiree, Services Australia won’t know their financial situation, so they may choose to disclose all finances fully on the SA457 – ‘Residential Aged Care Calculation of your cost of care’ form.
Where self-funded retiree clients do not complete this form, Services Australia will send a series of reminder letters to:
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the care recipient
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their nominee (if applicable), and
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their aged care provider
The final reminder letter will advise that the care recipient will be classed as ‘means not disclosed’ if they do not respond to the letters.
As a ‘means not disclosed’ resident, they can be asked to pay a means-tested care fee equal to the full cost of their care, as determined by their basic subsidy and primary supplements subject to annual and lifetime caps (see below).
Since 1 October 2022, this daily cost of care increased from $264.81 to $358.41 per day. This is a significant increase of $93.60 per day, which impacts existing and new residents.
In comparison, residents who disclose their financials, may pay lower fees, with their daily ‘means tested care fee’ calculated as the lesser of the:
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cost of care (currently up to $358.41 per day), or
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means tested amount minus the maximum accommodation supplement ($63.14 per day as at 20 September 2022).
The sum of the daily ‘means tested care fee’ is subject to an:
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annual cap of $30,574, and
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lifetime cap of $73,378.
Taking the annual cap into account, over the course of a year, a resident who had not completed the form would be no worse off (ignoring potential forgone earnings). Further, they may now reach their annual cap faster (85 days from 1 October 2022, rather than 115 days previously) as a result of paying a higher daily amount.
However, if a resident moves out of age care during the year, for example when they pass away, they may have paid more fees than necessary. This may occur if the relevant financial disclosure form is not completed and the calculated means tested fee would have been less than the cost of care.
For new residents who delay having their means assessed, the maximum means-tested care fee is often charged while waiting for their assessment to be completed. This means the initial cash flow pressure is going to rise for many who may not have the assets or income to meet the additional cost.
It is therefore encouraged that clients complete the required paperwork quickly to avoid delays (assuming they have decided to disclose their financial situation).
You may also be able to help clients when they are completing their form(s). In some cases, if you calculate the client’s expected means-tested care fee, the care provider might accept this as the amount to charge as an interim fee while the assessment is being completed. This may help make your client’s cash flow easier to manage.
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