Centrelink collects financial details of care recipients to complete a Residential Aged Care means assessment to work out how much a care recipient pays for their care services. When a care recipient starts care, it is required to enter their details into the online Aged Care Entry Record for ‘means assessment’ data matching.
Income details used to work out the cost of their aged care may include:
- income from work and net rental income
- income support payments from us or DVA
- value of financial investments
- superannuation, overseas pensions and money from outside the Australian Government
- income from income stream products such as annuities and allocated pensions
- family trust distributions or dividends from private company shares
- gifting over the allowable amounts.
The following assets are also included. This includes assets held outside Australia. This could be:
- financial investments
- real estate
- shares
- household contents
- personal effects.
RAD is short for ‘Refundable Accommodation Deposit’, which is a lump sum payment that is refunded once you leave Eldercare. RAD is a Centrelink-exempt asset that can help retain or increase social security entitlements (if any) and reduce the means-tested amount.
While RAD is an assessable aged care asset, no income is assessed for the income test. Paying the RAD means no Daily Accommodation Payment (DAP). For aged care purposes, however, the RAD is assessed as an asset even if it’s paid using borrowed funds. It makes no difference if the money is borrowed from a relative or sourced from a reverse mortgage or is an accommodation bond loan.
The average RAD in Australia is about $470,000 but prices can vary greatly depending on location and facility. The RAD is often an ‘advertised price’ and is negotiated between the resident and the aged care facility.
Not everyone will have to pay a RAD to enter residential aged care, as this payment is means-tested against the assets and income of an individual new resident.
A resident with an annual income over $76,096.50 and more than $193,219.20 in assets will be asked to pay the full RAD for their accommodation. If a resident has an income below $31,504.20 and assets below $57,000, the Australian Government will pay the RAD for their accommodation.
If paying RAD requires the sale of a family home, then this may reduce the age pension, as homes are treated on a concessional treated when assessing the age pension and aged care fees.