Ask a planner: How do the annual and lifetime caps on ongoing aged care fees apply?

With the number of people entering aged care on the rise, this is a common one that comes across our desks. For clients in receipt of a home care package or in permanent residential aged care, an income-tested or means-tested care fee may be payable. These fees are reviewed on a quarterly basis and are subject to annual and lifetime caps. The annual cap is applied on an anniversary year basis (‘year’).

Annual caps

Home care recipients can be asked to pay an income-tested fee which varies depending on their level of assessable income for aged care purposes. The annual cap on the income-tested fee varies accordingly:

  • annual cap of $5,313 per year applies where assessable income is between $26,328 and $50,877; and
  • annual cap of $10,627 per year applies where assessable income is above $50,877.

Importantly, the annual cap for home care recipients is apportioned daily over a year.

Permanent residential aged care residents can be asked to pay a means-tested care fee which varies depending on their level of assessable assets and income for aged care purposes.

Unlike home care, the current annual cap of $26,566.54 that applies for residential aged care is not apportioned. Instead, permanent residential aged care residents may reach the annual cap part way through a year depending on the daily rate of their means-tested care fee. Once the annual cap is met residents cannot be asked to pay means-tested care fees until the next year.

Where clients transition from home care to residential care part way through a year, any income-tested fee paid by home care recipients will count towards the means-tested care fee annual cap.

Lifetime caps

A shared lifetime cap applies to care recipients of both home care and permanent residential care in an aged care home. Currently $63,760, both income-tested and means-tested care fees paid by a care recipient count towards the cap. Once the lifetime cap is reached, they cannot be asked to pay additional income-tested or means-tested care fees in future.

Indexation of caps

The annual and lifetime caps are indexed each March and September. The applicable cap for a care recipient is applied when the total income-tested care fees and/or means-tested care fees they have paid for the period reaches either cap prior to the next indexation date. If the client does not reach the applicable cap prior to indexation, the new indexed amount will apply going forward.

 

How can we help?
If you have any queries, require assistance or would like to clarify any particular details relating to the above then please feel free to give us a call to arrange a time to meet so that we can discuss your particular circumstances.

 

Post contributor:

Pete Pennicott
Financial Planner @ Pekada

Disclaimer: The information provided on this website is general in nature and does not constitute advice. You need to consider with your financial situation and your particular needs prior to making any strategy or products decision. Pekada will endeavour to update the website as needed. However, information can change without notice and Pekada does not guarantee the accuracy of information on the website, including information provided by third parties, at any particular time Unless otherwise specified, copyright or information provided on this website is owned by Charter Financial Planning. You may not alter or modify this information in any way, including the removal of this copyright notice.

The Trustee for Pekada Unit Trust (ABN 32 736 044 776), corporate authorised representative (CAR), number 443518 trading as Pekada and The Trustee for Pekada Group Trust (ABN 53 194 543 746) corporate authorised representative (CAR), number 235514 trading as Pekada are authorised to provide financial services on behalf of Charter Financial Planning Limited (Charter Financial Planning). AFSL Number 234665

The information provided on this website is general in nature and does not constitute advice. You need to consider with your financial situation and your particular needs prior to making any strategy or products decision. Pekada will endeavour to update the website as needed. However, information can change without notice and Pekada does not guarantee the accuracy of information on the website, including information provided by third parties, at any particular time Unless otherwise specified, copyright or information provided on this website is owned by Charter Financial Planning. You may not alter or modify this information in any way, including the removal of this copyright notice.