Do I need to pay the aged care accommodation cost in full?
In residential aged care you generally have the choice to pay the accommodation cost as a lump sum payment, a daily payment or a combination of the two.
Where the choice is to pay the accommodation amount as a daily payment an interest rate, referred to as the maximum permissible interest rate (MPIR), is used to convert it from a lump sum payment amount to a daily one.
For the period from 1 October 2022 to 31 December 2022 that interest rate is 6.31% p.a. From 1 January 2023 that interest rate is expected to rise to 7.06% p.a. which means the daily payment will be more expensive.
If you are already in care, any interest rate changes don’t generally affect your daily payment amount as the interest rate is set at the date you entered care. But if you are looking to move rooms, change facilities that change of interest rate can affect the daily accommodation payment you are required to pay.
It’s important the choice of how to pay the accommodation cost is not based the interest rate alone. You will also need to consider any personal objectives, liquidity, taxation, estate planning and impact on age pension entitlements as well as means-tested care fees.
Interestingly, if you are assessed by the Services Australia as low-means resident when you enter permanent care the rules are quite different, and the higher interest rate doesn’t impact your daily accommodation contribution but it can make the lump sum option relatively cheaper.
Seeking specialist aged care advice can provide you will a detailed and personalised analysis on your options so you can make better and more informed decisions.
How to find some help
To find out how we help families make informed choices at each stage of their care journey and achieve their preferred outcome at a very emotional and stressful time please contact us to find out more.
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