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. 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:
- Charge the maximum of $400.08 per day
- Set the fee at a lower amount, based on an average paid by their residents, or
- Use a calculator to estimate what you might be asked to pay and charge somewhere around that amount.
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:
- Ask your care provider for their policy so you know what to expect
- Fill in your means-test assessment forms as quickly as possible to minimise assessment delays by Services Australia. If you receive a payment from Centrelink or Veterans’ Affairs, check all your details are correct and up-to-date.
- Make sure you have left enough money in your bank account to cover these fees.
If you are making the move into residential care (or helping a family member), we can provide independent financial 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 independent financial 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.
Phone our office on 1300 451 339 to make an appointment to discuss your situation and find out how we can help.
IMPORTANT INFORMATION: This document has been prepared by Periapt Advisory Pty Ltd, ABN 67 648 208 253 AFSL 542418, 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 any particular individual’s objectives, financial situation, or needs. Before making any decisions, we recommend you consider independent financial advice. Current at 25 March 2024.
