All of us have been noticing how much inflation is impacting our lives.
Whether it be mortgage or rent payments, fuel, electricity, or groceries, we are all paying more for pretty much everything.
Aged care is no exception, with another aged care fee increase coming.
Basic Daily Fees in aged care are reviewed by the government twice a year, in March and September. These fees are aligned with the pension rates and are fixed at 85% of the base rate (i.e. without supplementary payments) of a full single pension. The full single pension is to increase to $1,064 per fortnight (base rate $971.50). This will see the Basic Daily Fee increase from its present $56.87 per day to $58.98 per day.
A second and more significant increase will occur from 1 April 2023 when the next changes in the Maximum Permitted Interest Rate (MPIR) take effect. These rates are reviewed every quarter. A resident entering aged care with assets of more than $193,219 are non-supported and will be required to pay a Refundable Accommodation Deposit (RAD). In Western Australia, these can range from as little as $180,000 for a shared room in an older facility to $1.8 million for a suite in a new facility with unobstructed ocean views.
Most of our clients seem to be in a space where they don’t have sufficient capital to pay the full RAD and can only pay part of the RAD. They then pay the balance by way of the Daily Accommodation Payment (DAP).
The DAP is calculated using the below formula:
[Balance of RAD outstanding] X MPIR ÷ 365.
The MPIR will rise on 1 April 2023 from its present 7.06% per annum to 7.46 % per annum.
This is a significant aged care fee increase particularly since the MPIR was 4.07 % as recently as June 2022 an increase of 83% in the space of only 9 months.
In practical terms it means that someone paying a full RAD of $550,000 – the most charged RAD – by way of a DAP would be paying $112,41 per day or $41,030 per year, or, $60.08 a day or $21,930 per year, more than they would have paid in June 2022.
With most economists predicting further interest rate rises in the short to medium term it means that the MPIR is likely to rise as well.
The only saving grace for this aged care fee increase is that the MPIR applicable at the time of entry into the facility applies for the duration of the resident’s stay, meaning that residents already in a facility will not have to find the additional funds.
We can assist you and your loved ones with Retirement Living.
Contact us or call Lewis on 0408 093 298
To stay up to date with Aged Care News you can also visit Aged Care Quality
