Mum or dad are fine one day, then suddenly they’re in hospital and your local ACAT (aged care assessment team) are saying they need permanent residential care in a hostel or nursing home.
It can be quite a shock. Especially when you’re confronted with the costs. One of the first questions many families ask when an elderly relative is assessed is: what is an accommodation bond & how do you pay for aged care?
Here are the main points you need to know:
– An accommodation bond is an upfront cost that is payable to the aged care facility in many, but not ALL cases for the actual accommodation of the resident. It is essentially a loan to the care facility that the hostel or nursing home can then ‘re-invest’ to derive income for assistance with their maintenance of the aged care home.
– There is no ‘typical’ or standard accommodation bond cost; it is determined by the assets of the resident, the supply & demand for beds in each care facility & the socio-economic profile of the resident’s suburb.
– Bonds can be as little as $200,000 in areas such as Penrith or Liverpool in the Western Suburbs but can range right up to $1.5 million for exclusive extra care aged care in blue-ribbon areas of Sydney such as Mosman and the North Shore or Double Bay and the Eastern Suburbs.
– The current ‘average’ accommodation bond cost in Sydney is $350,000 to $500,000.
– When the resident passes away the bond is refunded back to their estate within 14 days, less the retention amount.
– The retention amount applicable depends on how long the resident is in care, but is currently capped at $3,972 per annum with a maximum of $19,860 after 5 years.
– An accommodation bond is payable for low care & extra services high care, but NOT for standard high care.
– The bond can be paid as a lump sum, periodic payment (regular monthly payments) or a combination of both.
– Most aged care facilities prefer a large component of the bond to be paid as lump sum.
– Lump sum accommodation bonds can be paid from cash savings, selling the family home or by raising a reverse mortgage loan against the property.
– The accommodation bond will not be the ONLY aged care cost. The resident may also be required to pay a ‘daily care fee’ & an ‘income tested fee’.
– Accommodation bonds are due to be payable on ALL types of aged care from July 1st 2014, under the Living Longer, Living Better reforms.
And finally the most important point about aged care accommodation bonds….Seek financial advice on the best way to pay.
As you can see it is VERY complex, and there are both threats & opportunities for families with regard to taxes, pension entitlements, incomes & assets. For more detail on accommodation bonds and aged care costs & fees please download our FREE Guide.
Feel free to chat to us anytime for help.
Regards, Phil
