SMSF trustees warned on new reforms
The aged care reforms coming into play on 1 July 2014 will see retirees, including SMSF trustees, paying more for admission and subsequent ongoing care in aged care facilities, Equity Trustees has warned.
If moving to an aged care facility is likely to occur in the next six to 12 months, it may make sense for retirees to consider making the move before June 30, said Ann Lawton, senior manager of aged care services at Equity Trustees.
“The cost of aged care will increase, particularly for part pensioners and self-funded retirees,” she said.
How much retirees will pay will depend on their asset and income level, whether they remain homeowners once in care, and how much they pay for the cost of accommodation, Equity Trustees stated.
The current system of accommodation bonds will be replaced by refundable accommodation deposits (RAD) and period payments will be replaced by daily accommodation payments (DAPs).
“Providers will be obliged to start advertising their prices from 19 May 2014, and until this time there is no certainty about how much a provider will charge those entering care after June 30. However, the expectation is it will cost more,” Ms Lawton said.
“The maximum accommodation payment that can be charged by a facility will be $550,000. Those aged care providers wanting to charge a higher amount will need to apply for permission to do so, and will need to provide justification for the higher price.”
Ms Lawton also said the “biggest change” is that a resident’s co-contribution will be assessed based on both assets and income rather than the current system of income only.
“No one situation will be simple anymore. It is entirely possible that two aged care residents will face a different financial outcome, despite having essentially the same level of assets,” she said.
Ms Lawton also noted trustees of an SMSF will need to generate Centrelink schedules to provide correct information to Centrelink for accurate age care fee calculations and age pension payments, where applicable.