Can family pay bond rather than selling house?

Hi there,
Wondering what happens if a family member decidesto get a loan to fund RAD or DAP for a parent going into aged care, rather selling the family home? Does that somehow get factored into assets and means test? Do you have to rent out home as well? Are you able to let another family member stay there rent free or does family home have to be rented out?

Hi pauly mac,
From your post it would appear that the $160 per day would include the daily fee which everyone is expected to pay and is calculated at 85% of the single age pension (this is indexed every March and September in line with the pension). Currently it is $51.63/day. Plus the DAP which is calculated by multiplying the determined RAD by the current government interest rate and divided by 365 (days of the year).If your mother decides to pay the RAD which pays for her accommodation she will still have to pay the basic daily fee. However if she chooses to pay the RAD, whilst it is exempt from the calculation of the pension it is assessable for the aged care means tested fee.

Hi, my mum is in transit and will be going into a nursing hom, she has a unit valued at 290,000 and $20,000 assets. We have decided not to sell and that I will go and live there and pay for her daily accomodation fee. We have done a asset and means test, and it came out that she will pay the daily fee with her pension, her Means test came back that she didn’t have to pay anything and that she would have to pay for her daily accomodation in full. We have decided to go dap as we don’t have a rad to question is we foynd a nursing home and was told that it was a total of 160 a day, at the end of the day how much would we paying? Would it be the daiply fee, and dap?and if we give a full rad would she still pay a daily accomodation fee or would it be just the daily fee? Ty

The wonderful Robert Craven from Affinity Aged Care has come back with the below advice.
A loan from a family member to pay the Daily Accommodation Payment (DAP) no impact on aged care fees or the residents pension entitlements. A loan from a family member to fund the Refundable Accommodation Deposit (RAD) will reduce or eliminate the cost of the DAP currently calculated by multiplying the RAD by 5.7%. However, it will result in an increase in the residents means tested care fee because Centrelink include the RAD as an assessable asset when calculating this fee. The loan from the family member is not included as an offset in the calculation. Any lump sum RAD becomes the property of the resident and must eventually be returned to the residents estate. It is therefore strongly recommended that any loan from a family member be formalised in a loan agreement; preferably prepared by a qualified legal practitioner.

If the home is retains assessed at a caped value (currently $162,815.20) when calculating the means tested care fee but is excluded from the age pension assets test for 2 years. On the 2nd anniversary of the residents move to permanent residential care, the market value of the home becomes assessable for the age pension asset test, normally resulting the cancellation of the pension at this time.
If a person moves to an aged care facility after 01 January 2017, the net rental income is included in the income test for both the means tested care fee and the age pension. Thus, retaining and renting the home, often results in an increase in the means tested care fee and a reduction the residents pension. This does not necessarily mean that retaining the home is a bad option. Allowing a family member to live there rent-free is certainly one option. It is a complex area and if you are considering retaining the home, it would be well worth your while discussing the implications with a specialist helps,
the agedcare101 team

You can pay and keep home and Centrelink will not be affected for 2 years from day you enter into the contract arrangement/move in to age care. BUT…the aged care facility will count the loan of the RAD as another asset your parent has and will charge a daily fee say RAD is 300K then about 12 dollars a day? just guessing the amount there. You do not have to rent home from centrelinks point of view ever or sell it, after 2 years all assets count and your parent will face higher costs on the means based fee (Which is capped and paid over max of 3 years)Rent is counted differently since Jan 1 this year and I am unsure. Best thing to do and its free is visit Centrelink site arrange a consult with the Financial person (Free advice) they spell it all out and do some calculations for you then print them off and give them to you. They also put forward other scenarios you may have not thought of. Before you visit have a goal in mind eg “I want to keep the house can you help me wotrk out the costs I may face” I did this and it was better than the 2K I paid for financial advice which gave me several options which half of them were what centrelink also suggested I do.So I am payi ng the RAD for my full pensioner mother, her pension goes to the home (85% plus the rest to cover the RAD as a asset) then I kick in a little each way for meds and expenses. In 2 years time I will have to cough up more as House is not capped at 162K or whatever the figure is and will be reassessed as 1.1M I stay in the home and pay"rent" as such but it works out to be like rent. You also have to factor in your losses on the money not being invested for your RAD loan and if you sold home and invested the left over of that money vs losing pension etc and you paying her bills. This is where you can pay (I wouldn’t) a financial advisor to come up with all the permutations. Or use a PC and a spreadsheet :slight_smile: