I am trying to wrap my head around accommodation contributions. If mum entered a nursing home with a Refundable accommodation payment of $300,000 but her assets were assessed at $247,500.00, she can be asked to pay a refundable accommodation contribution of $200,000. If she was to pay this amount can she be asked to pay a daily accommodation payment (DAC)?
Hi ScudamoreK
The accommodation contributions can be confusing.
There are two main options to pay the accommodation costs or a third option which is a combination of the first two. If the accommodation asking price is $300,000 then you can pay that in one of three ways. How you pay it is entirely your choice not the nursing homes preference.
1.) You can pay the entire $300,000 up front which is called a RAD (Refundable Accommodation Deposit)
2.) You decide not to pay the $300,000 up front, but instead convert that to a daily fee which is called a DAP (Daily Accommodation Payment)
3.) You can decide that you will pay some up front (as a RAD) and then the remaining part as a daily fee (a DAP), so of the $300,000 you can pay $200,000 up front, then pay a daily fee on the remaining $100,000.
Making sure you have enough money for other expenses, we believe it always works out in your best interest to pay as much up front in a RAD as is comfortable. That is because whenffectively pay interest at the governments Maximum Permissible Interest Rate. Also when you pay a RAD, that amount is returned once the person leaves the nursing home. There are strict rules about this refund to ensure it happens and the RADs are backed by the government. Any money you pay as a DAP you do not receive back so that money is spent.
You can read more about this, including some more examples, on our website here:
https://www.agedcare101.com.au/aged-care/working-out-your-finances/doing-the-sums
The finances around aged care are complex and it is a good idea to speak to a financial adviser who specialises in Aged Care to get tailored advice. Whilst it may seem like an added cost, they could provide advice that in the long term will help you make the best financial decisions.
We hope this helps.