RAD payment - effect on means test amounts

If my elderly parents (both on full aged pension) pay a combined RAD of $700,000 after selling their home, and are left with approx. $50,000 in savings, can the means test re daily payments totally exhaust their savings ? are their savings protected in any way from the means test, or is there a protected minimum limit on their savings?? I believe the RAD amount (in this case $700,000) is included in the scope of the means test ?
Can you advise re this scenario.
Thank you, Paul.

Hi Nellie,
Everyone who goes into respite care pays the daily fee only which is currently $51.63 (as of 20 September 2019). The other prerequisite is an ACAT assessment. There is no Income and Assets assessment required for respite as the main reason for respite care is to give carer’s “respite” and is often needed at short notice. Everyone is entitled to 63 days respite.

Hi Jill,Are these rules the same for anyone going into respite car

Thank you Jill, you have confirmed my thoughts. I do have an aged care financial adviser to rely on, once the initial assessments are completed.Regards, P

Hi Paul,

The government stipulates that a person must be left with a minimum amount of assets if they pay at least part of their accommodation costs by refundable deposit (RAD). That minimum amount is currently $49,500 (as of 20 September 2019).

Yes the RAD is included in the means test assessment but is exempt for pension purposes. As Nellie has said the full value of the house if you sell it is included in the assets assessment but not if you keep it. Instead the value of the family home will be capped at $169,079.20 (as at 20 September 2019) or the net market value of the house if it is lower. Where the former family home is included as an asset and the aged care resident is part of a couple, each member of the couple is seen as equally owning half of the net market value of the home. The cap is applied to each half. The former home is exempt for age pension calculations for 2 years from the date your parent entered care or 2 years from when the second parent vacated the residence.

If you decide to rent out the family home the rental payments will be included in the assets assessment. As Nellie has already suggested we always recommend that people seek specialised aged care financial advice. It can save time and more importantly money and help set your parents up for the best financial outcome going forward.

Regards Jill

Hi Paul,It might be best to see a financial advisor and ask them if it would be better for everyone concerned to hang on to the house for now. I’m not a hundred percent sure but I think that the $700000 would be included in the asset test if you sell, where as if you keep the house only the capped rate would be counted in. I think is around $169000. So it’s probably worth seeing somebody about that. Its all a bit of a mine field as far as I’m concerned.