Insight into the Aged Care Reforms Linda Murray

1. Insight into the Aged Care Reforms Linda Murray

2. Insight into the Aged Care Reforms • Agenda • New Terminology • Implications for couples • Trigger Figures • Over payment and underpayments • Supported / Assisted Financial Rules • Sales Ideas • Policies and Procedures • Prudential Requirements

3. Insight into the Aged Care Reforms What is the new Terminology?

4. Insight into the Aged Care Reforms What are the Payment Options?

5. Insight into the Aged Care Reforms Your Price is Your Price

6. Insight into the Aged Care Reforms New Financial Opportunity with residents that have reduced assets You are allowed to charge a RAD greater than their assets “Your Price is Your Price” Other than “Supported residents” you can ask everyone to pay your nominated RAD price

7. Insight into the Aged Care Reforms • RAD Required $400,000

8. Insight into the Aged Care Reforms • Important Information when • talking with families • If the family decides to deduct their DAP from their RAD you are allowed to charge compound interest; subsequently their DAP will increase monthly. • Let families know this or they may object once they see the RAD balance declining and the DAP value increasing! • I recommend you provide an information sheet

9. Insight into the Aged Care Reforms • What is your preferred level of “not fully refundable”, Refundable Accommodation Deposit?

10. Insight into the Aged Care Reforms • What about a higher “not fully refundable”, • Refundable Accommodation Deposit?

11. Insight into the Aged Care Reforms • How will you manage your bad debt risk? • Be clear on your policy regarding low RAD’s and high DAP’s that are to be deducted from the RAD. • There are risks if the RAD paid is low and the resident outlives the deposit. • Remember 95% of families will do the right thing! • MPIR from the 1st of July 2014 is 6.69% (Currently 6.63%)

12. Insight into the Aged Care Reforms • What about couples? The rule still applies whereby only ½ the asset less $45,000 (each) can be used towards a RAD deposit. They can pay any additional RAD via a DAP so it does not limit their ability to pay your price. • In the event of overpayment you may be asked to repay the balance along with MIR penalty interest.

13. Insight into the Aged Care Reforms • Let’s Move In Together! • Consider moving them in on the same day

14. Insight into the Aged Care Reforms Means Tested Care Fee Trigger Figures

15. Minimum Means Tested Care Fee

16. Minimum Means Tested Care Fee

17. Insight into the Aged Care Reforms What happens if it’s time to move! .

18. Insight into the Aged Care Reforms It’s time to move by choice If a resident wants to move from their room priced at $300,000 to a room with a published price of $400,000 you are allowed to charge them a higher RAD or DAP from the “Price Agreement date” Ref: Exposure draft fees and payment principles 26th May 2014

19. Insight into the Aged Care Reforms It’s time for an involuntary Move • The move is necessary on genuine medical grounds OR • The room becomes an Extra Service place and the resident does not wish to pay the Extra Service Fee OR • The room is being repaired or redeveloped • Ref: Exposure draft fees and payment principles 26th May 2014

20. Insight into the Aged Care Reforms It’s time for an involuntary Move • If the moves is for less than 28 days there is no change to their fees and charges • If the move is for longer than 28 days then there is no additional charge even if the new room has a higher published RAD price • If the resident moves to a lower price you must only charge them the lower RAD and you must refund the difference. Failure to do so will incur MIR on the overpayment. • Ref: Exposure draft fees and payment principles 26th May 2014

21. Insight into the Aged Care Reforms Supported and Partially Supported Residents

22. Insight into the Aged Care Reforms Let’s Talk about RAC’s and DAC’s • The Terminology used to explain the financial contribution required if you are a supported resident is • Refundable Accommodation Contribution – (RAC) • A lump sum payment for accommodation, just like a RAD • Daily accommodation Contribution - (DAC) • A contribution made on a regular basis, similar to a DAP

23. Insight into the Aged Care Reforms Supported Residents • Residents with assets between $45,000 and $154,179 and income above $24,731 may be certified as “Supported Residents” • Asset Current cut off prior to July is $116,136 • You will continue to receive government funding for these residents

24. Insight into the Aged Care Reforms There are four types of RAC & DAC thresholds Refurbished > 40% = $52.49 Refurbished < 40% = $39.75 Not Refurbished > 40%= $34.20 Not Refurbished < 40% = $25.65

26. Insight into the Aged Care Reforms Are You a Supported Resident?

27. Case Study One - Fred Part One – The DAC Calculation Fred has assets in the bank of $140,000 and an age pension. What will he be asked to pay?

28. Case Study One - Fred Part Two – The RAC Calculation Fred now wants to know if he can pay part of his DAC as a lump sum (RAC). You now need to covert the DAC to a RAC

29. Case Study Two - Jane Part One – The DAC Calculation Jane has bank assets of $100,000 and an age pension and an overseas pension of $100 per week. What will she be asked to pay?

30. Case Study Two – Jane Part Two – The RAC Calculation Jane now wants to know if she can pay part of her DAC as a lump sum (RAC). You now need to covert the DAC to a RAC

31. Insight into the Aged Care Reforms • What’s your RAC and DAC policy? • Consider sending residents (or E.P.A) to the Centrelink Office and • request a copy of their income and assets across the counter to show to you • Plus a “Stat Dec” confirming financial position • Assist them to complete the Centrelink “Income and Asset” • form as a matter of urgency • Problem! • If you overcharge the resident you will be asked to refund the • overpayment plus MIR

32. Insight into the Aged Care Reforms Selling Ideas .

33. Insight into the Aged Care Reforms • There are three fees that consumers may be asked to pay 1. A contribution towards their accommodation (Physical building including their bedroom) via a RAD or a DAP. 2. A contribution towards the cost of their laundry, electricity and meals. This is funded via the Daily Care Fee. 3. A contribution to cover the “cost of their care” via the Means Tested Care Fee.

34. Insight into the Aged Care Reforms • Government Contribution to Care “Are you aware that the government can fund up to $67,000 a year for someone with failing health within aged care?” “The government will assess your mum’s position and she may be asked to contribute something towards her care. The most she can ever be asked to pay in one year is $25,000 and as you can see the government, dependant upon mum’s health, pays significantly more than this.

35. Insight into the Aged Care Reforms • Qualifying Strategies Does Mum live in the local area? Does she live alone in her own home? Does she receive any age pension? What is this information telling us?

36. Insight into the Aged Care Reforms • Information sheets • Offer information sheets on the following topics: • Property Rules • Means Tested Care Fee rules • RAD & DAP explanation • Payment Option Examples • RAC & DAC • Ask a family to initial your checklist confirming you have provided them with the appropriate information sheets

37. Insight into the Aged Care Reforms Policies and Procedures .

38. Insight into the Aged Care Reforms Your policies • Have developed clear policies for your staff: • RAD & DAP Policy • Self Funded Retirees RAD Policy • Admitting Supported Clients • Means Tested Care Fee explanation • Who do staff refer to if questioning it outside of their scope or becomes difficult. • Are you accounts department trained to take calls?

39. Insight into the Aged Care Reforms Mandatory Prudential Content .

40. Insight into the Aged Care Reforms • Mandatory Prudential Content • From new Fees and Payment Principles 2014 (No.2) (Cth) • A statement informing the person that if they request, you will provide the following information relating to the previous financial year to them within 7 days: • a summary of how you use RADs and Accommodation Bonds; • information about whether you have complied with the Prudential Standards and any other rules about the use of RADs and Accommodation Bonds; • information about the number (if any) of RADs, Accommodation Bonds or Entry Contributions that were not refunded as per the Act’s time frames; • if you have invested in financial products, information about objectives and asset classes you may invest in.

41. Insight into the Aged Care Reforms • Mandatory Prudential Content (Cont) • . • AND • an audit opinion copy; and • a copy of either - the Service’s most recent statement of audited accounts; OR your most recent statement of audited accounts if you operate more than one Service. • If the person is paying by a RAD you must also provide them with a copy of their entry in the RAD register.

42. Insight into the Aged Care Reforms • Remember we are • all in this together

43. Insight into the Aged Care Reforms • “Things work out for those who make the best of how things work out.” • John Wooden