How to Get Out of Paying a Nursing Home Bond
The family members of a person who is moving into an elderly care facility frequently have questions about how to avoid paying a bond at a nursing home.
Surprisingly, there are situations in which the payment of a bond is not actually required at all.
A resident who is considered to be of low means is exempt from the requirement that they post a bond.
It can be difficult to determine whether or not a resident will be considered to have low means of support.
Please don't hesitate to call us, as we are usually able to provide you with an answer to that question quite promptly.
In relation to the topic of how to avoid having to pay a bond to a nursing home, I believe it would be helpful if I took a moment to explain what exactly a nursing home bond entails.
Refundable Accommodation Deposit (RAD), also known as a Nursing Home Bond.
A refundable accommodation deposit (RAD) is the new name that has been given to a nursing home bond as of July 1, 2014. This change took effect on July 1, 2014.
A lump sum that is typically in the range of $300,000 to 0,000 is referred to as a RAD.
Unless the resident is considered to be of low means, a residential care facility for the elderly will require it as part of their fee structure.
Even if a resident is not considered to have low financial resources, they still have the option of not paying a bond to a nursing home because it is not mandated by law that they do so.
On the other hand, if it is not paid, the nursing home or assisted living facility is permitted to charge a daily accommodation payment (DAP).
The DAP is calculated using an interest rate that is multiplied by the amount of the RAD that is still outstanding. At the time of this writing, the interest rate is 5. 94%
Example of a Daily Payment for Accommodation
The DAP on an unpaid RAD of $500,000 is $500,000 multiplied by five. 94% of that number is $29,700 per year
The DAP on a $500,000 RAD with a 50% payment is $250,000 times five. 94% of that number is $14,850 per year
The DAP on a RAD that is paid in full and is $500 000 is equal to $0 * 5. 94% equals $0 annually
It is also important to note that the RAD is guaranteed by the government and will be returned to the resident if they move out, or to the resident's estate if they pass away. Both of these outcomes are important to keep in mind.
The Expenses of a Nursing Home Who Pays
This brings us to the very important question of who is responsible for paying for the costs of nursing homes.
A person living in an elderly care facility is the one who is initially responsible for paying their fees.
However, the majority of nursing homes for the elderly will ask a member of the resident's family or the person who has power of attorney to sign a personal guarantee for the aged care fees.
Therefore, in the event that the resident's bank accounts were to become depleted, the senior living facility would require the guarantor to immediately pay the fees.
When a parent moves into an elderly care facility, it is common for only one member of the family to be involved.
It's possible that other members of the family are either preoccupied, not interested, or simply do not want to participate.
Unhappily, the person who is responsible for doing all of the work is typically the one who winds up being required to sign the personal guarantee.
As a result, one of our responsibilities is to safeguard this individual and guarantee that their financial resources are never depleted.
We strongly recommend that the person signing this guarantee does not allow anyone else to put their financial stability in jeopardy by not taking the financial aspects of aged care seriously.
Because in the event that something goes wrong, the guarantor will be responsible for making payments, and other members of the family may argue that it is not their responsibility.
Please seek financial advice from a professional who is qualified, experienced, and licensed in the field of senior care.
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How to Keep From Having to Sell the House to Pay for Elderly Care
Frequently, family members wish to keep the elderly person in their home rather than having to sell it to pay for aged care.
There is no requirement, either from the government or from the aged care home, that a person who is moving into care must sell their home.
There are times when selling the home is the best choice financially, and there are other times when it is not.
Always remember the significance of contrasting the available options and strategies.
In point of fact, as an enduring power of attorney, it is your duty to carry out the aforementioned actions.
Having a carefully structured financial plan to pay for the various fees associated with aged care is the best way to avoid having to sell the home in order to pay for the costs of aged care.
You need to consider whether or not the income from the rental, government support, or other sources will be sufficient to pay the fees, or whether or not there are other financial assets that can be used to pay the RAD.
It is also essential to keep in mind that, according to the regulations that are currently in place, two years after entering an elderly care facility, a previous residence will be considered an asset for the purposes of determining eligibility for benefits from Centrelink and the Department of Veterans Affairs.
This is a point that is frequently overlooked, and the loss of support from Centrelink or the Department of Veterans Affairs can have a significant effect on the affordability of elderly care, which brings us back to the question of who pays for nursing home care.
How to Cut Assets to Save Money on Senior Care
When it comes to paying for senior care, families frequently want to know how to minimize their assets.
Their goal is to reduce the available assets in the hopes that this will result in an increase in the age pension as well as a reduction in the fees associated with elderly care.
It is possible to reduce one's financial assets by taking steps such as purchasing a funeral bond or ensuring that the contents of one's home are valued at their "fire sale" value rather than their "replacement" value.
Nevertheless, the question that I get asked the most frequently is whether or not it is possible to sell the family home or distribute all of mum's money.
This has the potential to be a disastrous financial move.
The transfer of a home or the giving away of mum's assets is not only fraught with danger from a legal perspective, but Centrelink can continue to count the assets for assessment in any case. Centerlink has gifting rules, and in any case, Centrelink can continue to count the assets.
This is unquestionably the place to look for an experienced consultant on elderly care.
Please be aware that while accountants and attorneys may be experts in taxation and trust structures, it is extremely rare for them to understand Centrelink's complicated rules regarding aged care.
Exemption for Elderly Care Provided in the Home
The family home is actually the most effective way to reduce assets for the purpose of paying for elderly care.
If there is a protected person living in the home, then it will be exempt from fees associated with elderly care and also from requirements associated with the age pension.
As long as they are receiving the necessary government benefit, a spouse, a child who is dependent on them, a carer who has been living in the home for more than two years, or a relative who has been living in the home for more than five years can be considered a protected person in the home.
Again, this can be a complicated topic, so it is best to consult an authority.
If you have any questions or concerns about elderly care, please give us a call at the following number: 1300 944 011. You will be connected with an experienced aged care consultant.
I'm hoping that you found this article to be informative.
If you would like to discuss your current predicament and possible solutions, please call me at the number provided in the above sentence. You can reach us here.
Many thanks, Shane
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