How do aged care bonds work

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No personal details are displayed in reviews. Your privacy and anonimity is guaranteed. Already a member? Refer a friend or relative Thank you for submitting a review. You have added to the public voice bringing transparency to the aged care industry. The louder the voice, the more it will be heard. In regard to how not to pay a bond to a nursing home, I think it best if I briefly explain what a nursing home bond is.

An aged care home will request it as part of their fee structure unless the resident is a low means resident. Even for a resident not assessed as low-means, it is also possible not to pay a bond to a nursing home, as there is no legal requirement to do so. However; if it is not paid, the aged care home is allowed to charge a daily accommodation payment DAP.

The interest rate at time of writing is 5. Which brings us to the very important question of nursing home costs and who pays? However, most aged care homes will ask a family member or enduring power of attorney to sign a personal guarantee for the aged care fees.

Unfortunately, the one that does all the work, is usually the one that ends up having to sign the personal guarantee. We strongly advise that the person signing this guarantee do not let anyone else jeopardise their financial security, by not taking aged care finances seriously.

Because when things go wrong, the guarantor will be required to pay, and other family members may say it is not their problem. Please seek professional, experienced and licenced aged care financial advice. There is no government or aged care home requirement that a person entering care must sell the home.

The DAP is calculated by multiplying the determined RAD by the current government interest rate and divided by the number of days in a year. From the day of entering their care, the new resident has 28 days to work out whether they want to pay the facility a lump sum, daily payment or some combination of the two. The amount to be paid is calculated by multiplying the lump sum the resident would have paid if they had not elected to pay by periodic payment the lump sum equivalent by the interest rate set out in the accommodation bond agreement it must be no more than the minimum permissible interest rate , adding the retention component set out in the accommodation agreement, and dividing the total by the number of periodic payments in the relevant year: s The minimum permissible interest rate for residents entering care in the first quarter of was 8.

Where the accommodation bond is paid by periodic payments, the resident must agree with the approved provider about the frequency of periodic payments, but they cannot be more than weekly: s When an older person or their relative seeks advice about the accommodation bond, they will usually be thinking primarily about the amount that has to be paid. But practitioners should make sure they also explain the process for refunding the bond, including the amounts that can be kept by the provider and the timing of the refund.

In addition, they should make sure that they obtain information under disclosure obligations about bonds held by the provider and prudential requirements. The ACA regulates refunds of accommodation bonds, including the amounts that can be deducted from the bond and when the amount to be refunded must be paid: ssF and G ACA. Interest cannot be charged for any period that the resident is receiving respite care or any period where there is a financial hardship determination: ss These are amounts that can be deducted from the accommodation bond on a periodic basis.

These amounts are regulated by the ACA and URP, which limit the maximum retention amount based on the amount of the bond: s This amount changes with CPI. The retention amount is deducted for every month or part of a month while the resident is provided with care: s The maximum is five years s If the resident is in an aged care home for two months or less, the retention amount is based on the entire month when the resident entered the home, plus the next two months: s The five-year period starts when the resident enters care; when the aged care home becomes certified; when a financial hardship determination if any ends; or when the resident transfers from respite care to permanent accommodation: s Retention amounts must not be deducted from the bond where certification of the home is suspended or a financial hardship determination has been made: s The provider can also claim amounts owed under the various agreements with the resident, such as accommodation bond agreement, resident agreement or extra service agreement.

A provider may also be able to claim interest on these amounts, depending on the terms of the agreement. Any interest charged is regulated by s If a resident dies, the refund must be paid within 14 days after the day that the provider is shown a grant of probate or letters of administration: s If the resident moves to another aged care home, the date for the refund depends on when notice is given:.

For other situations, such as where the resident moves to the home of a carer, the refund must be paid within 14 days after the resident stops receiving care: s Interest on the bond for the period between departure and payment must be paid to the resident. The interest rate is set by the federal government. A higher interest rate applies if the refund is paid outside the limits set by the legislation: s The ACA allows a refund to be paid by the federal government if the provider becomes bankrupt or insolvent.

The government must first give a notice to the resident and provider: ss12—14 Aged Care Bond Security Act Any rights that the resident has to the refund are then transferred to the Commonwealth s15 and payments must then be made within 14 days after the notice is given: s A levy may be imposed on a provider by the government in relation to refund and administrative costs associated with the repayment of the accommodation bond balance to a resident: Aged Care Bond Security Levy Act