1. Aged Care Accommodation
  2. Aged Care - Means Tested Daily Fee

Aged Care - Means Tested Daily Fee

Means Tested Daily Care Fee (MTCF)

Depending on an assessment of your income and assets you may be asked to pay an additional "means-tested care fee". It is a contribution towards your day-to-day care costs such as nursing and personal care. The calculation of the MTCF is complex and we hesitate to provide it within a website entitled "SimplyRetirement", but if you want to understand how the figures are arrived at, there is no substitute for understanding the basis of the calculation.

Your precise contribution is based on the information you provide within an income and assessments that you must complete on entering an aged care home. As mentioned previously, it is a contribution you will not be required to pay if your assets and income fall below certain thresholds and are regarded as a Low Means Resident. The complex calculation means that many individuals and advisors simply rely upon advice from Centrelink. There is also Residential Care Fee Estimator on the Myagedcare website which will provide an estimate of fees payable.

Bear in mind that your contribution level may change, both up and down, if your income and assets change, and consequently you should advise Centrelink if there have been any substantial changes which may impact your assessment.

How is your individual Means Tested Care Fee Calculated?

Your fee is based on a calculation of your "Means Tested Amount" (MTA). The MTA is a function of your income and assets, calculated as follows for a Single Individual entering Aged Care and with thresholds current as at September 20, 2019. These are example calculations only.

50% of your income in excess of the “Income Free Area”
(Currently $27,463.80)

Plus

17.5% of your assets in excess of $49,500 up to $169,079.20 (indexed)

Plus

1% of your assets in excess of $169,079.20 up to $408,237.60 (indexed)

Plus

2% of your assets in excess of $408,237.60 (indexed)

Minus

Maximum Accommodation Supplement Amount (MASA) - currently $57.49 per day

The impact of this test is that the Means Tested Care Fee is payable only once an individual has income/assets beyond certain thresholds - beyond Region "B" in this illustration of how Aged care costs apply.

Briefly, what Income and Assets count when Calculating Aged Care Fees?

  • If you intend to pay a RAD, the amount you pay will count as an asset for aged care fee purposes
  • If you retain your principal residence it will count, up to a capped amount of $169,079.20, as at 20 September 2019, unless it continues to be occupied by a "protected person"
  • The assessable income includes age pension, DVA pensions, foreign pensions, deemed investment income etc and, if you rent your house out, the net rental income.

Example 1

An individual is on the basic single Age pension of $850.40 per fortnight, and has financial assets of $100,000 which are deemed to generate $1,964 per annum of income. What would be their means tested care fee (MTCF)?

 

50% of your income in excess of the “Income Free Area” (Currently $27,463.80) +
Income = full pension + $2,497 per annum
= $22,110.40 + $1,964 = $24,074.40
= Within income free area = 0
17.5% of your assets in excess of $49,500 up to $169,079.20 (indexed) +

17.5% of ($100,000 - $49,500)
= 17.5% x $50,500
= $8,837.50
1% of your assets in excess of $169,079.20 up to $408,23.60 (indexed) +
Nil
2% of your assets in excess of $408,237.60
Nil

= $8,837.50/364 = $24.28 per day minus $57.49 MASA
= negative and therefore No Means Tested Care Fee (MTCF) applies
(but $24.28 per day is payable as an Accommodation Contribution - RAC or DAC)

Example 2

An individual is on the basic single Age pension of $850.40 per fortnight, and has financial assets of $220,000 which are deemed to generate $5,564 per annum of income. What would be their means tested care fee (MTCF)?

 

50% of your income in excess of the “Income free area” (Currently $27,463.80) +

Income = full pension + $6,397 per annum
=$22,110.40 + $5,564 = $27,674.40
= 50% of ($27,674.40 -$27,463.80)
= $210.60

17.5% of your assets in excess of $49,500 up to $169,079.20 (indexed) +
17.5% of ($169,079.20 - $49,500)
= 17.5% x $119,579.20
= $20,926.36
1% of your assets in excess of $168,351.20 up to $406,053.60 (indexed) +

1% of ($220,000 - $169,079.20)
= 1% x $50,920.80
=$509.20
2% of your assets in excess of $406,053.60
Nil
Total =
$21,435.56

= $21,435.56/364 = $58.89 per day minus $57.14 MASA
= A Daily Means Tested Care Fee (MTCF) applies of $1.75 per day
(with the individual to pay a full RAD or DAP)

Annual and Lifetime Caps

There are both annual and lifetime caps applying in relation to the means-tested care fee. Note that any income-tested care fees paid within a Home Care Package also count towards your annual and lifetime caps in residential aged care. The maximum means-tested care fee you can currently, effective September 20, 2019, be asked to pay is:

  • $27, 754.52 annually
  • $66,610.90 over your lifetime

- both of these caps are indexed, and typically increase annually.

Once either cap is reached, you cannot be asked to pay any more means-tested care fees until the next anniversary of the date you first began receiving aged care. The Government (should) notify you when you reach either your annual or lifetime cap.

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