How one family fought the government on aged care fees and won
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If her children lent her $305,000 the basic daily fee of $48 would be unchanged, there would be no interest, but her means-tested care fee would increase to about $12 a day or $4380 a year. While her costs reduce to $60 a day, she is still being penalised $11 a day because money lent to her is being treated by the government as if it were her asset.
The situation is ludicrous and is caused by the government's inability to get Centrelink and the aged care authorities on the same page.
The issue appears to be created by the fact that the RAD is an exempt asset for Centrelink purposes, and Centrelink performs the means testing arrangements for aged care. In Centrelink's view of the world you cannot have a debt offset an exempt asset (remember the RAD is exempt for pension purposes).
Lane says one family, the Whitbys, successfully argued before the Australian Administrative Tribunal that the money they loaned to their mother should be disregarded as an asset. It was a long process, with several appeals. Yet despite the ruling, the government attitude remains unchanged.
Martin Checketts, of Mills Oakley Lawyers, agrees that families should take steps to argue that the Whitby precedent applies, and ensure asset protection. "It is amazing how many families enter into loan arrangements without proper documentation," Checketts said. "This can create two issues: it can increase care costs because the principles in Whitby don't apply, and they can struggle to demonstrate that the loan is a liability of the estate which must be repaid before the other assets are divided."
So remember to put things in writing, and get good advice on the current system when a family member moves into care. That is a much better strategy than waiting for Centrelink and the aged care authorities to play nicely together.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noel@noelwhittaker.com.au