Blog #05 Fact #04 What is a Refundable Accommodation Contribution (RAC)?
Blog #05 FACT #04 What is a RAC?
· Short name term for a ‘Refundable Accommodation Contribution”
· What is it? – An amount of money that someone can pay as a lump sum to an aged care facility to reduce their Daily Accommodation Payment (DAC- described in previous blog)
· How does someone find out they will have to pay a Refundable Accommodation Contribution (RAC)? – They do not. It is an option available to a care resident who may wish to reduce their daily accommodation payment
· How is a Refundable Accommodation Contribution (RAC) calculated?
· The formula is: RAC = DAC x 365/MPIR
· What does MPIR mean?
· Maximum Permissible Interest Rate
· What is the rate? 8.38% (from 1/10/24-31/12/24)
Does a resident have to pay a Refundable Accommodation Payment? No, it is optional
· If a resident paid a lump sum as a Refundable Accommodation Contribution, when is it returned? – Normally when a person leaves the facility or passes away
· When a person passes away – how long till the Refundable Accommodation Contribution is paid to their estate? – Normally after probate and this may take 12 months or longer in some cases
·Does a person receive the whole amount amount back or are there exit fees? – Normally the full amount is paid, however, if the resident had authorised other deductions – this would be subtracted from the lump sum to be returned
· Does a person receive interest on any Refundable Accommodation Contribution paid to an aged care facility? No
· Is it possible to receive capital gains on a Refundable Accommodation Contribution paid to an aged care facility? No
· If the aged care facility went into liquidation- are there any guarantees that a person will receive their Refundable Accommodation Contribution back? Yes – currently (as of October 2024) there is a government guarantee to have funds returned
Is it possible not to have pay a Refundable Accommodation Contribution at all ?