In the continuing series about accommodation bonds, we have myth number 2:
Myth – I will lose a large part of the accommodation bond when I leave the facility.
We are talking about (Commonwealth funded) aged care facilities.
What a facility can deduct from the accommodation bond when the resident leaves, or dies, is strictly controlled by the Aged Care Act. The facility must follow the rules set out in this legislation – the facility has no discretion whatsoever.
The only deduction that can be taken from the bond is what is called the ‘retention amount’. This is a monthly deduction of, at May 2011, $307.50*. This amount is set by the Department of Health and Ageing. The retenton amount can only be taken for a maximum of five years (even if the resident moves to another facility). Accordingly, the maximum deduction for a resident who stays at a facility (or facilities) for five years or more can only be a total amount of $18,450. If the resident leaves after one year, the amount retained will only be 12 times $307.50 – $3,690.
It doesn’t matter whether the bond is for $100,000 or $800,000, the deduction is the same.
Moreover, the retention amount cannot be altered during the period of residency.
The facility is also entitled to all of the interest earned on the bond moneys, and the interest must be applied to very specific and limited purposes, defined in the legislation, which include improving the facility.
Apart from the retention amount and the interest, the facility cannot deduct anything else from the bond.
*a lower retention amount applies to bonds of less than (approximately) $40,000.
© Peter Gauld LL.B.
Peter J. R. Gauld LL.B
Gauld & Co. Elder Law Solicitors
Suite 5, 1st Floor,
838 Glenferrie Road,
Hawthorn, Melbourne, Australia, 3122.
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