This can benefit people who:
- are low means residents and can afford to pay a lump sum RAC
- Paying a RAC saves the person paying a Daily Accommodation Contribution (DAC). The saving is equivalent to the amount of the RAC multiplied by the government interest rate (currently 5.96%pa)
- People can choose to drawdown DAC from RAC
- Amounts invested in a RAC are exempt under income and assets tests for social security purposes
- Amounts invested in a RAC are an assessable asset for the aged care means test assessment however they are not deemed
Things to be aware of:
- RACs are government guaranteed in the event the aged care facility becomes bankrupt
- Once a RAC is paid the aged care facility does not have to refund the RAC until the person leaves the aged care facility
- Costs involved in selling existing investments to pay the RAC
- Consider a person’s estate planning wishes as RAC is returned to the estate of the person upon their passing
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