This can benefit people who:

  • are low means residents and can afford to pay a lump sum RAC

Potential Benefits:

  • 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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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.