Aged Care Planning
Aged care is one of the most difficult issues confronting today’s families, but it’s something we all need to prepare for – be it for family, older friends, or ourselves. The financial considerations for aged care services and facilities will be different for everyone. Whether you want to help your parent with the transition, or would like to factor such costs into your own financial plan, you need a financial care adviser who can help to develop a strategy to suit your needs.
It can be difficult to plan, both financially and emotionally, for the move into an aged care facility. When the time comes you may find yourself being confronted with a complex range of questions and decisions. Seeking financial advice from an aged care specialist during this time can ensure that the decisions that you and your family make will be the right decisions, whilst taking into consideration the impact to your financial situation, age pension entitlement and aged care costs. Making the wrong decision could result in a loss of age pension, increased aged care costs and a reduced estate to be passed on to the next generation.
To help you get started iAdvice have broken down the process into some steps that you need to go through.
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To be eligible to enter an aged care facility, it is first necessary for a resident to undergo an assessment of their physical and mental ability by the Aged Care Assessment Team (ACAT). As part of the assessment, an ACAT professional – usually a doctor, nurse, social worker or other health care professional – will come and talk to your parent or relative about how well they’re coping in day to day life and their general health.
This assessment will generally occur once a referral has been received from a general practitioner. Based upon the results of the assessment, ACAT will determine whether the client requires home care or residential aged care.
Once the ACAT assessment has been completed and the required level of care is established, the Department of Human Services (DHS) or Department of Veteran Affairs (DVA) will assess the resident’s ability to pay fees for aged care accommodation and services.
Residents have to provide asset and income information and will need to complete a ‘Permanent residential aged care request for combined assets and income assessment’ form which outlines your current financial position.
The financial assessment will take into account the amount of income and assets that the resident has at the time that they enter aged care accommodation. You must remember that failure to complete the form may result in the client being charged higher fees across the different categories.
Our financial adviser can help you to complete this form. They can also tell you if it is worthwhile to delay completing the form when negotiating the aged care fees upon entry into the aged care facility.
Types of Fees
Another common question regarding the transition to age care is how much do I need to pay? Aged care homes charge a range of fees to cover care, accommodation costs and living expenses. These can vary a lot between facilities and from resident to resident. You may be charged for the care and services provided. The most common indicative charges are as follows:
- Basic daily fee – A contribution toward accommodation and costs of daily living.
- Means tested care fee – A contribution towards the cost of care.
- Accommodation payment or contribution– A contribution towards capital accommodation costs.
- Extra service fees – Where extra services apply to residents occupying extra service places for the provisions of a higher standard of accommodation services and food.
Basic Daily Fee
Residents in aged care can be asked to pay a basic daily fee as a contribution towards accommodation costs and living expenses such as meals and refreshments, cleaning, laundry, heating and cooling. The basic daily fee for all permanent residents who enter an aged care home is 85 per cent of the annual single basic age pension. This is the maximum fee for all residents.
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|Resident contribution at 1 July 2016||
The basic daily fee is indexed on 20 March and 20 September each year in-line with the indexation increases to the age pension.
Means Tested Care Fee
If you are under permanent aged care, you may be asked to pay a means tested care fee in addition to the basic daily fee. Residents with total assessable assets plus income above the maximum accommodation supplement may be asked to pay a means tested care fee. There are annual and lifetime caps that apply to the means tested care fee, as follows:
There are a number of payment options for the accommodation payment. The accommodation payment can be paid as a:
- Lump sum
- Periodic payment
- Combination of lump sum and periodic payment.
At iAdvice we generally recommend you paying at least part of your accommodation via a periodic payment and renting out your former home. It could deliver a better outcome than selling it. The overall benefit may be reduced aged care fees and maximising your age pension entitlement.
Speak to our financial adviser before making any decision on that.
Extra service fees
Some aged care facilities provide extra services which can be offered across the whole facility or to a designated part. Extra service means that the facility will provide the residents with a higher standard of accommodation and/or services.
If you seek for above average services then the higher standard of accommodation and/or services will be paid for in the form of an extra service fee.
Financial Hardship Assistance
Now it’s better if you are aware of the financial hardship assistance. Financial hardship assistance helps you when you have difficulty paying fees and charges for Home Care Packages or an aged care home. Your fees and charges may be reduced or waived according to your individual circumstances. In these circumstances, the Australian Government will pay some or all of your fees and charges on your behalf.
There are some certain circumstances when you become eligible for hardship assistance. Hardship assistance will be granted in circumstances beyond your control, such as difficulties selling your home, and not due to a choice you have made. For Home Care Packages, the value of your assets will be taken into account as part of the assessment process for financial hardship assistance.
Want to know more about Financial Hardship Assistance; click here
We understand that choosing the right aged care option can be a confusing, complex and often an emotional journey. But you don’t have to do it alone. At iAdvice, our financial adviser can be by your side every step of the way. They will explain the unfamiliar terms and financial arrangements you need to consider and assist you through the maze of aged care choices.
Ensuring that you make the right decisions about aged care will depend upon a multitude of factors. Speak to our financial adviser who can help you make the right financial decisions.
Speak to an Expert Financial Advisor
Theo Karoumbalis is director & senior financial advisor at iadvice Melbourne (a privately owned wealth management firm in Melbourne, Victoria). He helps successful individuals manage their wealth effectively. Theo’s graduated in Commercial Law, Commerce, Accounting and Financial Planning, is a best Advisor and have significant direct markets experience.
B.Law, (LLB), B.Comm, (Accounting & Finance)
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