Moving a loved one into aged care can be a stressful time. You want to find for the best facility to place their loved one into, but typically you have very little time to make a decision and understand the complex residential aged care system which can be expensive.
Aged care homes (also known as nursing homes) help people who can no longer live at home meet their everyday tasks like cleaning, cooking, personal care, and their healthcare needs.
Aged care Assessment
Initially, if your friend or family member has not already been through an aged care assessment through an aged care home or residential respite facility, they would need to undertake an assessment to understand the level of care they need. You can contact My Aged Care to obtain an appointment with a local Aged Care Assessment Team (ACAT) or Aged Care Assessment Service (ACAS) in Victoria.
The first stage of the assessment to find out if you’re loved is eligible for subsidised aged care. This involves a two-part assessment process that understands their needs and what services could help them. It starts with a simple eligibility check which you can do online or over the phone followed by an in-person assessment.
Once the assessment is completed and they are successful, the following actions will need to be completed by the carer/s:
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Getting short-term respite or emergency care
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Contacting Centrelink to get a means-test assessment completed
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Finding an appropriate care facility
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Understanding the cost
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Managing the care and cost
The My Aged Care website has a number of resources to help find facilities in your local area and also it supplies fee estimators for the homes you are looking at.
Aged Care Ongoing fees
When it comes to the on-going aged care fees, there are variety of the fees that you should be aware of when it comes for your loved one:
Basic Daily Care Fees
Typically paid by everyone for their on-going care, and it covers costs such as meals, power, and laundry. Currently $54.69 per day or $19,961.85 per annum.
Income tested Care Fees
This fee can be up to $32.30 per day or $11,790 per annum and this is where obtaining advice from an adviser can reduce the daily means tested amount you pay.
Accommodation Fees
This is for the cost of you have agreed with the aged care home. This could be over $1m and once again the advice provided by a professional could assist with reducing the overall cost for clients.
Fee for extra and additional services
You may have to pay extra to the aged care facility if you need additional services over and above the care services typically provided.
How can we help?
The main areas financial advisers can assist clients with aged care, is reducing the cost of the income tested/ means-tested daily fee and the amount contributed towards the client’s accommodation costs.
The hardest conversation to have with the carer regarding the costs is how long they expect their loved ones to live for? Typically, the life expectancy in a nursing home is 2.1 years for males and 3.2 years for females. The ability to discuss and educate your clients is important so they can be able to understand the long-term consequences of any decisions they make.
Selling the family home
A common misconception is that you must sell the family home to pay the accommodation payment as a lump sum. This action could potentially increase the living costs a couple separated by illness may and once one of the partners passes away this could also have significant consequences for the surviving spouse as the family home is typically exempt from Centrelink assessment.
Products like funeral bonds, special purpose trusts and annuities are also strategies you can look at to potentially reduce a clients’ means tested fees. As a financial adviser you would like to make sure you have made consideration of life expectancy and the resources the client/s have to fund the cost of aged care.
If you pay the full accommodation payment (Refundable Accommodation Deposit (RAD) you may not have to pay a Daily Accommodation Payment (DAP) or a rental style payment.
You could also choose to make a partial payment of the RAD and have the DAP paid from this amount. Please note, there is a 4.07% Maximum Permissible Interest Rate (MPIR) on the outstanding RAD a facility can charge.
Summing Up
Everyone’s situation is different, so it’s important to take your time to determine the appropriate strategy when moving your loved one into aged care. Make sure to consider cash flow and how to fund the monthly/daily cost of the care and the partner who may be illness separated.
If you any further questions on aged care, don’t hesitate to get in touch with an Oracle adviser today!
Written by Andrew Pfumojena
Financial Planner
Oracle Melbourne
