Understanding Aged Care for a loved one and what is normally an overwhelming and complex time
Matthew McCabe, Financial Planner and Retirement Specialist at Rethink Financial Group Newcastle
It’s almost inevitable that you or someone you know and care about over the age of 70 will require Aged Care services. Statistics prove that approximately 45% of people over the age of 70 will use an Aged Care service.
Aged Care is not cheap, accommodation deposits (RADs) for assisted living are on average around $300,000. Coupled with the feeling of being overwhelmed, looking for the best care & support for your loved one, and the recent changes to the Aged Care system, the complexity of navigating without proper advice and guidance could result in paying significant higher ongoing care fees.
Things you need to know before moving, or assisting someone moving, into Aged Care:
- ACAT assessment – An Aged Care Assessment will provide access to aged care support.
- Research – Determine your preferred option, whether it be, in home care or support in an Aged Care facility. The next step is to research the facilities and home care providers to determine the most suitable.
- Financials – The different fees, RAD, DAP, Basic Daily Care Fee, Means Tested Fees, and extra services fees just to name a few. One of the main issues for Aged Care, are the acronyms for all the fees and the various fees and how the fees will be paid. Establishing a plan so you maximise your entitlements and minimise fees/taxation can be complicated.
- Ongoing financials – Once in aged care, there are ongoing obligations that need to be considered, whilst also keeping abreast of government changes to Centrelink and potential taxation consequences.
Moving from home
When moving into an Aged Care residence, one of the main choices one is required to make, is whether to sell or keep your existing house. While there are a number of factors that will impact your decision, it is important to know that keeping or selling your house can affect your ongoing care fees when you enter an Aged Care facility.
Generally up to $144,500 of the value of your house will be assessed as an asset in determining your ongoing care fees, one exception is if the property is occupied by a ‘protected’ person, for example your spouse. If you sell your house, all of the proceeds will be assessed to determine your ongoing care fees. This will need to be considered in conjunction with the demands of keeping the house, tenants, ongoing expenses and upkeep.
There are other strategies that may support you in providing the optimal outcome from an Aged Care fee and Age Pension prospective, whilst overlaying the potential taxation consequences of your decision.
Paying for accommodation
Generally you have 28 days after entering an Aged Care residence to determine whether to pay for your accommodation as a refundable accommodation deposit or a daily accommodation payment. Your choice can have an effect on your financial assets, which can then influence how much you pay for your ongoing care fees.
The refundable accommodation deposit will be assessed as an asset to calculate your ongoing care fees.
Your financial assets are assessed when calculating your ongoing care fees, so a clever investment strategy can possibly reduce the amount you pay and/or even support you in meeting the ongoing costs of care.
Why this advice is important for you?
A move into Aged Care usually happens in a hurry and with emotional turmoil, planning ahead can help to improve the situation and avoid family conflict.
The costs for Aged Care are increasing and with an ageing population we all need to think more carefully about how to ensure our loved ones can access the help and support they need.
Our initial meeting including discussing your Aged Care options is $550 (inclusive of GST).
Should you require financial advice and further support, our fees start from $5,500 (inclusive of GST) depending on the complexity.
The decisions you make can have a significant impact on your loved one’s lifestyle and comfort, their entitlement to the age pension, taxation liabilities and the ongoing Aged Care costs.
We can sit on your side of the table and support you in making these important decisions, please contact us on 02 4962 4440.