Preparing for aged care
MOVING into an aged-care home can be a complicated and emotional process. There are many issues to consider and good financial advice can make the transition easier and minimise costs.
The ageing population
Australia’s ageing population is steadily increasing, with many of the baby boomer generation born between 1946 to 1966 entering the aged-care bracket between 2011 and 2031. At present, 13.5% of the population (about three million people) is aged 65 years or over and this is expected to increase to 22.7% over the next 40 years.
For some of these baby boomers, it may mean looking into alternative accommodation such as aged care homes and other care arrangements.
Jenny Christie of Priority One Financial Group said the decision as to which type of accommodation or care arrangements people require may be based on lifestyle choice or a need for assistance with daily living activities if it becomes harder to manage on your own.
If you require assistance with daily living activities, one of the hardest decisions you may have to make is whether to remain in your home or move to a hostel or nursing home. If you remain in your home, there are various community programs available which can help you. On the other hand, if you require accommodation in an aged-care facility, you will need to take into account a variety of financial, legal and social security issues.
Aged care in Australia
“Looking into the different types of aged care accommodation available and the associated costs can be quite complex and requires careful consideration. This is where financial planning can help to alleviate these concerns and help potential residents achieve the kind of retirement lifestyle they desire,” Ms Christie said.
“Some important aspects you need to consider include payment of accommodation bonds, fees and charges, arranging aged care assessments, tax implications and estate planning.”
Hostel and nursing home care
Aged-care facilities are commonly referred to as hostels and nursing homes. The main difference between the two lies in the level of care provided.
“People who require some help with daily living activities may require low level care such as hostel accommodation. On the other hand, people who require 24-hour nursing care may be more suited to high level care such as nursing home accommodation provides,” Ms Christie said.
To enter a hostel or a nursing home, you need to be assessed based by an Aged-Care Assessment Team (ACAT). The ACAT will make a determination whether low care or high care is required. A financial adviser can help organise an assessment for you.
How much will care cost?
Although aged care accommodation is subsidised by the Government, a resident will generally be required to contribute towards their own care by paying various fees and charges.
“Aged care fees and charges can often be complex and can vary according to your circumstances. The fees and charges are generally calculated in relation to your level of income and assets,” Ms Christie said.
Residents of hostels and nursing homes are required to pay a daily care fee and income tested fee depending on their level of income, plus an accommodation bond or charge.
According to the Department of Health and Ageing report, Ageing and Aged Care in Australia July 2008, the total average cost borne by an individual: in a hostel is $18,545 a year; in a nursing home is $16,350 a year.
A financial adviser can work out what fees and charges you need to pay for the type of accommodation you require.
In some cases, an adviser may be able to put a strategy in place to reduce the fees,” Ms Christie said.
The family home and social security entitlements
“One of the main considerations when entering an aged care facility is deciding whether you should keep or sell your home. Whichever you decide on will have implications for any social security benefits you receive and your estate planning needs,” Ms Christie said.
“Many people want to keep their family home to pass onto their children and loved ones. There are a few strategies an adviser can suggest which could enable this to happen, help you maintain your Age Pension and ensure that your family home is not counted as an asset.
“If you wish to leave your home to your children or other loved ones, it is vital that you have an up-to-date will stating your wishes.”
There are many complex factors to consider when considering aged care accommodation and services, so it is essential that you obtain quality financial advice.
A financial adviser can work through the options with you and help put you in the best financial position.
The difference between no advice and good advice can be the difference between the family needing to subsidise the costs or not.
Contact Jenny Christie of Priority One Financial Group for more information on 6643 2244.