The decision to move a loved one to an aged care facility is often an emotionally confronting time. It’s also a time to make several important financial decisions, which may need to be done in a relatively short time frame, so it’s important to understand your options before making any decisions.
When confronted with making these decisions, all options must be considered to ensure that the decision does not negatively impact the client, spouse, or even potential future beneficiaries.
Many things need to be considered, including how accommodation payments will be made, how income and assets are treated for the calculation of ongoing care fees and Centrelink assessment, and ensuring sufficient funding of ongoing costs for both those receiving care and remaining spouses. This involves looking at the impact of any decisions today and in the years ahead.
The beginning of any assisted care journey is generally organising an Aged Care Assessment Team (ACAT) assessment – this is organised through My Aged Care. My Aged Care is the Government body that assists clients to find and access aged care services. An ACAT assessment involves assessing the needs of the person involved and determining approval for Government subsidised care.
It’s important to note that this approval may not be just for someone entering an aged care facility – there are 4 levels of funding available for home care services which can help people maintain a greater longevity within their own residence. The wait times for these services can be quite lengthy (up to 12 months), so it is important to look at organising an assessment if you or a loved one begins to show signs of needing assistance.
Often the first statement you hear is “we can’t afford this” or “we need to sell the house”, but often both statements are incorrect. It’s important in the first instance to gain an understanding of how the funding of aged care works and the options available.
Funding accommodation costs can be done so generally via two main mechanisms:
- Refundable Accommodation Deposit (RAD): This is a lump sum payment made to the care provider. If the Government is partly funding the contribution it is known as a Refundable Accommodation Contribution (RAC). It is important to note that these funds are returned when a person leaves a facility or pass away and are also guaranteed by the Government.
- Daily Accommodation Payment (DAP): This is an ongoing payment in lieu of paying the RAD. If the Government is partly funding it is known as a Daily Accommodation Contribution (DAC).
This is a little bit like the decision to either buy a house or rent a house and both have various financial impacts to consider such as affordability, cash flow and Centrelink impacts. It’s also possible to use a combination of the two to help fund the costs.
In addition to the above accommodation costs, there are three other fees that are generally payable:
- Basic daily care fee: This fee is essentially payable by all that enter aged care. Currently this amount is set at $53.56 per day ($19,549 per annum) and is equivalent to 85% of the single basic age rate of pension.
- Means tested fee: This is a fee that is calculated by the Department of Human Services based on a person’s income and assets. It is essentially the amount based on their financial means which they are required to pay towards the cost of their care.
- Extra service fee: This is a fee charged by the residential care services for additional services such as Foxtel, newspapers etc but will vary across providers. This is often a voluntary service that can paid for or not taken up although many providers are beginning to make this part of the room cost.
How We Can Help
A professional financial adviser who has the knowledge and training around the complexities of aged care can help someone understand their current financial situation, the options they have in relation to care and also the consider the options in relation to funding the care. Consideration also needs to be given to the impact of these options in relation to things such as Centrelink, ongoing care costs and the ability to meet income needs into the future.
At Lambourne Partners, we have accredited aged care advisers who can assist you in this journey. Get in touch below to discuss your situation or call us on (02) 4969 6600.