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Aged Care Planning

Aged care planning

Overview


We understand that it can be difficult both financially and emotionally to make decisions about placing yourself or a relative into an aged care facility. Ensuring you make the right decisions will depend upon a multitude of factors. We believe that your best approach is to do some research and seek expert guidance to find the option that best suits you.

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Changes from 1 July 2014

From 1 July 2014, the Government has introduced reforms to radically change the aged care system within Australia. The reforms aim to make the aged care system more equitable.

The Government has also provided more support to our aging population to remain within the family home. This means elderly family members can access a home care package in order to remain within their home for a longer period of time. This will change the journey into aged care facility and you or your family may require assistance from a financial planner to understand the applicable fees and charges.

How do you enter an Aged Care Facility?

A person will generally be referred to an Aged Care Assessment Team (ACAT) by their general practitioner or hospital. They will determine is a person needs home care or residential aged care.

What fees might I be charged?

If you require residential aged care, there are a range of fees to cover both medical and accommodation costs and these can vary enormously between facilities and from resident to resident. The type of fees are:

  • Basic daily care fee – A set fee paid by everyone that covers care and accommodation.
  • Means tested care fee – This fee will be calculated based on your income and assets to meet the costs of care.
  • Accommodation payment – This is a contribution towards the capital costs of your accommodation and can be paid as either a lump-sum, a daily amount or a combination of both. This payment will vary considerably between facilities.
  • Extra service fees – This may be charged by a facility for a higher standard of accommodation services or food.

How are my fees assessed?

A resident’s ability to pay fees will be determined by an assessment made when the person enters the facility. This will generally be made using information available to Centrelink for assessing the Age Pension or it will need to be provided by the resident if they don’t receive the Age Pension.

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs, because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.

Daley Financial Planning is a Corporate Authorised Representative of Australian Unity Personal Financial Services Ltd.

ABN 26 098 725 145, AFSL 234459

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Approach

Research shows that more than 60% of women aged over 65 and almost half of men aged over 65 will needs some form of aged care during their lifetime. These figures illustrate that aged care is something all of us need to consider. This is why it’s important to understand how the rules around aged care work before a sudden event such as an accident of illness means you’re faced with making aged care decisions on the run – either for yourself or for a family member.

Right now, residential aged care costs are heavily subsidised by the Federal Government. But, with the Government’s aged care costs estimated to double from $13 billion now to $26 billion by 2023/24, there will be substantial changes to the aged care system. Some changes to aged care will start from 1 July 2014 to make the system more sustainable, fairer and more transparent. So, what’s changing?

Aged care facilities will need to publish details of their accommodation, services and maximum rates on their websites to allow people to compare different facilities’ fees.

New fee structures for residents moving into aged care. Arrangements for existing residents will remain under the previous system.

New rules about how assets will be included in the combined income and assets means test for new residents.

Lump-sum accommodation deposits, as well s resident’s home up to a threshold (with certain exceptions) included in means test.

Residents holding substantial assets will pay higher care fees in earlier years, subject to an annual cap $25,000 per annum, indexed).

A lifetime cap ($60,000 indexed) means long-term residents will pay minimal fees in later years.

For those not eligible for Government support, accommodation p[payments will start from $19,287 a year and residents will need to pay living and care costs of up to $41,972 a year.

Income concessions available for people who have long-term annuities and accommodation deposits.

It’s all in the

Planning

With a little pre-planning, you can avoid having to make quick decisions about aged care at a time your focus is on your own or your family’s health. This will also avoid a situation in which you need to rapidly sell valuable assets such as the family home to meet upfront deposits and ongoing fees for living, accommodation, and care services. If you or a family member is likely to require aged care in the short or medium term, it’s worth thinking now about how you will manage the transition financially.

It’s also important to ensure that any assets restructures that will take place as you move into aged care are considered in your Will.

People that need aged care soon should be thinking now about what they can do to help reduce aged care fees and maintain any social security benefits. One of the other important things to consider is ensuring there are enough funds for upfront and ongoing payments, which will help you have aged care options.

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs, because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.

Daley Financial Planning is a Corporate Authorised Representative of Australian Unity Personal Financial Services Ltd.

ABN 26 098 725 145, AFSL 234459

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