A very significant, and rapidly growing part of the services we provide for our clients these days is support and advice around Aged Care and Centrelink matters.
Providing assistance with the process of understanding and preparing for the need for Aged Care support, both in home and in specialist facilities, is a growing demand. It can be either for a member of one of our client couples or parent(s) of our clients who need this advice and support from us. This is most often a very traumatic time and equally can be a confusing and complicated time for family members with the significant emotional burden, added to by financial uncertainties.
Very often the partner, or children of the individual(s) concerned have managed difficult health issues for a long time and the need for more professional care (at home or going into an Aged Care facility) adds to an already significant build up of emotional and physical stress. The burdens that surround this sort of decision making process are complicated significantly though the financial uncertainties and financial calculations that go along with access to Aged Care and what the Aged Care facilities are charging.
It seems that one of the biggest issues that we deal with often is leaving it way too late.
Great benefits can be achieved by going through the process of having an understanding well before it becomes “urgent important”
- what is available
- how to go about being eligible
- with an Aged Care facility, what these costs potentially could be
- how this might be best managed
It’s important to review these before it becomes urgent – it can mean a big help to remove the huge burden of financial uncertainty. Very often these questions are being raised at the same time as the necessity for home or higher level care are being loaded on family members.
If some degree of proactivity is taken many of the unknowns can be answered well before emotionally difficult decisions need to be made.
- Matters such as the process of applying for an Aged care Assessment
- The potential funding for benefits and services by accessing outside help to keep a family member in the home for a longer period of time
- Being made aware of what is possible both with “In Home Care” and what costs would apply for higher level Aged Care in a facility.
- Fairly predictable costs across the three possible charges can be calculated in advance based on a number of different variables
- Very often this can make it clear that there will not be any significant extra financial burden and often, can be revenue neutral or even some improvement, if extra Age Pension can be achieved
The reasons people go into Aged Care facilities will usually be because the burden of caring at home is becoming too great for children or the partner.
For family members this can be an overwhelming time to concede that appropriate care is becoming beyond the ‘family’ and most often the level of care that’s required is beyond the capabilities of the family member(s)
Doing some preparatory investigations with professional support from such as an Aged Care qualified Financial Planner can be invaluable
- where you can discuss the implications and what is required
- what are the costs and how do they apply
- how the costs can be navigated and best managed
- what flexibility is available
- will it be manageable
- This can take a lot of the mental burden away from the carer/family members.
Thankfully the three (3) levels of costs applicable when going into an Aged Care facility are set by Government.
We have modelling tools that we can use to predict variable costs very accurately. Once these numbers are estimated then the planning of how best to manage becomes an important step.
Again, this can all be done well in advance of the need arising, as a proactive step to remove from the “worry basket” one huge ‘uncertainty’.
Preparing with knowledge well in advance also allows potential for managing/reducing some of the costs or at the very least showing that it will be manageable.
THE THREE POTENTIAL AGED CARE FACILITY COSTS
- The BASIC DAILY FEE is set as the minimum for all residents. This amount currently sits at just over $60 per day. This equates to around ¾ of the full rate single age pension per ft. Note that when entering care (even if a member of a couple) the resident is classified as single (separated due to ill health) and eligible for up to the full single rate of pension.
- The MEANS TESTED FEE as it states is totally based on the means of the resident to pay extra towards care costs. This calculation CANNOT cost more than is possible to be paid and also has annual and lifetime caps/maximums that apply.
- The REFUNDABLE ACCOMODATION DEPOSIT (RAD) is a lump sum amount (note multiple ways this payment can potentially be managed, again professional planning support can be invaluable) This ‘amount’ is held in trust by the facility and is used by them for the time the resident is in care. This amount is fully refundable to the individual or The Estate when the resident is no longer in the facility.
- Note there are situations where a resident can qualify as a “supported resident” and not have this lump sum obligation. This is where pre-planning can be very helpful
- Making a decision on how best to manage this RAD via a full or partial etc payment is a key part of getting the best ongoing financial outcome.
- Each option and variations of this have positive and negative implications that differ for varying individual circumstances.
- It is also possible to have an initial position that is altered as circumstances change that can benefit the overall financial outcomes.
- Note also that whilst any lump sum component of the RAD that is paid, still counts towards the above means tested fee, it is currently (like the family home) an exempt Centrelink Asset. So often, this can create a better Age Pension payment possibility
NOTE OF CAUTION TO BE AWARE OF
- One area of overall planning that we see as a key part of much of the Aged Care and associated Centrelink implications is estate planning and areas such as home ownership.
- There can be positives gained if a proactive review of what an individual’s and a couples Will’s might be stipulating.
- And conversely, often sadly without this, we have seen some very negative unintended outcomes. The implications of best intentions can often be not what is desired nor desirable.
- A proactive review of existing WILLS and a proactive discussion about potentially amending for better outcomes can be invaluable!
- In summary family members should be seeking planning support and guidance well in advance of this becoming an urgent important necessity.
- This can remove a lot of their worries from the “worry basket” – as well as allow some planning that could be done which often can improve final financial outcomes when Aged Care becomes a necessity
This blog contains information that is general in nature. It does not take into account the objectives,
financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
If you decide to purchase or vary a financial product, your financial adviser, AMP and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.
PB Financial Solutions Pty Ltd ABN 67 097 381 523 – trading as Burke Britton Financial Partners & Securelife Financial Solutions is an authorised representative and credit representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee.