Aged Care Financial Planning
Thinking in advance about the final phase of our lives, or arranging aged care for our older loved ones, can be very difficult. Complex emotions come into play, and the need to make big decisions, sometimes at what feels like alarmingly short notice, can create high levels of stress and sometimes family conflict.
This can be avoided, or at least greatly reduced, by making plans for aged care funding well in advance of when it might be needed.
Being prepared
Facing the fact even of our own mortality is somehow easier than facing the possibility that we might eventually need some form of aged care. For example, many people arrange life insurance protection for themselves and their loved ones but neglect to plan for their aged care needs.
Yet for most people, aged care in Australia is very expensive. Some aged care facilities require an advance lump sum (effectively a bond) of up to $1 million to pay for accommodation, and then there are the ongoing care costs to be funded from day-to-day cash flow.
When planning for aged care costs, it’s critical to seek professional help – and ideally, as far in advance as possible.
Will the government pay?
Broadly speaking, the federal government subsidises a range of aged care options in Australia – but individuals are required to contribute to the cost of their care depending on their ability to pay, which is derived from their level of income and the value of their assets.
Support from a financial adviser
Whether you’re thinking about aged care for yourself or partner, or for an older family member, the following are just some of the difficult financial considerations that can come into play when considering how to fund aged care:
The pros and cons of selling or renting out the family home
The impact of entering residential care on aged pension entitlement and other benefits
How to fund the ongoing care fees (and other living expenses)
Assessing how long your money will last
If selling down investments, which to sell and when – and any capital gains tax implications
The impact on your inheritance and estate planning arrangements.
A specialist area
Providing advice on aged care financing is a specialist area. Fiducian’s financial advisers are experts at helping their clients navigate this difficult and ever-changing financial environment.
More importantly, they understand the emotional toll that arranging aged care can have, especially if arrangements need to be made at short notice.
What aged care options are available?
Commonwealth Home Support Program
This provides elderly people with ongoing help with basic household tasks in their own home. Assuming you can afford to contribute to the cost of the care, the amount you would be required to pay is negotiated between you and the service provider.
Home Care packages
Home care packages offer, (via a choice of four levels), more comprehensive support to help older Australians remain in their own home. Depending on the package chosen, Home Care can help with things such as cleaning, meals, transport, personal care and nursing care.
The Federal Government pays most of the cost of Home Care. However, as with all aged care services, people may be asked to contribute towards the cost of Home Care if they can afford to do so. The cost can vary from person to person depending on an individuals’ financial situation and the services provided.
The government’s Aged Care website lists a schedule of fees and charges.
After hospital (transition) care
This is short-term care for people who need help recovering after being in hospital, or need time in which to decide on their best long-term care options. The cost may include a daily care fee, agreed between you and your service provider.
Respite care
A form of support that allows you to keep receiving your usual level of care if your regular carer has other commitments or needs a holiday.
Residential aged care
This live-in care is for people who are unable to safely or effectively manage at home with day-to-day tasks, or need constant health care. Residential care includes permanent and respite care.
The total cost of residential care will differ for each resident, depending on their ability to pay and level of assets. The costs may include:
- A basic daily fee payable by all residents (capped at 85% of the single person basic age pension)
- A means-tested care fee depending on your income and assets
- A full or partial accommodation payment depending on your income and assets
- Fees for additional services such as a higher standard of accommodation or health care.
How are aged care needs assessed?
An assessment by an Aged Care Assessment Team (ACAT) will determine the eligibility and level of care a person needs. The assessor is usually a nurse, social worker or other health care professional.
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