Aged Care

Most of us plan for our retirement. We budget for our income requirements when we give up employment by ensuring that we save enough in superannuation to provide for this. We aim to repay our mortgages before we retire and may even downsize the family home in an effort to reduce our living costs.

However many of us do not think about the costs of the next stage – moving into an aged care facility or getting in-home help.

Let’s look at the facts:

• Over the next 20 years, the amount of people aged over 70 is expected to double to 4 million.
• Approximately 10% of people will require residential aged care.
• Of the 10% of people requiring care, 36% with need high care.

In preparation for our aging population we are seeing ample advertising for over 50’s villages, over 60’s villages, lavish hostels and nursing homes, and pre-paid funerals.

We too have our finger on the pulse.

Our advisers understand that every life stage has its needs and we won’t put you out in the cold the day after you retire. We want to make sure that you are aware of all of your options for your mature future, including what to expect if and when the time comes that you need assistance.

Putting an aged care plan into place early – regardless of whether it is ever initiated – is the sensible thing to do. This way you retain your independence, your dignity and you get to choose where you want to live.

Your Aged Care Plan

An aged care plan takes into account where you want to go, how you will pay for it and who gets involved. Our advisers step you through this process and provide advice and options regarding:

1. Estate Planning;
2. Deciding where you want to live;
3. Paying for your aged care;
4. Making your plan known.

Estate Planning

This is not just planning for what happens after death. This includes documenting your wishes for who you want to act on your behalf in the event you are unable to do so.

A Power of Attorney gives power to someone you trust to act in financial matters, such as your bank accounts, your liabilities and your investments.

An Enduring Guardianship gives power to someone you trust to act in lifestyle matters, such as where you live and what treatment you receive.

A Health Directive gives your medical providers, your carers and your family instructions as to what treatment you want or don’t want to receive. This includes instructions for resuscitation and life support.

Where you do not have the above in place, decisions can be hard on your family, or the State in some cases, and may not be what you actually intended.

Don’t let the opportunity to be heard pass you by. We can prepare a brief to be issued to your solicitor today to have these documents prepared and your Will reviewed if necessary.

Deciding Where You Want to Live

Do you want to stay in your own home at all costs (and there will be many) or are you comfortable with the idea of moving into a care facility? Which location do you want to be in? If you initially required low care then needed extra assistance would you be happy to move to a high care facility elsewhere or do you want to stay put?

Aged care facilities have come a long way from just white walls, white coats and fluorescent lights. In preparing your aged care plan it is a good idea to visit a few places and see what they are all about. Most new facilities are more like resorts or up market hotels.

Some aged care facilities offer “ageing in place”. This means that the facility has both low and high care options available so you don’t have to move locations if you need to transfer from one level of care to the next.

Home care can also be arranged if you only require a low level of care and really want to remain in your own surroundings.

Paying for Your Aged Care

Whether you remain at home or you need to move into an aged care facility, it is going to include substantial costs.

Depending upon your age, most of us can access the Centrelink Age Pension around age 65. Other than superannuation pensions, this is the most common source of retirement income.

The fees you pay for aged care are ‘means’ tested in very much the same way as your Centrelink Age Pension. Centrelink assesses your level of income and assets against their set thresholds to determine your fortnightly entitlement.

Aged care facilities must leave you with a certain level of assets and income, however the fees can add up. The following table illustrates some of the common aged care fees that may apply to you:

If you were to remain in your home you may have costs such as:

• Modification costs – widening doorways and building ramps for a wheelchair, the addition of hand rails in bathrooms,
• Medical equipment rental fees – dialysis machines, C-Pap machines, hospital bedding;
• Carer and home help fees – these are set by the care provider and can range from 17.5% of the basic Age Pension rate to 50% of any other income above the maximum Age Pension rate that you may receive. In the event you do require a level of care (and you may not know just yet), it doesn’t seem wise to “spend the kids inheritance” just yet. You may need the capital to provide for your lifestyle.

If you were asked how you would pay the accommodation bond and ongoing fees, the most common answer is “sell the family home”. But you should know that this is not your only option.

The decision to sell your home in order to pay the accommodation bond is usually made prior to people seeking our advice. This is an area where planning can be of great benefit.

Every scenario is different and it is hard to provide a worked example, however please find following some key points in relation to your residential home:

• Your home remains an exempt asset if your spouse continues to reside there.
• If your home is retained and you have been in care for less than 2 years you will remain a homeowner for Centrelink purposes and the home will not be an assessable asset if the property is rented out. The rental income will be assessable income however.
• If your home is retained and you have been in care for more than 2 years you will be classified as a non-homeowner for Centrelink purposes and accordingly the value of the property will be subject to the assets test, as it essentially becomes an investment property. The rental income will also be assessable.
• If your home is retained, rented and a periodic payment or annual accommodation charge is arranged with the aged care facility, you will be classified as a homeowner for Centrelink purposes. This means that your home will remain an exempt asset and the rental income you receive will also be exempt.

Making Your Plan Known

Once you’ve decided upon your plan, you’ve got the documents in place for others to step in when required, and you’re comfortable that you will be able to pay for the services you require, you have to inform the people who need to know about it.

We can help you put your plan into a concise brief that will explain your wishes to your family and/or future carers. We can also meet with you and your family to ensure that this process is smooth and everyone is comfortable with your plan. Our advisers are knowledgeable in this area and can answer any questions that may arise with confidence.

Get Prepared

Now you’ve got an idea about the types of aged care that you may need in time, talk to us about getting organised with your plan. We can ensure that you never have to worry about the security of your future needs.

We also encourage you to keep in mind that your family, friends and neighbours may from time to time require a helping hand in preparing aged care plans. Or the time is upon them to act quickly. In any circumstance we are able to step you through the process and ensure you make the right decisions.

In Case of Emergency

We understand that you live busy lives and sometimes, planning for aged care may not be possible. You may have a situation where a parent has an urgent need to move into a care facility and you don’t have time to go through the planning steps above.

No need to worry – just call us. We can help you straighten things out quickly and calmly to ensure peace of mind for all involved.