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Navigating the aged care maze

Navigating the aged care maze

Today’s retirees often have a bucket list including everything from overseas travel to learning new skills and spending time with friends and family. It’s safe to say that residential aged care is probably not on the list.

Most people avoid talking about aged care, let alone actively plan for it.

‘I suppose I could go there’ or ‘that might be a nice place to consider’ are common approaches to the often unspoken reality that the time may come when you or a loved one needs more care than can be provided at home.

Unfortunately booking into residential aged care isn’t like booking into your hotel of choice. You can’t always choose when and where you go.

The sad truth is that people often enter facilities direct from hospital after an illness or a fall. When that happens, they may have to go where a bed is available. As the demand for aged care facilities in some areas is high, it may mean going on a waiting list for anything up to 12 months.

To add to what can be an extremely emotional and stressful time there a number of specific procedures and documents to complete before a facility can offer you or your family member a place.

Where to start

Before entering Government-subsidised residential aged care, you must first be assessed by an Aged Care Assessment Team (Aged Care Assessment Service in Victoria). These are health care professionals who may be referred to you by your GP.

They will determine your eligibility, the level of care you need and discuss your options before presenting it in a report.

It is always good to visit few potential facilities before making a final decision. This will give you an idea of what to expect including what it may cost, the suitability of rooms and common areas, the type of care that is given and the activities that may be on offer.

What does it cost?

As of July 2014 aged care facilities have a range of fees including an accommodation charge which residents can pay in the form of a lump sum refundable accommodation deposit (RAD), periodically in the form of a daily accommodation payment (DAP) or a combination of both.

The RAD is refunded when you leave the aged care home less any deductions you have agreed to. The DAP is not refundable. It is calculated as the RAD multiplied by a predetermined interest rate and divided by 365 days.

Once you find a place you like you will need to complete an application form and submit it with your ACAT report. You also have to complete a Centrelink Income and Assets Assessment which will be used to determine your cost of care.

The Australian government pays for the bulk of aged care but those who can afford to contribute to the cost of their care are expected to do so. While the average accommodation charge published by providers is currently $359,000, prices range from $50,000 to $2 million.

Selling the family home

Given the substantial amount of money involved, it’s not surprising that one of the major decisions people face is whether to sell the family home to fund their entry and or ongoing care.

While it may be financially necessary to sell, doing so may have an adverse impact on your age pension entitlements as well as the cost of care.

If a person or family particularly wants to keep the family home and there are other assets to pay an accommodation charge, it may be preferable to let the house to pay for any means-tested care costs inside the facility.

Thinking ahead about the care options available for you or an elderly parent may help avoid costly surprises in the future. It can also reduce stress at what is undeniably an emotional time for most families.

The financial decision-making around aged care is complex. Please call us on 08 8362 006 if you need to discuss your options.

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Barry Phillis and Owl Financial Management Pty Ltd are Authorised Representatives of GWM Adviser Services Limited Australian Financial Services Licensee Registered Office at 105-153 Miller Street North Sydney NSW 2060 and a member of the National Australia group of companies.

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