RESIDENCY OPTIONS FOR AGED PEOPLE
One of life’s certainties is that we will all age and experience a decline (to some degree) in our physical and/or psychological health status.
Ideally, before a significant change occurs, people should have an understanding of the residence alternatives available to them.
These may include:
Remaining in your current residence
Some people may prefer to remain in the familiar surroundings of their own home, especially where the company of neighbours and friends can be maintained. Where some help is required with domestic duties such as cleaning & cooking, personal hygiene and dressing, shopping, transport to medical services or a need for companionship, home care services are available.
For instance, an older person who can do most things for themselves but requires an “entry level” of care, may be eligible for the Commonwealth Home Support Program. The Regional Assessment Service (RAS) will assess your needs.
Alternatively, those with more complex needs could utilise a “tailored “Home Care Package“. These packages can be fully funded from one’s own income without an ACAT assessment. Alternatively, an ACAT (Aged Care Assessment Team) assessment will be required to determine the level of care required and an income means test applied to determine the level of government subsidy.
In both cases, a “Basic Daily Fee” is paid by everyone while an “Income Tested Care Fee” may be charged, depending upon the recipient’s income.
Some people may choose to establish a Granny Flat by “gifting” their home to another person (e.g. child) or providing the money to establish a granny flat in exchange for the right to reside in that property for life.
These arrangements require a legal contract. The “gifting” of the home or money is not subject to the Centrelink gifting rules.
Where a person is able to live relatively independently or purchase a home care package, village accommodation offers security, social activities with other residents and some assistance with medical services (e.g. onsite nurse).
Several different purchasing options exist, the most common being a “deferred settlement” arrangement. This involves the up front purchase of a unit, payment of ongoing daily expenses and a capital payment when ‘leaving” the village. We strongly recommend that a solicitor be consulted to review the contract before making a decision to purchase as the terms (and financial consequences) can vary significantly.
Aged Care Facility
Approval following an ACAT assessment is required before admission to an aged care facility. The sector is heavily subsidised by the federal government and places are becoming limited.
Two levels of accommodation are available, namely:
- Low Care for people who remain largely independent and can do most things for themselves.
- High Care for those that require total ‘around the clock’ care and assistance with most daily living activities.
A range of fees apply. These may include:
- A “Refundable Accommodation Deposit” (RAD) up to $550,000 which is set by the facility and paid upon entry or a “Daily Accommodation Payment” (DAP) is paid instead or in combination.
- A “Basic Daily Fee” which is currently $47.15 per day which is payable by all residents.
- An “Income Tested Fee” which is subject to means testing.
Also, some facilities who provide a better standard of food etc. can also charge a daily “extra services” fee.
Low Means Persons
People whose means tested amount is below a threshold will pay the entry fee as a lump sum or daily amount but will pay no “means tested fee”. All residents will pay the Standard Resident Contribution.
The Family Home
When not occupied by a dependant child, spouse or carer, the home is an assessable asset (up to $155,823) when calculating the means tested fee.
Consequently, whether to sell or rent the family home can have a big impact upon the affordability of fees and Centrelink entitlements!
Irrespective of the type of accommodation chosen as most suitable to the needs and preferences of the individual, expenses can be funded in many different ways including:
- Your own financial resources including savings, other income sources and the sale or renting of the home.
- Family members may decide to contribute to the costs.
- Reverse mortgages which allow an owner occupier to drawn down debt to meet expenses while the interest and capital owed accrues against one’s equity in the home and must be repaid upon leaving the home.
- Utilising government subsidised ‘home care packages” or aged care accommodation.
You can read more about the Critcal Steps in Aged Care Planning, which provides a guide to people who are searching for a suitable Aged Care Facility.
The Value of Advice
We understand that the range of accommodation and funding options available to aged people is wide and complex. Further, strategies exist that can minimise fees, maximise Centrelink entitlements and /or make your lifestyle choice affordable.
It is critical that all estate and legal issues are properly addresses to avoid future problems.
Our goal is to have a comprehensive discussion with clients (and their family) that allows us to properly understand their needs and aspirations and ensure that their accommodation of choice is affordable and financial affairs structured to achieve your wishes.
We believe that the optimum outcome can be achieved with proper planning and a well informed client.
We can provide a referral to other high quality service providers when appropriate.
After the initial meeting and providing we can we deliver some value to our client, we will quote a fixed fee before being any work. The fee is based upon the time involved in research, preparing and presenting our written recommendation and assisting with the implementation if required.
Note: We accept no commissions or other inducements from third parties. We are only remunerated by our clients.
The advice may not be suitable to you because it contains general advice which does not take into consideration any of your personal circumstances. All strategies and information provided are of general nature only.Get Advice