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Older Australians who may need aged care services and impact on the family

Aged Care and your family

Aged Care and its impact on your family is becoming an increasingly relevant issue for most Australians. Recently released projections suggest significant age demographic changes before the end of this century.  The projection is that people over the age of 65 in Australia will exceed those under the age of 18!

Aged Care culture in Australia

Australian culture is currently focused on outsourcing aged care.  The financial decisions by families for decades to come are likely to be impacted by current government policies and strategies.  Increasing demand for aged care services will arise as older generations expand as a portion of the total population.  As a consequence they will continue to require services that families are not always in a position to provide.

We discuss key areas of aged care to assist you in further understanding this growing need in our community.   You will read how to apply it to your current or future circumstances.  Those soon to enter Aged Care arrangements will find the information important.  Younger generations on whom that such a move will have an impact will find it useful.

How will Aged Care impact your family

As older Australians make up a larger portion of our population, affordable and reliable care options become paramount to more families.

Future care requirements and determining the right level of care is crucial when investigating options for an elderly person.  Planning well ahead is also crucial – to the extent possible. The current options covered under legislation and regulation are, in-home care; and at-facility care.

In-home aged care

Many people would prefer to remain in their own homes if they have that choice. Because of limited numbers of visiting carers/ services available (in most communities) in-home care is currently difficult to access. The government has committed to ensuring that home care resources will be gradually increased.  The provision of differing levels of home care packages are also on the horizon.

Costs associated with care are calculated on the single basic age pension.  An extra income-tested fee, determined by the care required, may also be applied. While the government will subsidise those who don’t have the capacity to pay, a ‘capacity to pay’ rationale applies. Fees are capped on an annual or lifetime basis and indexed annually.

Aged Care facility arrangements

If choosing to enter aged care accommodation, residents have the choice of paying a Refundable Accommodation Deposit (RAD) and/ or making periodic Daily Accommodation Payments (DAPs). (The RAD is also known as an Accommodation Bond.)
To safeguard against the loss of their investment in their aged care accommodation, should the care facility become insolvent and unable to repay bonds, the government undertakes to make the repayment to either the resident or their estate. Bond amounts are recovered by the government via a regular fee levied against the care facility.
Strategic planning as to how best to fund aged care within a facility is important and families need to be ready ahead of the time when, sometimes, very short notice is given, and arrangements need to be made. The wrong decision at this time can impact the value of the eventual estate – and the ongoing costs of receiving that care. Some of the issues to be considered at this phase include:
  • Does the Family home need to be sold and what timeframe?
  • Could the family home be rented rather than sold?
  • Could Superannuation be used to pay the RAD?
  • Will Centrelink continue to pay aged pension if applicable?
  • If the home is sold, how should any surplus funds be invested?

Government aged care strategy

Some key aspects of the government’s aged care strategy include:
  • High and low care are treated similarly so that the level of care can be adjusted seamlessly as needed.
  • Care facilities can offer a wide range of extra-service packages. These are available to all residents at an additional cost, and residents can choose to opt-in or opt-out.
  • Rental income from the resident’s former home is included in the means test for those entering a residential facility.
  • The family home remains exempt from income and asset testing, if it is not generating an income, or if there is a protected person living in it, such as a spouse or financial dependent.
In an aging society, care for older Australians is a real concern for governments, communities, and families. It requires genuine and careful attention. Ongoing reviews and reforms by governments will help, but your financial adviser/ Aged Care specialist can assist you to create a tailored strategy that will help you plan for your own family’s future.

ContinuumFP Aged Care service

Continuum Financial Planners has an experienced, accredited Aged Care Specialist available to work with you in planning your course(s) of action to prepare for the best financial outcome for the transition to accessing Aged Care services (including those strategic planning questions mentioned above), whether in-home or at a facility. You can contact us by phone (07-34213456), or by completing and submitting our online Contact Us form.
General advice alert

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.