5 Things to Consider when Looking into Aged Care
If you are worried about the need to access aged care, you are not alone. When the time comes it can be daunting, with a lot of new information to take in and many decisions to make. The responsibility to make the right decision for yourself, or a loved one, may weigh heavily on your mind. Fear of the unknown adds to stress levels, so start your planning early. Don’t wait for the crisis to occur.
From our experience clients seeking advice in respect of aged care often need planning on various fronts. Depending on specific circumstances, clients usually need advice on issues such as:
Understanding what fees will need to be paid and the best way to fund these
Retaining / maximising social security entitlements
Minimising aged care fees
Understanding the options for the family home
Cashflow management
Estate Planning
In this article, we highlight five things you should consider prior to moving into aged care.
1. You need to be approved to access aged care
An individual must be assessed and approved for residential care by the Aged Care Assessment Team (ACAT), based on the person’s care needs. All approvals for residential care are non-lapsing (unless expressly time limited). This is intended to reduce the need for re-assessment if a person does not immediately enter care after being approved for residential care.
Respite care in an aged care facility is generally available to assist if a carer is unable to provide care for some reason, or a break is needed for the carer or care receiver. Respite care can sometimes be accessed (subject to availability) prior to entry as a permanent resident. Respite care can be accessed for up to 63 days in a financial year, however it is possible to extend this by 21 days at a time with further approval in some circumstances.
You can book an appointment directly with ACAT on 1800 200 422 and further information is available at www.myagedcare.gov.au. You can also search for a list of aged care facilities in your preferred location at www.myagedcare.gov.au.
2. Understand the costs
Most people are surprised and confused by the level and range of fees. How much you have to pay may depend on:
The facility you select
The service you choose
Your assessable assets
Your assessable income
We can help you to understand the fees as the total amount payable can be hard to calculate. Without good advice there may be unintended consequences for both your social security entitlements and aged care fees.
You need to know what fees you will be asked to pay when you first enter care. But this is just your starting point as your fees and social security entitlements will change over time.
When signing contracts, many people feel pressured to make quick decisions which might lock them into arranging a quick sale of the home. Your provider must give you 28 days after moving into care to decide how to pay. This gives you time to get advice and be prepared.
Decisions you make before and after entry and changes to your circumstances can impact your fees. Make sure you get an understanding of what to expect over the following 2-5 years, with projections showing expected changes in fees, age pension, cash flow and asset values.
3. Filling in the forms
Services Australia needs to review your financial position to calculate your fees. To enable this assessment, you need to complete some forms and update Centrelink (or Veterans’ Affairs) records.
If you don’t fill in the right form, or make mistakes with the information provided, your fees might be incorrectly calculated or cause long delays with the assessment.
4. Added considerations for couples
Couples often wish to stay together and enter care at the same time however it is important to understand how the timing of your move may impact your aged care fees. There may be a benefit to entering care on different dates as having one member of the couple still living in the home would exempt the home value from assessable assets for the first person entering care. Depending on the value of the couple’s other assets, the could mean the first person to enter care may qualify as a low means resident.
For Centrelink, a couple are considered separated due to illness even if both partners enter the same aged care facility and even if they have a shared room together. The DVA can have a stricter view and may not apply illness separated status if they share the same aged care facility.
While couples who are separated due to illness each receive the higher singles rate of Centrelink / DVA pension, they are still means tested using the couple separated by illness thresholds.
5. Get advice
Even if your situation seems simple, there are so many aspects to consider in working out the best financial strategy. The value of seeking advice from an accredited aged care adviser is peace of mind to ensure you have made the right decisions to generate enough cashflow while protecting the value of your estate.
Written by Megan Rich, Financial Adviser at Progressive Financial Planners
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