6 Steps to Planning Your Aged Care Needs
Over 1 million retirees are already accessing aged care services in Australia. However, your access to support can be a complex process.
Careful planning can help to demystify aged care and reduce stress levels when it comes to making the transition. With a plan, you can maintain control and choice, have access to the financial resources to pay for care and minimise the stress on you and your family.
This article discusses the steps you should consider when planning to move to residential aged care.
Step 1 – Plan ahead
We are often reluctant to think about a potential move into care for ourselves or a loved one, and sometimes this means that we fail to plan and ignore the warning signs until a crisis emerges. At this point, the time available to evaluate options is limited, and decisions become rushed.
Having your loved ones all on the same page about your options can go a long way towards taking stress and tension about making decisions for your future. We suggest starting with a family meeting to make shared decisions.
Use this meeting to:
Discuss options and preferences
Explore each person's concerns
Decide who needs to be involved in any planning
Frank and open discussion is the first step to an effective decision-making process. If you need, we can help facilitate your family meeting, provide impartial advice, and offer our expertise into your options and next steps.
Step 2 – Assessing options
Aged care help can be accessed in your home or residential service. To help you decide which option is best, you can arrange a free assessment by an Aged Care Assessment Team/Service (ACAT/ACAS).
You will need to have ACAT/ACAS approval before accessing a government-subsidised home care package or residential care. You can book an appointment directly with ACAT/ACAS on 1800 200 422, and further information is available at www.myagedcare.gov.au.
Step 3 – Searching for services
If residential care is required, think about what criteria is important in deciding where to live and make a list. Your list should include location, amenities and your health care needs.
This list will help you develop a shortlist of potential services you might like to contact or visit. But first, check what fees will be asked for accommodation and ongoing services to ensure it is affordable for you.
You can search for services by visiting myagedcare.gov.au and search by postcode for the list of aged care facilities in your preferred location.
Once you have selected your preferences, you can fill in an application form to add your name to the waiting list. You can put your name on the waiting list for more than one service to increase your chances of finding a place.
Step 4 – Understanding the fee structure
Most people are often surprised by the level and range of fees. How much you have to pay may depend on:
The service you choose
Your assessable assets
Your assessable income
We can help you understand the fees as the total amount payable, which can be hard to calculate without fully understanding the system.
What you will pay for residential care is divided into contributions towards accommodation, care and additional services:
Paying for accommodation – we all need to either find a lump sum of money to buy a home or generate income to rent a home. Residential care is firstly accommodation that needs to be "purchased" (refundable accommodation deposit) or "rented" (daily accommodation payment).
Paying for basic living expenses – the Government subsidises food, electricity, cleaning and laundry services and nursing assistance. Residents are asked to contribute to the cost through a basic daily care fee plus a means-tested fee for those with a higher capacity to pay.
Luxuries and lifestyle – additional items can be purchased on a user pays basis or in bundled packages as additional service fees.
Step 5 – Structuring finances
Market forces set accommodation costs with prices published on the MyAgedCare website. But if assets and income can be reduced to low enough levels (to become a low-means client) before the move, the Government may subsidise accommodation and regulate how much the resident pays.
In this way, the accommodation cost may be cheaper, but it is not always better. Choice and control may be lost, and residents may be faced with accepting a place in whichever service has a low-means place available, which could even be a shared room.
A homeowner will generally not qualify as low-means unless their spouse (or other protected person) will continue to live in that home.
If potential residents wish to enter under the low-means rules, there are a few pre-planning strategies to reduce assets. One option may be to enter into a granny flat arrangement to transfer ownership of the home to a child in exchange for a life interest to live in the house.
If this transaction occurs within five years before moving into residential care, it could be captured under gifting and deprivation rules (depending on circumstances). Instead of being a solution, it could create more problems. Other legal issues also need to be considered to minimise the family problems that could arise.
Your adviser can review your entire financial situation and provide advice on how to:
Make appropriate decisions
Structure assets to pay for accommodation and as well as create sufficient cashflow
Minimise fees or maximise Centrelink or Veterans' Affairs benefits
Step 6 – Estate planning
Anytime your circumstances change, it is crucial to consider the impact this has on your estate plans. This includes when you move into aged care.
We recommend speaking to your solicitor about the ability to review and redraft your will to reflect your wishes. As dementia is a leading factor behind the need for care services, the client will likely need to delegate financial decisions to someone else when the time comes.
This is easier if an enduring power of attorney (and guardianship) is in place. So it is vital to have the appropriate powers in place before a person has lost legal capacity. Once capacity has been lost, it will be too late to set up the powers, and a trip to the Guardianship Tribunal will be needed.
Disclaimer: Prepared without taking into account your objectives, financial situation or needs. Before acting on any information in this article, Olive Grove Financial Advice recommends that you consider whether it is appropriate for your circumstances. Information in this article was correct and current as of 23 May 2022.
Olive Grove Financial Advice is operated by Bill Savellis through The Financial Advisor (Australia) Pty Ltd ABN 72 619 546 431, who is a Corporate Authorised Representative (No. 1278394) of Havana Financial Services Pty Ltd.