Take the stress out of transitioning to an aged care home by planning ahead
The decision to look into moving into an aged care home can be an emotional one. There are difficult decisions to make, with many factors to consider. You will need to look into the best location, how much the facility or care will cost, how to fund it, and the transitioning process.
Aged care is a complex system to understand, and it’s highly recommended to contact a financial adviser to help navigate the rules with tax, entitlements and social security systems. Seeking advice at this stage can help you through a stressful time managing finances, understanding entitlements, considering investment options and the distribution of your estate.
Australia’s aged care system helps support the elderly in their own home, with short-term care or in a residential aged care facility. Below are the fees you can expect to pay, if you’ve decided to move into a government approved residential care facility.
Paying for accommodation
When it comes to your accommodation costs, your income and assets will determine if you will receive government assistance. You will either have your accommodation costs paid in full, partially paid or need to pay them in full yourself.
If you will be paying for your accommodation, you will have 28 days after becoming a resident to choose from these payment options:
- A refundable accommodation deposit (RAD): a lump sum payment refunded when you leave the facility – capped at $550,000.
- A daily accommodation payment (DAP): a daily payment.
- A combination of the two.
The Maximum Permissible Interest Rate (MPIR) on a RAD since July 1 is 5.73%. This will be reviewed again on September 30 for the following quarter.
Means-tested care fee
A means-tested care fee may also be required. This is determined by your combined assets and income and the overall cost of your care. It is also subject to change if your circumstances change. You can use this tool to give a general estimate. For the means-tested care fee there is a 12 month period cap of $26,380.51 and a lifetime cap of $63,313.28 that applies.
Basic Daily Care fee
The Basic Daily Care fee refers to day-to-day living expenses (ie meals, personal items, laundry, utilities). The fee is 85% of the single person rate of the basic age pension, and is currently $49.07 per day.
Extra services fee
The extra services fees refer to additional services requested and provided by the facility. This could be for a larger room or pay TV. This fee differs depending on the facility and is laid out in the accommodation agreement.
(Note: private facilities operate outside of government legislated fee systems and will need to be consulted individually to determine fees and agreements).
Planning your transition to an aged care facility:
- Consider your needs . You will need to decide if you need care at home, short-term care or to move into an aged care home.
- Aged Care Assessment Team (ACAT). Have an assessment by an ACAT to determine if you require full time residential aged care, home care or respite care. These assessments can be done at home, a health centre or a hospital.
- Finding an aged care home . Consider the location, lifestyle and costs of the aged care homes, and the facilities they are able to provide. This is an important decision so it’s always worth asking family and friends for assistance. For help in finding an aged care home, visit the government’s My Aged Care website.
- Planning your finances. The government will partially fund aged care costs, however there are some fees you may be required to pay depending on your assets and income, as explored above.
- Applying for your care home. You will need to fill in an application form for your chosen aged care facility and an Accommodation Agreement. This agreement lays out your rights and responsibilities, and that of your facility. At this stage it recommended to seek legal advice to make sure you understand the agreement.
- What to do with your home. Decide if it’s best to sell or rent out your home. This will make a difference both at tax time considering capital gains tax (CGT) and income tax; and regarding the cost involved in setting your place up for renting and continuing maintenance.
- Moving into your aged care home. To make sure your transition is as smooth as possible, ask your friends and family for help in the moving process. Talk about any concerns you may have, and start to build relationships with other residents and staff.
Considering all of these factors; it’s always advisable to seek the help of professionals in making these decisions with you. Ensure that you are set up for your move financially and understand the agreements you’ve entered into.