If you are considering aged care for someone close to you, there are five questions you need answered to ensure the best care at the most reasonable cost.
Question 1 – what are the aged care options?
The degree of care needed is evaluated by an Aged Care Assessment Team comprising health professionals and social workers and their role is to assess if the person needs assistance services at home or if a move to residential care is needed. In-home care can be arranged through the Department of Social Services in the form of Commonwealth Home Support Programme, Home Care Packages and Respite Care Services.
If it appears that independent living is too much of a challenge then they may recommend receiving full time care in a residential aged care facility
Question 2 – what costs are involved?
While the cost of care is partly funded by the government, there can still be significant costs to residents which are partly based on their level of assets and income. It may well be that the resident is required to contribute towards an entry fee plus ongoing daily care fees.
All Commonwealth subsidised residential aged care facilities use the same structure to calculate entry fees. Residents may be required to either pay the entry fee or contribute to the cost of the entry fee. Income and assets will determine which one applies.
Residential aged care facilities also charge daily care fees on top of the entry fee. The basic daily care fee is generally payable by all residents, whereas the means tested care fee is based on the resident’s income and assets.
Question 3 – What will happen to the family home?
In many cases, the family home will be the major asset involved and once the reality of the costs of aged care start to become apparent, it may seem inevitable that the family home needs to be sold to fund these costs. However, the situation with the family home needs to be carefully considered. If a spouse still remains at home then the value of that home is not assessable for aged care purposes and this may serve to reduce the entry fee payable to the aged care facility. If the home is left vacant and not lived in by an eligible person, then it is assessable but the amount that is counted is capped. The question here is whether it is better to sell the home or to retain it and rent it out.
Question 4 – what are the impacts on the age pension?
If selling the family home is being considered, then it is important to factor in how this may affect pension levels, as the proceeds from the sale of the home may be assessed under both the income and assets test. It may be possible to keep the home, rent it out and use the income from this to fund the entry fee paid at least partly as daily accommodation payments. By doing this, both the value of the home and the rental income generated may still be exempt from the Age Pension assets and income tests respectively.
Question 5 – how can ongoing income be maximised?
Optimising ongoing income for the aged care resident can be quite a challenge once all the complexities of the aged care regime are taken into account. The need to minimise fees, maximise the age pension, deal with the family home and structure other financial investments will all have an impact on what ongoing income can be generated.