As we sail past middle age, new physical and mental challenges gradually emerge. Many of us also find ourselves assisting parents and friends to meet the challenges of old age, including accessing the range of services available. These services are diverse and include extra help at home, short-term care, including respite care, and aged care homes.
In many cases, these services are subsidised by government, subject to an initial assessment of personal circumstances, including health, financial position and social situation. To help address some of the most common issues, I consulted respected financial adviser Kristi Badgery, who is an expert in the aged care area.
Where do you start?
Kristi: Visit the government’s myagedcare website to establish your eligibility for a personal assessment. This can be done quickly online. Once eligibility is verified, you will meet with a qualified assessor – usually in your own home. If you wish, you can be accompanied by a friend to provide support.
Two types of assessment are possible. Each reflects the level of care you might need. Firstly, a Regional Assessment Service (RAS) can conduct a home support assessment and recommends the support you need to remain in your home under the Commonwealth Home Support Program (CHSP). Secondly, an Aged Care Assessment Team (ACAT) can do a more comprehensive assessment and make recommendations on home care packages, short-term (respite) care, and aged care homes.
What costs and fees apply for these services?
Kristi: Once the appropriate level of care is determined and you accept the recommendations, you may be expected to contribute towards the cost. Costs and fees plus government support should be discussed with service providers. Any government contributions are designed to keep costs affordable and, in some circumstances, services provided will be cost free.
CHSP services generally involve a small personal contribution. Home care packages can include a basic daily fee and an income-tested daily fee. Aged care home costs can include these fees plus accommodation costs. The combination you pay will depend on your financial circumstances and the level of care you select. Service providers usually offer a flexible range of payment options.
If entering an aged care home, what happens to the family home?
Kristi: It is not a given that the family home must be sold to finance aged care. Indeed, in some family situations, it is not practical nor financially sensible to sell the home. This is often the first financial challenge as the asset value of the family home is assessed differently for age pension purposes to its assessment for entry into an aged care home. A personalised financial strategy will address the differing assessment rules and deliver the most efficient outcome.
How do you select an aged care home?
Kristi: The myagedcare website contains a search facility to find suitable types of accommodation based on specific criteria. There are also numerous private sites offering search facilities. It can be helpful to list those features most important to you, e.g. private room, ensuite, social experiences, food quality. Once you develop a short list, contact each home’s admissions team and arrange a visit.
Why establish a personal financial strategy?
Kristi: You are potentially dealing with the complexities of superannuation, taxation, Centrelink/Department of Veterans’ Affairs and aged care systems. Each area has a range of regulations and procedures that can be quite overwhelming and challenging for inexperienced individuals.
But careful planning can help you strengthen your financial position. For example, if a person with a part-age pension sells their family home to move into an aged care facility, they might use some of the proceeds to pay for their accommodation costs and invest the balance. They are no longer a homeowner, so this affects their age pension assessment. It might also affect the means-tested daily care fee (contribution) they pay to the facility. Keep in mind that Centrelink’s means-testing rules are not exactly the same as those used in aged care.
Astute planning can maximise pension entitlements and minimise the means-tested daily fee. Appropriate investment selections are an essential component of a comprehensive financial strategy helping to maximise capital security, provide a secure recurrent income, and minimise taxation.
Kristi: It’s always important to have a current will, to grant powers of attorney, and to consider establishing an advanced care directive. A solicitor can help you draft or update your will. The Victorian Office of The Public Advocate website contains very useful information on powers of attorney and advanced care directives.
My thanks to Kristi for agreeing to participate in the creation of this article. Kristi Badgery is a financial adviser at Breakwater Financial Planning.
Note: This article is in no way intended to provide you with personal financial advice and you should discuss your own financial circumstances with a qualified financial adviser before committing to any decision on matters raised.