Australians are living longer so it is becoming more prevalent for people to enter an aged care facility in their later years.
For anyone who has been through this process, you’ll know that the aged care system is complicated. Furthermore, decisions around aged care also impact on Centrelink means testing. I would recommend seeking advice before commencing the process.
The first step is the Aged Care Assessment Team (ACAT) evaluation. This can be performed by any health care professional who is a member of the ACAT. This is to determine the eligibility for care.
Once you are determined eligible the next step is finding a home. There is a government website myagedcared.gov.au that provides a list of all aged care facilities, their costs and a brief description of their rooms and services. This should assist in finding an appropriate facility.
The financial aspects of the aged care facility are where the complexity lies. Upon entering an aged care facility there is an upfront accommodation payment. This is referred to as the retirement bond. This payment is means tested, and in some cases only a contribution will be required, not the whole amount. This retirement bond is refundable. In the event that you are assessed to pay a bond, but are not able to do so, you will be required to pay an ongoing daily payment. This payment is not refundable.
The ongoing cost has three components. A basic daily fee, a means tested care fee and additional daily fee. The basic daily fee is the same for everyone and is currently $49.07 a day. The additional daily fee is for additional services and is to pay for benefits or small luxuries. Foxtel subscription would be an example of an additional service. Some facilities have a suite of included services for a set fee, others allow you to choose what additional benefits you would like and charge accordingly.
The means tested care fee is based on a combination of an income and asset test. Unlike Centrelink, where the income and assets are tested separately with the lower result counting, the aged care means tests aggregates both the income and assets tests combining the assessment for each.
Further complicating the means test is the treatment of the family home; the home is not counted for means testing if an acceptable person is remaining in the home. Normally this is the spouse, but also includes carers and dependent children. The money used for the bond does not count for means testing.
A good financial planner will be able to assist in being as efficient as possible in arranging your finances to limit age care costs and maximise Centrelink entitlements.
Alex McKenzie, Future Financial Services
Alex McKenzie is a financial planner, and the owner of Future Final Services in Penrith. He is a graduate of Western Sydney University.