Few of us think beyond the opportunity to travel and do all those things we’ve been putting off until we have more time and fewer responsibilities before we even think about moving into Aged Care for ourselves or loved ones. But as the population ages, it’s a possibility that few of us can ignore and based on discussions with clients about themselves or their family members a number do not know how much Aged care will cost them.
Over 3.6 million Australians, or 16 per cent of the population, are currently aged 65 and over.iThis is projected to grow to 22 per cent by 2061, or more than one in five.ii We’re also living longer as the average Australian can expect to live into their 80siii, and many of us will live beyond 90.iv
That means more of us will need some form of aged care late in life. And as pressure grows on aged care service providers to cater for more people, the costs may rise.
What will you pay?
In recent years the government has tightened the rules around the calculation of means-tested fees for residential aged care. The aim is to make the provision of aged care services sustainable as the demand for high quality accommodation grows, it will also mean you pay somewhat more if you have a large pool of assets or high income coming in.
As we begin to consider the future care of not only ourselves but our older loved ones, what can we expect to pay?
The government provides an online Residential Care Fee Estimatorv to help you work out the likely cost of aged care. The type of fees you pay will depend on the facility and your ability to pay. One or more of the following may apply:
| Type of fee |
Included |
| Basic daily care fee |
Living costs such as meals, power, laundry. Set at maximum 85% of the single Age Pension and for some people this is the only fee payable.
|
| Means-tested fee |
An additional contribution towards cost of care determined by Department of Human Services (DHS) and based on a means-tested income and assets test. The more income and assets you have, the more this fee will be.
|
| Accommodation payment |
The government may cover some or all of this depending on your assets and income and a refundable lump sum accommodation deposit (RAD), a non-refundable daily accommodation payment (DAP) or a combination of the two may be payable. The amount of this payment will be set by the Aged Care facility with payment options.
|
| Extras/additional options |
These vary depending on your choice of facility and cover extras such as a higher standard of accommodation and services.
|
Watch out for “extras”
Although the government caps the annual and lifetime means-tested fees, you may be asked to pay extra for things such as a higher standard of accommodation, hairdressing, wine with meals, internet access and excursions. It’s important to check with the facility first to find out what is offered and how much these extra services will cost. In some cases, the charges exceed the services supplied and can add up to a substantial amount.
Aged care providers must give itemised accounts to the resident breaking down each of these services and the associated charge.
You should always get the Aged Care contract checked by a legal professional and double check all associated costs including entry and exit costs.
Plan to make it easier
Moving house can be stressful at any age, but particularly so when you are elderly and frail and have a lifetime of memories stored in your family home. Everyone wants the best possible living conditions for themselves and their loved ones, so it’s important not to make decisions in a rush at the eleventh hour. You will need to decide whether it’s better to sell the family home or keep it and rent it out to help fund the ongoing cost of care.
This is where we can help. Strategies for wealth creation that take into account all your retirement needs – including potential aged care planning – are increasingly relevant. With careful planning you need never compromise on the life you want to lead. Call our Oran Park office located in the Macarthur region if you would like a further chat.
As the saying goes, you’re never too young to plan your future. But you’re never too old either!
ii http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/3222.0main+features32012%20(base)%20to%202101
iii http://www.worldlifeexpectancy.com/australia-life-expectancy
iv http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(16)32381-9/fulltext
v http://www.myagedcare.gov.au/estimate-fees-for-aged-care-services
