Demystifying the aged care maze

21 February 2019

Denise Harrison, Wealth Adviser |

Unfortunately, none of us are getting any younger and some of us will need to navigate aged care for parents, and perhaps for our partner and ourselves as the years roll on. But what does this actually look like in practice?

The Royal Commission into aged care may give you pause, and rightly so based on the reports of abuse, poor staff training, neglect and understaffing. There is still a lot that needs to be done to raise the standard for all those relying on an Aged Care facility, however it also seems likely that the numbers choosing to remain at home will continue to increase.

The current trend shows Australians are staying at home longer and entering aged care on average at age 83. This trend is expected to continue with the average age rising, whilst three times as many Australians receive home care compared to those in a care facility according to the 2019 Productivity Report.

Once in aged care, the average stay is around 2-3 years, therefore the need for a large sum of money to cover many years of costs is much less than one might expect.  It is also cheaper for the Government when you remain at home. The 2019 Productivity report shows the cost of home care is a quarter of the cost when compared to aged care despite three times more aged individuals choosing to do so. As a result, there are a range of government subsidised home care services that can provide assistance.

Help at home

It’s not unusual that people want to stay in their own home for as long as they can. It helps provide a sense of normality in familiar surroundings, whilst they continue to be around family, friends and neighbours. Small things can also make a difference – transport, help getting dressed, modifications to your home (e.g. hand rails), or even nursing care and physiotherapy can help keep you at home.

Short-term help

A short term incapacity does not necessarily mean you lose your independence long term. A short term stay at a care facility can provide a level of care to recover from illness or injury, allowing you to return home afterwards. It can also provide a break for a care, allowing them to go on a holiday.

Care in an aged care home

If you, or a loved one, needs more significant ongoing help with day–to-day tasks or health care, you may need to consider a care facility that can provide 24-hour support. Choosing the right room for your/someone else’s needs will be important to ensure comfort during the stay.
In addition to choosing the type of room (single or double and ensuite), the rooms can range in quality and size. Many rooms include additional features such as a view, a 24/7 on-call nurse, air-conditioning and fans and so on.
Many facilities offer a variety of amenities that you may want to consider. Hairdressing and barbeque settings are useful, whilst water exercise programs at an on-site pool are quite popular for those wanting to stay active.
Given the variety of options available, the cost will depend on the facilities and services that you are looking for. The reality for many is that aged care is about end of life care. Your or your loved ones needs, whether ongoing or short term, will influence the services you choose and the resulting cost.

Aged care homes costs

There are various fees you may be asked to pay, including:

  • A basic daily fee of $50.66 ($709.24 per fortnight) covers your day-to-day living costs. Everyone can be asked to pay this fee
  • The daily fee will be between 0 - $252.20 per day if your income and assets are over a certain amount. There is an annual payment cap of $27,232 and a lifetime cap of $65,357, after which no further payments are required
  • Some people will have their accommodation costs paid in full or in part by the Government, while others will need to pay the agreed price to the aged care home. This can be a refundable deposit, an equivalent rental-style daily payment, or a combination of the two. This will vary depending on the care home chosen
  • Extras such as a higher standard of accommodation, better food, and recreation activities incur an additional cost.

The most important aspect is that the care facility meets the physical and emotional needs of the resident, whilst providing the comfort and support needed in their later years.
Also worth considering is how care is funded and what other implications there might be. These factors may include:

  • The resident’s overall health and likelihood of a longer or shorter stay in care
  • The sources of funding available
  • The capital gains implications if assets need to be sold to fund care (a capital gain effectively increases the cost of funding aged care).

Often the need for care can occur suddenly after a bad accident, significant degradation in capacity due to dementia, or it’s just simply put off until it can no longer be ignored. This can reduce the time available to consider your options and make decisions.

Some early investigation and planning can provide some peace of mind and lead to a less stressful transition. If you would like more information to navigate this important decision, please contact a BDO Private Wealth expert.

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The information in this document reflects our understanding of existing legislation, proposed legislation, rulings, etc., as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended to be, comprehensive or a substitute for professional advice on specific circumstances.

The financial product advice or information in this document is of general nature only and has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision on the basis of the advice above, a prospective investor needs to consider, with or without the assistance of a professional adviser, whether the advice is appropriate in the light of their particular investment needs, objectives and financial circumstances.