Aged Care

While the Australian Government provides funding to residential aged care homes to assist with the costs associated with providing care, most residents will have to pay fees and charges.

Major reforms to the aged care system, including the way fees and charges are calculated, apply to residents who first enter residential aged care on or after 1 July 2014, or who move to aged care facilities and choose to be assessed under the new rule.

One of the key changes is that all aged care facilities will be subject to the same fee structure, regardless of the level of care the resident requires.

There are two main types of fees payable for aged care:

• Accommodation payments
• Ongoing fees

The accommodation payment is det by the aged care facility and can be paid as a lump sum (RAD) or a daily amount (DAP).

The ongoing fees include the basic daily fee and can also include a means tested care fee and an extra services fee.  The basic daily fee is the same for everyone, but as the name suggests, the means tested care fee will depend on your financial means.

Some aged care facilities are approved by the government to provide extra services across the whole facility or in a designated part of the facility. In addition to designated extra service facilities, some standard aged care facilities offer extra services on an opt-in basis.

Extra services mean that the facility will provide you with a higher standard of accommodation and services, which you will pay for in the form of a daily extra service fee. Extra services may include a choice of meals, wine or massages. Accommodation and services vary from one facility to another, so you will need to check with the provider for details of services and extra service fees.

Older people needing access to greater levels of support may compare retirement villages against residential aged care services, and view them as substitutes. While both provide supportive environments for older people, it is incorrect to view them as substitutes.

Retirement villages offer the opportunity to live in a community of older people. Maintenance of the external building and community garden areas is provided by the village operator. But it is still independent living.

In a retirement village you may be able to choose to access support and assistance inside the home, but at an additional cost. The services available vary from one retirement village to the next. You need to have the financial capacity to meet the costs as these care services are not subsidised by government. You may, however, qualify for government subsidised home care packages.

Residential aged care services bundle together fully supported living and care supports with accommodation. This care is provided 24/7 and is very heavily subsidised by the government.

The RAD (Refundable Accommodation Deposit) is effectively the price of a room set by an aged care facility.

The most expensive room is around $2 million with the average across Australia just over $400,000. But if the thought of paying $400,000 or $500,000 or $800,000 or more for a room in residential aged care scares you, you may find it reassuring to know that you have choices.

With most decisions on where to live, you can choose to buy or rent. Aged care is the same. While the prices are quoted as a lump sum you have the choice to pay the lump sum and “buy” the right to live there or to pay a daily fee and “rent” the right to live there.  The daily fee option is called a DAP (daily accommodation payment).

The potential need for aged care can be a difficult and emotionally loaded conversation for family members.  Many parents and their adult children avoid talking about it until they have no choice, by which time it is often too late for any effective planning

Residential aged care is a complex area so getting the right professional financial advice can make all the difference in ensuring you or your loved ones assets and income are structured effectively, minimising any changes to your pension payments, and ensuring you have sufficient income to support your care needs.

Nobody wants to admit to themselves that their parents have grown old and frail. It’s a stark reminder that time marches on and life is not forever.  But there are certain realities that must be faced if we are to keep our loved ones safe.

Here are some signs to watch out for which, if they are occurring more frequently, may point to Mum or Dad needing some extra help:

• Missed appointments
• Appliances left on
• Unclean house
• Unexplained dents in the car
• Empty fridge or spoiled food
• Poor personal hygiene
• Forgetting to take medications

Spotting one or more of these clues is not necessarily cause for alarm in itself; it may just be an isolated incident. But if there are multiple instances of one or more, it may be time to chat to mum or dad about ‘getting some help around the house’. Help from family members may be easier for them to accept in the short term. If this is not possible, you may need to consider paying for support services like house cleaning, shopping and gardening. You can also contact the Myagedcare hotline on 1800 200 422 to request an aged care assessment to determine your parents’ eligibility for government subsidised services.