Understanding the aged-care numbers
With various regulations and assessments, there is one answer to the cost of aged care housing. Rodney Horin, managing director of Joseph Palmer & Sons, explains.
Many families are faced with difficult financial decisions when the time comes for elderly parents to enter aged-care accommodation.
The move into aged care often means that parents are moving a significant distance from their home in order to be in an aged-care accommodation that is near family. This adds yet another layer of complexity to this process. Families want their parents to be comfortable and well cared for, but are concerned that the costs of aged care in major cities may be out of their reach. Many aged care facilities ask for refundable accommodation deposits (RADs) of up to $1 million and daily fees, which can include a means tested fee, and an extra services fee, can quickly run up to more than $100 per person per day.
But it is not all doom and gloom. There are some avenues to pursue which may result in a satisfactory outcome. It helps to understand that the aged-care sector is made up of not only commercial operators, but also not-for-profit organisations that are happy to tailor their offering to a person’s financial circumstances.
Let’s look at a couple of examples.
Bill and Joan
Bill and Joan have lived in country Victoria for most of their lives, and more recently, in a retirement village in a regional centre. They will receive an exit payment of $120,000 from the retirement village and have savings of $80,000.
They receive the full age pension of $1,348.40 per fortnight ($674.20 each). When the Centrelink form to assess their income and assets was completed, it determined that they qualified for partially government supported places. They were able to find a very nice aged-care facility, with RADs of $600,000 per room, that would take them in as supported residents in two of these rooms without having to pay the RAD. The daily fees per person would just be the basic fee of $49.42 and a daily accommodation contribution of $25.72, totalling $74.14 per day. Once in care, their pensions would increase to $894.40 each per fortnight or $63.88 per day. So they would end up with a daily shortfall of $10 each, which they can afford as they now have $200,000 in the bank.
Beryl
However, it may be difficult to find supported places and some individual’s personal assets may be too high for them to qualify. In this example, Beryl is moving from interstate, will receive an exit payment of $100,000 from her retirement village and has savings of $80,000. She receives the full age pension of $894.40 per fortnight. She does not qualify for a supported place because her assets are above the cutoff of $162,815. However the Centrelink assessment states that she will have no means-tested fee and can only be asked to pay a RAD of $132,500, because she must be left with assets of $47,500.
Her family finds a new aged-care facility (with RADs of $750,000) that is keen to fill its rooms. The facility accepts a RAD of $132,500 for the room, and she will pay only the basic daily fee of $49.42, which is 85% of her pension. As the above examples show, the aged care sector is very complex. It is important to seek professional advice, which can often provide optional pathways to consider and the opportunity to identify significant savings.
To speak to an aged-care consultant at Joseph Palmer & Sons, call (03) 9601 6800 or visit www.jpalmer.com.au.
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