We all know we are living longer, thanks to medical research and the continuously improving medical treatments. As we are put back together and held in one piece by the many specialists around us our bodies are slowly pushed towards breaking point. It is at this point in time when the first consideration of age care occurs.
This can be a very stressful time for family members. Decisions need to be made quickly around a complex area which is unknown to many of us - all whilst the health of our loved one being a mum, dad or spouse is deteriorating.
The first thing that comes to mind is that you want the best care for your loved one. But then consideration must be given to the cost or availability of the care facility.
New entrants should know that all facilities charge an upfront costs known as an accommodation payment, which will be advertised at www.myagedcare.gov.au. This website is a great starting point when trying to find a nursing home that suits the applicant’s needs. The accommodation payment generally has a maximum of $550,000, and a resident must be left with assets of at least $46,000. The amount payable will vary depending upon the nursing home, and the level of assets of the entrant. The accommodation payment can either be paid as a lump sum or periodic payment where interest of 6.14% is charged on the outstanding amount of the accommodation payment.
The ongoing costs consist of a basic daily care fee of $47.86 per day which is payable by all residents. If a resident is on the full age pension, 85% of their age pension is retain to pay for this basic daily care fee.
A means tested care fee will apply to someone which can get up to a maximum of $25,731 per annum, and has a lifetime cap of $61,754. An individual paying the maximum means tested care fee will stop paying this fee after 2.4 years, leaving only the basic daily care fee to be paid.
During this stressful and eventful time, it is generally the Enduring Power of Attorney or family member who is assisting with the application for care. We find their major concerns and questions are:
- Should the family home be sold or retained?
- What are the costs going to be?
- Can we maximise any age pension entitlements?
- How much bond should I pay?
- How should I pay for the bond?
Most of the planning occurs around the family home, as generally this the individual’s biggest asset which can be used to fund the upfront costs. This may also impact the level of age pension entitlements received making the ongoing costs harder to meet in the future.
Our financial advisers can assist with the modelling of these scenarios and more. This allows for a more personalised and informed approach into entering care. We find this helps answer the question of ‘am I doing the right thing for my loved one?’
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