For many people, how the aged care industry operates is a bit of a mystery. Generally, people only start to learn about it when they have to. But as with many things, a little knowledge in advance may help you achieve a better outcome for yourself in the long run.
In my experience, there are four things that people don’t often realise about aged care that could help them if only they knew in advance.
1. There are four different fees that you can be charged
There are generally four fees applicable when you move into aged care.
The first is a basic daily fee that is applicable to everyone in aged care regardless of their means. This fee is calculated as 85% of the aged pension.
The second fee is an accommodation payment – usually the bond or what’s known as the RAD, Refundable Accommodation Deposit, which a person will put towards the cost of care. If a room has been advertised for $400,000, you would pay this in full, up front, or make a contribution towards it, known as a combination payment. If you have cash, you could make a deposit of, say, $100,000. Alternatively you could opt not to pay that amount up front, and instead make a Daily Accommodation Payment (DAP). This second payment will depend on the facility and its bond requirements – in some country areas or at not-for-profits, the bond might be much smaller, while in sought-after areas it could be up to $1 million.
The third fee is a means-tested care fee. The government mandates what a person needs to contribute towards the cost of their care based on their means. This requires some calculation and it’s where I spend the bulk of my time with clients, because the facility will be able to tell a client what the bond is, but they won’t be able to advise what their means-tested care fee is without knowing their financial position. In order for me to make those calculations, I need to fully understand my clients’ financial position.
The fourth fee that may be applicable is an additional services fee or an extra services fee. This may not always be an issue – it depends on the facility. Many facilities will charge an additional fee per day for an individual in aged care to have access to, for example, cable television, wine with dinner, excursions, choice of meals – which can all add up to significant expense. At some establishments it could be $100 a day in addition to the other fees which is something that shocks many people.
2. Aged care is highly subsidised and there are many different agencies involved
The government picks up a significant amount of the aged care tab – and this is a point that a lot of people miss when they’re going into care. They feel like they’re paying quite a lot, without realising that the government is significantly subsidising care to bring it back down to the levels they pay.
The labour costs, the cost of fresh food, not to mention incidentals, electricity and gas – the running of a nursing home costs a lot. All these things make it a very expensive industry. It’s important to know all the many players involved in aged care who can assist you to get the most cost-effective and quality care.
One of the first agencies you’ll encounter is My Aged Care, which becomes involved early on when you or your family are considering whether you need care. Centrelink is another key player, as is the Department of Veterans’ Affairs (DVA) if you are a veteran. Those covered by DVA often have access to excellent support and treatment options.
Your GP and other health professionals will also be involved, since they make the assessments about your health requirements and therefore your care needs. If you have a disability, the NDIS is the responsible government agency up until you turn 65 – from then on, you are deemed of pension age, and Centrelink takes over responsibility for any care arrangements.
Your financial advisor should be on hand to ensure you have structured you finances to get the maximum benefit from government assistance – and to make sure estate planning is in place to weather the difficult financial decisions and conversations aged care can bring. Complexity often also means that lawyers will be involved – particularly if your estate planning isn’t up to date.
There is a host of different people who may need to get involved. This is why it’s good to have the difficult conversations early to ensure you have a plan in place to manage them all.
3. You can’t choose when you enter aged care
Most people can’t elect to enter aged care because they’re not in a position to assess their own physical and mental need for care. Many people resist care, thinking they are fine living alone, but this is not their call to make. Neither is a decision to enter care voluntarily, because of the scarcity of places you can’t just say, ‘I want to go into care’.
As you gradually get closer to needing full-time aged care, it’s important to speak to your GP and other health care professionals. They can arrange an aged care assessment, which is where you are assessed to determine if you should go into residential aged care.
Sometimes an aged care assessment is triggered when a person has a fall or another health incident and goes into hospital. Through the health assessments at the hospital you might be told that you can’t go home. At that point the hospital will start to transition you into aged care. You may then go to a transitional care centre, and from there, the health professionals involved will assess when you need to start looking at full-time residential aged care.
4. You can try before you buy
As you get closer to needing care, it’s important to think ahead – visit as many facilities as possible. Respite care allows you to try before you buy. The government will give you around 60 days a year to go into respite care, and this may be an opportunity to work out whether you like a facility. If you’ve been assessed as requiring care, you can go to a home and spend some time there. You may decide you don’t like it because of room size or capacity, or because you want to be closer to family. All these things become important, and you can choose to have a bit more freedom if you’re well prepared.
This doesn’t mean you have to land on a decision now. You might just start to consider things like location. It may be that you’ve driven past a home for a number of years and it’s nearby. You can keep it in the back of your mind, knowing that you’re not yet at the point of needing full-time residential care. Considering what aged care is like long before you need it, as opposed to going to the first place you see when in a crisis can significantly ease the transition.
Trying before you buy can also help a primary carer who needs a break. If you’re looking after a loved one for a number of years, the impact and responsibility can be overwhelming. Respite care takes pressure off the carer, ensuring that the individual is happy too. This prior knowledge also puts you in the driver’s seat more than if you’re rushing your decision. Like anything in life, if it’s planned and there’s lead-up time, it works out better for everyone.
By understanding these four things better, you can start to plan for your future and put yourself in a better position when the time comes to enter aged care.
Martin Sherwood is an Executive Advisor at Viridian Advisory
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