The recent joint investigation by the ABC’s Four Corners and Fairfax Media into Retirement Villages has shed light on the widespread confusion surrounding Retirement and Aged Care Services in Australia. This investigation was headed up by our client, esteemed journalist Adele Ferguson.
As Aged Care is a complex area, major emotional, financial and legal issues can arise if misinformed decisions about one’s Aged Care needs are made, Especially if decisions are undertaken in a rush because of an unexpected life event.
The best way to prepare for such an event is to plan ahead and seek financial and legal advice to produce the best outcome for you and your loved one.
Below we provide a discussion of the Aged Care options available to you.
RETIREMENT VILLAGES
Living in a Retirement Village has become a popular lifestyle choice for many elderly Australians. However, most people are unaware of the complex lease or loan contract arrangements provided by Retirement Village operators, which do not offer the same level of legal protection as those required under Residential Aged Care contracts.
Common Retirement Village Costs
A Retirement Village should not be viewed as an investment venture. You could potentially leave the village with significantly less than what you paid to enter.
Some of the common costs associated with living in a Retirement Village include:
- Ingoing Contribution: The amount you loan to the village operator for your unit;
- Deferred Management Fee: Charged upon leaving the village;
- Maintenance Charge: Operational costs each year;
- Legal Costs: Involved in the preparation of the lease or loan agreement;
- Reinstatement Work: Repairs to bring your unit up to marketable condition when you leave the village;
- Long-term Maintenance Fund Fees: Maintenance and repair work for your unit; and
- Capital Gains/Loss: You may receive the benefit of a capital gain and be taxed on that gain, or you may be penalised by a capital loss upon the sale of the unit.
Legal and financial advice is highly recommended to ensure you make an informed decision as to whether you should enter a Retirement Village.
RECEIVING CARE AT HOME
Unpaid Carers
Aged Care does not always need to start with professional assistance or Residential Aged Care. You may have a family member or a close friend that can assist with your basic care needs at your own home.
An unpaid carer may be eligible to receive financial assistance from Centrelink if they give daily care and attention to someone “who has a disability, serious illness” or is “frail and old”.
The Centrelink benefits available to an unpaid carer are currently as follows:
- Carer Allowance: $124.70 per fortnight;
- Carer Payment: Up to $888.30 for a single recipient or up to $1,339.20 for a recipient couple, combined.
The Carer Allowance is not income or assets tested whereas the Carer Payment may be reduced subject to the level of income and assets of the unpaid carer and the care recipient.
You may also be entitled to receive short-term respite care services to allow your unpaid carer to attend to their personal daily commitments, or go on leave whilst ensuring your care needs continue to be supported.
Government Support Services
You can access the following Government Support Services at your home:
- Commonwealth Home Support Programme (CHSP): This provides basic services such as personal and nursing care and assistance with minor home maintenance and modifications. To determine your eligibility for this service you must obtain a Home Support Assessment from a My Aged Care Regional Assessor. The amount you pay for this service will depend on the type and number of services you require and your level of income;
- Consumer Directed Care (CDC) Package: This provides a co-ordinated home care package that can cater for basic or complex personal and nursing care needs, including transport and meals. To determine your eligibility for a CDC package you must obtain an assessment from the Aged Care Assessment Team (ACAT) that will subsequently refer you to a local service provider. The basic CDC fee is $10.10 per day (or $141.40 per fortnight) plus an income tested care fee that varies depending on your level of income.
For further information regarding the Government Support Services available, please refer to the MyAged Care website on https://www.myagedcare.gov.au
RESIDENTIAL AGED CARE
Australia’s Aged Care system ensures that everyone who requires Residential Aged Care can afford care, therefore the decision to move into one is not all about price. You should also consider the quality of the facility, and its proximity to your family members and friends to ensure it satisfies your lifestyle goals.
Residential Aged Care Fees
Understanding how the fees work and what fees can be negotiated with your chosen Residential Aged Care facility can put you in a much better financial position.
The fees associated with Residential Aged Care are outlined below:
- Basic Daily Care Fee: Covers your general daily living costs such as meals, electricity, gas and laundry. It is currently $49.07 per day and payable by all residents, regardless of their income or assets;
- Means-Tested Care Fee: You may be required to make an additional contribution towards the cost of your daily care depending on your level of income and assets;
- Accommodation Payment: This is the amount the Residential Aged Care facility will charge for granting you accommodation at their home, and is dependent on your level of income and assets. You may choose to pay for this fee via a lump-sum Refundable Accommodation Deposit (RAD) or via a Daily Accommodation Payment (DAP); and
- Extra or Additional Optional Services Fee: Some Residential Aged Care facilities offer residents higher standards of accommodation or additional services, and the fees charged for these additional services will vary depending on the provider. The details of these services and the fees that apply can be obtained from your chosen Aged Care Facility. On some occasions, there is scope to negotiate this fee.
ENSURE YOUR ESTATE PLANNING IS IN ORDER
Estate planning is a process designed to transfer your wealth after you pass away in the most efficient way to your chosen beneficiaries. Given its significance, your estate plan should not be neglected.
Wills
Everyone should have a Will in place. This important document should be reviewed periodically to ensure your estate assets and control are placed in the hands of the right people, at the right time and with favourable tax outcomes.
There are several decisions you will need to make when reviewing your Will in relation to:
- What assets can be distributed in your Will (Estate Assets);
- Who will be responsible for administering your estate (Executor);
- Who will receive your assets (Beneficiaries); and
- When and how your beneficiaries will receive your assets (Testamentary Trust).
Powers of Attorney
A Power of Attorney is a legal document which authorises a person of your choosing to either support or act on your behalf should you become unable to do so yourself.
Powers of Attorney are valuable and important documents as they allow you to decide who you would like to manage your financial, medical and lifestyle affairs should you no longer be able to make those decisions yourself.
Therefore, it is crucial this power is granted to someone who has your complete trust.
By having Powers of Attorney in place, you can be assured your affairs are being managed by a person with your best interests.
DISCUSS YOUR OPTIONS WITH MORROWS
The Morrows team are available to answer any further questions you may have, please feel free to contact any of the below specialists on 03 9690 5700.
Aged care / retirement residence advice
David Alcorn – Principal, Morrows Private Wealth
Allison Hyland – Senior Advisor, Morrows Private Wealth (currently on maternity leave)
Ethan Allen – Associate Advisor, Morrows Private Wealth
Renato Manias – Paraplanner, Morrows Private Wealth
Estate Planning
Steven Jell – Lawyer, Morrows Legal