Research shows that more than 60% of women aged over 65 and almost half of men aged over 65 will need some form of aged care during their lifetime. (1)
These figures illustrate that aged care is something all of us need to consider. This is why it’s important to understand how the rules around aged care work before a sudden event such as an accident or illness means you’re faced with making aged care decisions on the run – either for yourself or for a family member.
Right now, residential aged care costs are heavily subsidised by the Federal Government. But, with the Government’s aged care costs estimated to double from $13 billion now to $26 billion by 2023/24, there will be substantial changes to the aged care system.
Some changes to aged care will start from 1 July 2014 to make the system more sustainable, fairer and more transparent. So what’s changing?
- Aged care facilities will need to publish details of their accommodation, services and maximum rates on their websites to allow people to compare different facilities’ fees.
- New fee structures for residents moving into aged care. Arrangements for existing residents will remain under the previous system.
- New rules about how assets will be included in the combined income and assets means test for new residents.
- Lump sum accommodation deposits, as well as resident’s home up to a threshold (with certain exceptions) included in means tests.
- Residents holding substantial assets will pay higher care fees in earlier years, subject to an annual cap ($25,000 per annum, indexed).
- A lifetime cap ($60,000 indexed) means long-term residents will pay minimal fees in later years.
- For those not eligible for Government support, accommodation payments will start from $19,287 a year and residents will need to pay living and care costs of up to $41,972 a year.
- Income concessions available for people who have long-term annuities and accommodation deposits.
It's all in the planning
With a little pre-planning, you can avoid having to make quick decisions about aged care at a time your focus is on your own or your family’s health. This will also avoid a situation in which you need to rapidly sell valuable assets such as the family home to meet upfront deposits and ongoing fees for living, accommodation, and care services.
If you or a family member is likely to require aged care in the short or medium term, it’s worth thinking now about how you will manage the transition financially. It’s also important to ensure that any asset restructures that will take place as you move into aged care are considered in your Will.
People that need aged care soon should be thinking now about what they can do to help reduce aged care fees and maintain any social security benefits. One of the other important things to consider is ensuring there are enough funds for upfront and ongoing payments, which will help to ensure you have aged care options.
Let us help you devise strategies to ensure you have options when it comes time for you or a family member to move into aged care. Call or email us today to find out how we can help.
(1) Australian Government Productivity Commission Inquiry Report: Caring for Older Australians, 28 June 2011.