At some stage, most of us will be faced with difficult decisions on aged care either personally or for a family member. Entry into a Residential Aged Care Facility can have a very significant impact on our emotional state and financial position.
DID YOU KNOW?
- One third of all men and half of all women who reach age 65 will enter aged care
- 13% of Australians are currently over age 65 (3 Million)
- By 2056, this figure will be 25% (9 Million)
The various types of aged care available include community aged care packages (providing support to those still able to live in the family home), independent living accommodation (such as retirement villages) and Residential Aged Care.
The costs of Residential Aged Care can vary significantly between facilities and from resident to resident. With good advice these costs can be managed to ensure that the financial impact on the aged care resident and their family is reduced.
Types of residential aged care facilities
Two types of Residential Aged Care Facilities are available: Low Level Care, commonly referred to as Hostels; and High Level Care, commonly referred to as Nursing Homes. The main difference between the two lies in the level of care provided. Individuals requiring a high level of care generally require Nursing Home accommodation. In contrast, those who require low level care are more suited to Hostel accommodation.
Entering a residential aged care facility
Entry into a Residential Aged Care Facility is not automatic and is subject to a medical assessment by the Aged Care Assessment Service (ACAS). ACAS also conducts a financial assessment, based on social security means testing to allow the entry and ongoing costs to be determined.
As can be appreciated, the emotional pressures on the family at this time are significant. When this is coupled with the financial implications, the period from initial assessment to entry into the aged care residence can be very stressful.
Upfront and ongoing fees for aged care facilities
Hostels levy an upfront bond (which is eventually returned after the retention amount is deducted). Nursing Homes do not generally require an accommodation bond and will instead charge a Daily Fee (Accommodation Charge). In addition, both will apply a Basic Daily Fee and based on income, an Income Tested Fee.
Centrelink Income Test and Deeming Rates
It is important to note that Centrelink’s income test partly determines the ongoing fee that needs to be paid. Consequently, the deeming rates (i.e. the returns Centrelink assume on financial assets) influence the ongoing fee a resident needs to pay. Any increase to deeming rates needs to be kept in mind as the ongoing fees paid by an aged care resident are sensitive to changes in the deeming rates.