Planning for residential aged care is all too often at the bottom of our to-do lists.
When the time comes to give it more careful consideration, many of us may be overwhelmed by the procedural requirements, and some of us may not be capable of having a conversation about decisions being made due to ill-health.
Input from government departments, healthcare professionals and financial institutions is likely to be required. But where to start?
Your financial adviser can help. Whether the first conversation with an adviser happens before, during or even after making the transition to aged care, he or she can help ensure you or your loved one’s needs – both financial and emotional – are being fully considered.
Here are the five key areas that need to be taken into account. Remember that if you are gathering information on behalf of a loved one, you are likely to need their permission first.
1. Aged care needs
Q. Are you/your loved one aware of the government-funded aged care services that are available?
The Government’s website, www.myagedcare.gov.au, is a great place to start. It has information about the different government–funded services that can be accessed – such as the Commonwealth Home Support Program, a home-care package or residential aged care.
An Aged Care Assessment Team (ACAT) or, in Victoria, the Aged Care Assessment Service (ACAS), can determine a person’s eligibility for these subsidised services. You can request a free assessment by visiting the Government’s website.
There are different costs associated with each service and your financial adviser can help you understand what these are.
Your adviser will need to understand your income and assets to help determine the types of fees/how much you could be asked to contribute towards your aged care costs.
Q. Are you/your loved one receiving any income support payments, for example from Centrelink or the Department of Veterans’ Affairs (DVA)?
Any such payments need to be considered when determining how much you/your loved one will be required to contribute to aged care costs. There may be records readily available, but if not, contact the relevant authority.
Q. What are your/your loved one’s assets, income and/or liabilities? This can include savings, shares, account-based pensions, annuities, debts and loans.
Financial statements can help identify the value of holdings. Contact with relevant financial institutions and the person’s accountant can also assist.
3. The family home
When transitioning into residential aged care, what you or your loved one wishes to do with the family home can make a big difference to his or her cash flow.
Q. Is anyone currently living with you/your loved one?
Having someone continue living in the former home after you/your loved one transitions into residential aged care can affect your aged care fees.
If the person residing in the former home is someone other than a spouse, the financial adviser will need additional information in order to accurately determine your/your loved one’s aged care fees. This can include information on whether the person was caring for you/your loved one, how long the person has lived in the former home and whether that person qualifies for any income support payments from Centrelink/DVA.
Q. Could you/your loved one rent out the former home? Is the home in a rentable state? If not, how much would it cost to get it to a rentable state?
Renting the former home after entering aged care can provide additional cash flow. However, it can have an impact on social security payments such as the Age/Service Pension as well as aged care fees. A financial adviser should understand the family’s view around renting the former home and can assist with developing different strategies to assist you/your loved one with funding the aged care services required.
4. The aged care facility
If you or your loved one have visited aged care facilities before meeting with a financial adviser, or have already transitioned into care, details about the facility will be required to develop a funding strategy.
Q. If you/your loved one have chosen a facility, or already reside in one, what is the agreed accommodation price or current costs?
Determining aged care facility costs is necessary to determine cash flow requirements. If you/your loved one has already transitioned into residential aged care, refer to the accommodation agreement, monthly invoices and/or contact the aged care facility. If transitioning into care, visit the facility’s website or go to the Government website, www.myagedcare.gov.au, to view advertised prices and service details.
Q. Do you/your loved one have a preference regarding payment of these costs?
Facilities provide a choice in relation to payment of fees. With accommodation fees, there is a choice to pay a lump sum, a daily amount or a combination of both.
The funding strategy developed by an adviser will also be influenced by your/your loved one’s preference on whether to retain or sell down certain assets.
5. Other expenses
Additional lifestyle expenses can be included in a financial adviser’s funding strategy. These could include haircuts, day trips or specialist medical appointments.
Q. What additional expenses require ongoing funding?
Bank statements can help determine current spending requirements. The facility can also provide information on other optional services and their costs.
Q. Are there any ongoing health expenses that require funding?
Ongoing specialist medical treatments, medications, consultation fees and/or private health fund costs should also be incorporated into the adviser’s strategies. The family doctor or specialist medical professionals can help with details of potential ongoing health expenses. This could include approximate costs for future operations and so on.
To find out more about your aged care options, talk to your financial adviser, visit //www.challenger.com.au/agedcare or call Challenger on 13 35 66.
This article first appeared in the March 2019 Retirement Affordability Index.
Disclaimer: The information in this article is general only and has been prepared without taking into account any person’s objectives, financial situation or needs. Because of that, each person should, before acting on any such information, consider its appropriateness, having regard to their objectives, financial situation and needs. Each person should obtain and consider the relevant Product Disclosure Statement (PDS) before making a decision about whether to acquire or continue to hold the relevant product. A copy of the PDS can be obtained from your financial adviser, our Investor Services team on 13 35 66, or at https://www.challenger.com.au/personal