An important issue to discuss with your financial advisor is the Deferred Management Fee or Exit Fee which is paid when your unit is sold when you leave the village or complex. The deferred payment structure varies with each village, and it is worth making sure you understand the fine print as some people are not prepared for, and have not allowed for, the amount of the payment. Typically, the deferred payment percentage will increase the longer you stay in the village up to a maximum capped amount. The maximum deferred payment percentage for most villages lies between 30% and 40% over a 10-13 year period.

The Commonwealth government provides a range of services which allow you to keep living independently in your home or retirement complex. They are mainly funded by the government but in some cases you may need to pay a contribution depending on the amount of services you need and want.

To be considered for these services you need an assessment of your care needs by an Aged Care Assessment Team (ACAT). The ACAT assessment looks at how you are coping at home and what your care needs are. It may recommend you remain at home with extra services or it could recommend you move into an aged care facility. You can find your local ACAT service here.

On February 27, 2017 the legislation on Home Care Packages and Commonwealth Home Support Programme care packages changed. Packages are calculated and assigned directly to you, rather than to a service provider, allowing you greater choice in the care you want and who provides it.

There will be four levels of home care packages ranging from $11,693.65 to $52,545.40 over 12 months depending on your needs.

The cost of aged care is increasing, and you will want the financial freedom to choose the location and type of care you want. Currently the entry cost of aged care accommodation is anywhere between $300,000 and $1 million (source: Australian Financial Review, 21-22 January 2017).

Preserving this financial freedom is one of the primary reasons many people engage a financial advisor and implement a wealth creation strategy. Research shows many elderly people are finding they don’t have sufficient resources for the level of care they want, and are falling back on their children to contribute towards the cost.

Your financial advisor can incorporate this goal into your building blocks of wealth creation so you have peace of mind that this matter can be taken care of when the time comes. As a member of Count Financial we are accredited in aged care and can help you plan ahead financially. An ideal time to plan for care later on is in your pre-retirement years when you are at your peak earning capacity and you have less financial commitments.

When the time comes we can negotiate with the home on your behalf, complete the required paperwork, advise on the best way to pay, and ensure the decision is made with your financial interests in mind and with the intention of preserving wealth.

To be considered for residential aged care you need an assessment of your care needs by an Aged Care Assessment Team (ACAT). The ACAT assessment looks at how you are coping at home and what your care needs are. It may recommend you remain at home with extra services or it could be recommend you move into an aged care facility. You can find your local ACAT service here.

There are many different types of nursing homes available, for general and very specific needs. This can be a confusing process when working out availability, location and affordability. DPS Publishing produces the ‘go to’ guide to all types of retirement living and aged care options in Queensland and it is available here.

Changing our living arrangements as we age is a difficult and emotional decision for either us or for our family to make. It is a conversation no one wants to have and it is very complex due to the number of options available and the ways in which services are funded or paid for.

If you are no longer able to remain living independently, moving into a nursing home can ensure quality of life, comfort and give you peace of mind that you’re well looked after.

The PWC Property Council of Australia report found that only a small number of retirement villages or apartment complexes have integrated aged care, or aged care within 500m so moving to the next level of care generally requires new decision-making.

This can be an anxious and emotional time. Often the decision has to be made very quickly. Aged care options and the different costs of care are quite complex and can be overwhelming. This is where skilled financial advice can make a huge difference.

If your children contribute to the costs of your care it is essential to get advice. If not handled correctly this contribution will be means tested as part of your assets which means you may have to pay a higher means tested care fee than if you are assessed on your assets alone. This contribution may also have important estate planning implications.

If your children contribute to your accommodation fee or refundable accommodation deposit (RAD) in the form of a ‘loan’ which will be repaid on your leaving the home or your death, this needs to be clearly documented so the whole RAD does not automatically become part your estate.

Contributing to the aged care of a relative is not a decision to be taken lightly, and your financial advisor will be able to advise which of the charges is the appropriate option for your children if they need to make a contribution to your care.

1. an accommodation fee/refundable accommodation deposit
2. a basic daily care fee
3. a means-tested fee
4. extra services fees

Paying for aged care is a complex area and the decision should ideally be in the hands of your financial advisor to determine the best payment option for you. Your advisor can also maximise your Centrelink entitlements, minimise your means tested contributions, minimise tax implications and advise on the decision as to whether assets you hold, including your home, should be rented, sold or retained.

There is no pre-determined cost for aged care as each facility determines its own costs on location, size and type of care provided. It also depends on your assets. The average cost of accommodation is around $350,000 – $400,000 but this will vary depending on a range of factors such as location and the quality of the accommodation, which includes factors such as having a private bathroom, the range and standard of meals and the availability of additional services.

If you are seeking care as a couple, you will be considered to own half of the assets held by you and your partner or spouse.

If you are required to make a payment you have 28 days to make a decision from the following three options. It is best to discuss this with your financial advisor as we have the complete picture of your finances and can work out the appropriate option.

1. Refundable Accommodation Deposit (RAD) which is a lump sum payment made to the facility. This works like an interest free loan which you get back if you leave the home or it becomes part of your estate when you pass away. The amount is at the discretion of the aged care facility and depends on many factors such as location, standard of accommodation, level of staffing, quality of appointments, meals, ambience and available services; or
2. Daily Accommodation Payment (DAP) which is a daily interest payment on the RAD if you have not paid one; or
3. A combination of both meaning you provide a proportion of your payments as a RAD and a proportion as DAPs, in negotiated proportions.

This is an ongoing fee which covers your day-to-day living costs such as food, laundry and cleaning. Basic daily care fees are regulated by the Australian Government and are set at 85% of the maximum single Age Pension.

Currently, this is $48.44 per day/ $17,680.60 per year. This fee increases twice a year with changes to the Age Pension.

Depending on the outcome of your assets and income assessment, you may be asked to pay this fee. The amount will depend on the outcome of your assessment. If your children have contributed to your RAD, their contribution, unless clearly documented as a loan, will increase the amount of means tested fees you need to pay. As at March 1, 2017 this is capped at $26,041.09 a year and a maximum $62,498.66 over a lifetime. Once you have reached this amount, you will not be asked to pay any more fees.

As your financial advisor we are in a position to recommend what, if any financial assets, need to be sold to pay for this charge, as we have the complete picture of your assets and their value.

Some aged care homes offer higher levels of accommodation and additional services. Sometimes these are offered in mainstream aged care homes as a few beds with a higher standard of accommodation and additional services. You will need to pay an extra fee for the higher level of accommodation and the extra services.

Things like daily newspapers, more choice in meals, a higher standard of meals, hairdressing, podiatry, Foxtel, internet access are classified as extra services and you will need to pay. There should be a choice of whether you wish to use these services or not.

Your financial advisor can review these charges and advise on affordability.