With longer and more productive retirements, there is a high chance that help will be needed with daily living activities and/or medical care, especially at older ages. For some people this may mean accessing aged care services at home. For others it may require a move into residential care.
Clients seeking help with aged care generally have three main concerns:
1. How do I access care;
2. Can I afford it; and
3. Am I missing out on anything?
For these clients (and their families), peace-of-mind and a clear roadmap can make all the difference, with any savings in fees or additional Government benefits being the icing on the cake.
Is care affordable?
The cost to care for someone in a residential facility can be as high as $230 per day ($83,950 per year) but luckily costs are heavily subsidised by the Government.
The cost pressures on aged care facilities and the Government budget have led to a new regime of fees that will apply from 1 July, 2014.
Clients moving into care from 1 July, 2014 may pay higher fees than clients moving into care before that date, but they gain long-term protection with a lifetime cap on the means-tested portion of the daily care fee.
A quick comparison of the current and new fee structures is shown below.
What is the value of financial advice?
Most clients need to restructure their finances when moving into residential care. Of particular importance is the need to create sufficient cashflow to cover fees and personal expenses.
The new rules aim to create greater equality but different investment options can still vary the financial outcomes.
Under the new rules, strategies to use annuities and trusts investing into insurance bonds may still offer advantages for some clients. But the ability to negotiate higher bonds for lower fees is likely to disappear as an advice opportunity.
The new rules may give greater reason for clients to seek advice, as they will be given 28 days after moving in to decide whether to pay the accommodation payment as a lump sum or a daily fee. Making an informed decision will need a series of calculations and comparisons of various options, including whether to sell or keep the house.
Why the family should be involved?
Advice may help to remove much of the stress faced by families when looking at aged care.
Decisions may be best solved as a family, so encourage clients to hold a family meeting and talk to their children and other close family members. Facilitating these meetings on behalf of clients can help with smoother implementation of your advice, as well as provide you with an opportunity to start building relationships with the wider family.
Remember that by the time clients need to move into aged care, it is probably the children who will need to make the arrangements and the decisions.
Written by Lara Hansen – Training and Paraplanning Manager at Aged Care Steps
How to get support?
For further information please contact Customised Financial Planning – 02 9548 5933.