Naturally, when investigating options for an elderly person, finding the right level of care is crucial, as is anticipating future care requirements and planning ahead.

Given a choice, many people would prefer to remain in their own homes. However, in home care is limited by the number of visiting carers and services available. The government has committed to ensuring that home care resources will be gradually increased over the coming years, including the provision of differing levels of home care. Costs associated with care are calculated on the single basic age pension and perhaps an extra income-tested fee determined by the care required.

The rationale is that those who can afford to pay for care should do so, while the government will subsidise those who don’t have the capacity to pay. Fees are now capped on an annual or lifetime basis and indexed annually.

When entering aged care accommodation, residents have the choice of paying a Refundable Accommodation Deposit (RAD) or making periodic Daily Accommodation Payments (DAPs).

To safeguard against the care facility becoming insolvent and unable to repay bonds, the government undertakes to make the repayment to either the resident or their estate. Bond amounts are recovered by the government via a regular fee levied against the care facility.

Other key aspects of the government’s aged care strategy include:

• High and low care are treated similarly so that the level of care can be adjusted seamlessly as needed.
• Care facilities can offer a wide range of extra-service packages. These are available to all residents at an additional cost, and residents can choose to opt-in or opt-out.
• Rental income from the resident’s former home is included in the means test for those entering a residential facility.
• The family home remains exempt from income and asset testing, if it is not generating an income, or if there is a protected person living in it, such as a spouse or financial dependent.

In an aging society, care for older Australians is a real concern for governments, communities, and families. It requires genuine and careful attention. Ongoing reviews and reforms will help, but your financial adviser / Aged Care specialist can assist you to create a tailored strategy that will help you plan for your own family’s future.     

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.