Residential Aged Care Costs – Why You Should Review and Plan Ahead
Easing the guilt and emotions associated with a parent or loved entering in residential aged care is a personal and individual journey. Before moving in, take time to understand residential aged care costs. The lead up to this day is often quick, confusing and emotionally charged. The goal, for most, is to stay at home to lead a healthy, independent and safe life to the end. When this does not happen, and in lieu of a plan, things can get messy and mistakes made.
Residential Aged Care Costs – Objective
The aim is to understand if you can afford the cost of care. Care will come at a cost from day one and an income will be required forecasted out at least two, three years of entry (we forecast out to five years to play it safe).
Despite good intentions, the role of an aged care facility managers, social workers or discharge nurses, for example, are not there to provide licenced financial aged care advice.
At our aged care advice firm, we see time and time again people stressing about keeping up with their aged care payments either for themselves or their loved ones.
Due to a rapid decline in health, Jenny, aged 75 years, needed 24-hour supportive care. She is a widow and non-homeowner. Over the years, she accumulated $220,000 in cash.
Jenny’s daughter had done her homework and found a caring home which meet Jenny’s social and physical needs.
The costs associated with moving into a residential aged care home left Jenny short by about $330,000.
This is because Jenny was to pay $550,000 for the cost of the room (Refundable Accommodation Deposit) plus a Daily Care fee at around $18,845 per annum and a Means Tested Fee at $690 per annum.
Jenny’s only source of income was her age pension.
Settled in the home, Jenny and her daughter technically have 28 days to understand how they were going to pay for her care.
Without an answer, Jenny could be at risk of having to move into a less costly room or worse case, another home which costs less.
In this case, a few viable options include paying a daily accommodation deposit, family assist with payments or move to a lower–cost room/facility.
Also important is how Jenny will afford her care in years two, three and beyond.
Making rushed decisions often sees the financial estate diminish. In this case, Jenny’s desire to leave her daughter money after she passed away, were reduced.
My mantra is that ‘there is always options’, however that comes with a caveat, and that is, you need professional aged care advice and time to prepare in advance.
Written by Luisa Capezio, Director at Phillips Wealth Partners, accredited aged care professional™ www.philipswp.com.au