AGED care is a growing worry. The older baby boomers are now approaching 65 and many are helping parents move into aged care. It’s a difficult time emotionally and the plethora of rules and regulations that confront their every move makes the process much harder. So complex is it that, some financial planning groups are training specialist advisors in this field.
A couple moving into aged care will often undergo an asset assessment in order to calculate the maximum amount payable for an accommodation bond or charge. Unfortunately, most people do not understand that the timing of this assessment can create very different outcomes.
Case Study: William is in high care and Ethel in low care. They have a house worth $700,000 with cash and contents worth $55,000. If they both complete the asset assessment while they are still living at home (or while one is in respite), William will not be liable to pay an accommodation charge and Ethel cannot be asked to pay an accommodation bond. Therefore their total assessable assets will be $27,500 each – less than the minimum asset amount of $37,500 each. The aged care facility will receive a fully supported resident supplement for William and Ethel. But, if they both entered care on the same day and completed the assessment after entry, each would be considered to have $340,000 of assessable assets. Ethel could be asked to pay a bond of up to $340,000 and William would be liable to pay the accommodation charge of $26.88 a day. If William and Ethel enter on separate days with the asset assessment completed after entry, the first person will not pay an accommodation bond or charge while the second would.
The huge difference in outcome is solely attributable to the timing of the assets assessment.
While it may seem attractive to have both William and Ethel enter care with no bond or charge payable, under this scenario they would not meet the criteria to keep and rent their former home with the pension and aged care exemptions that can apply. So any financial planning strategy for aged care needs to consider; the ability to access care, the impact on pension entitlement, the effects on the cost of care and the ability to afford care in the short and long term
I cannot stress too highly the importance of seeking expert advice if you or your family are considering moving into aged care.
Noel Whittakeris a director of Whittaker Macnaught Pty Ltd. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. His email is firstname.lastname@example.org
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