How Much Money You Can Keep When Entering Aged Care

Understanding Means Testing for Aged Care Costs

When it comes to Aged Care costs many governments use a means-testing process to determine how much a person should contribute from their own assets and income. Means-testing looks at various assets, including cash savings, income from pensions, and even the value of property, to assess eligibility for financial assistance or government subsidies.

According to My Aged Care, a government resource on aged care services, the means test assessment affects your costs and the support you may receive, ensuring that those with higher resources contribute more to their care.

However, only some assets are treated the same way. Understanding how different assets are evaluated can help you make more informed decisions and may even allow you to protect certain parts of your savings. Please read Means Tested Care Fee Explained or Aged Care Fees to understand more about the costs involved with Aged Care.

Current Savings and Asset Thresholds

In Australia, thresholds are set to determine the level of financial assistance available for Aged Care residents. If your assets exceed a certain level, you may need to contribute more toward your care costs. Conversely, if your assets fall below the threshold, you may qualify for increased support.

This can make a big difference in the funds available to cover other personal expenses or future needs. Knowing these thresholds and planning accordingly can provide a clearer picture of the funds you’ll retain.

How Much Money Can I Keep?

One important consideration is the Basic Daily Fee, which covers everyday living expenses such as meals and utilities. Beyond this, it’s advisable to retain a personal allowance of approximately $5,000 per annum which helps cover incidental expenses like clothing, toiletries, or small treats. This allowance ensures that even while in Aged Care, you maintain some financial independence.

How Different Assets Are Treated in Means-Testing

Not all assets are assessed equally. Here’s a look at some of the main types of assets and how they are typically considered during means-testing:

• Cash and Savings: Liquid assets like bank savings, shares, and cash are usually included in the means test. Keeping track of these assets and understanding how they fit into the broader means-testing process can be essential for effective planning.
• Pensions and Income: Income from sources like pensions and annuities is also assessed. However, there are often nuances around how much of this income is counted, particularly if you have a spouse or dependents.
• Property and Real Estates: Your primary residence may be exempt in some situations, especially if a spouse or dependent continues to live there. However, if the home is unoccupied, its value may be included in the asset assessment. In some cases, individuals opt to sell the property to cover care costs, though this should be carefully considered as it has broader implications.

You May Also Read: What Are Home Care Packages

Exemptions and Special Cases

Some assets may not be included in the means-testing process. For instance, if you have a partner or dependent living in your primary residence, that property might be exempt from assessment. Other exemptions may apply to specific belongings, insurance policies, or certain types of bonds and trusts, making it valuable to review your assets comprehensively.

Strategies to Protect Savings and Assets

There are several strategies available to help protect your savings and assets within the rules. For example, creating a trust or gifting assets to family members are common methods. However, these actions should be taken with caution and proper advice to avoid unintended consequences. Early planning is key. Acting before there’s an immediate need for care allows more flexibility and options in preserving your wealth.

A financial adviser specialising in aged care planning can be invaluable in providing tailored advice on these options, helping you make strategic decisions that align with your financial goals.

Government Assistance and Care Subsidies

For those with limited savings, the Australian government offers several options to support aged care costs. Programs like the Commonwealth Home Support Programme provide subsidies, especially if assets fall below the means-testing threshold. This assistance can relieve financial pressure, ensuring that everyone has access to quality care.

Eligibility for government assistance is determined through an income and asset assessment, ensuring that financial aid is directed toward those with the greatest need.

The Importance of Financial Planning for Long-Term Care

Whether you’re preparing for an immediate move or planning for the future, financial planning is essential. A sound plan can help you retain as much of your wealth as possible, ensuring you’re able to meet your own needs and even leave a legacy for your family. Financial advisers can help structure a strategy that covers everything from asset protection to understanding subsidies and planning for potential future changes in your financial needs.

Conclusion

Moving into Aged Care raises important financial questions, but with proper planning, it’s possible to navigate these complexities confidently. By understanding the rules around asset thresholds, means-testing, and allowances, you can make informed decisions that protect your savings while ensuring access to quality care.

If you or a loved one is considering a move to Aged Care and want to understand how best to protect your finances, reach out to Roccaforte for expert guidance. We specialise in aged care financial planning in Sydney and can provide tailored advice based on your unique circumstances. Contact us today to schedule a consultation and secure peace of mind for the future.

Call us at 02 9894 1844 to arrange an appointment and secure peace of mind for the future.

Get in Contact