Three Aged Care Mistakes You Should Avoid
Introduction
Moving into residential aged care can be a stressful period with complicated rules, family conflicts and rushed timeframes. This can easily lead to financial and situational mistakes, which can be costly and difficult to rectify. This article highlights three common mistakes and tips to avoid the traps and aims to provide aged care financial advice to those who need care.
Rushing your Financial Decisions
The biggest expense you will face is the cost of your room, which is likely to be quoted as hundreds of thousands of dollars. Typically you will have two options when deciding how to pay for this:
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Daily Accommodation Fee
This option is easy to understand and can be great if you’re unsure how long you plan on staying, or if you want to see if the institution is right for you. However, in the event of a long-term stay, the amount of money you spend becomes harder to predict and there’s a chance that you’ll end up paying more than a lump sum.
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Lump Sum
Perfect for if you’re intent on a long-term stay, the lump sum payment offers the benefit of lower total payment and certainty in knowing the amount you’re paying for aged care accommodation. This makes it easier to plan your finances, especially considering the variability of other fees, which will be mentioned later in this article.
When signing contracts, many people feel pressured to make quick decisions which might lock them into arranging a quick sale of the home. We recommend you take time to make an informed decision and understand your options. Your provider must give you 28 days after moving into care to decide how to pay. This gives you time to get advice and be prepared.
Focussing on Just Day 1
While it’s important to know the fees for the first day of your stay in residential aged care, it’s equally crucial to consider the long-term financial implications of your stay. Knowing the fees for day 1 is just your starting point, as your fees change over time. For example:
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Basic Daily Fee
This day-to-day living fee is capped at a percentage of the single basic Age Pension. It’s important to stay up to date with the regular changes to the Age Pension as it could affect your Daily Fee.
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Additional Service Fees
Should you choose to pay additional fees for above-standard services, it’s important to be aware of any potential changes to the fees that the provider might implement.
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Means-Tested Care Fee
This fee is additional to the basic daily fee and is calculated based on an assessment of your income and assets. It contributes to the cost of your care. The amount can change if your financial situation changes.
Decisions you make after entry and changes to your circumstances can impact your fees. Make sure you get an understanding of what to expect over the following 2-5 years, with projections showing expected changes in fees, age pension, cash flow and asset values. If you’re unsure of how to manage these considerations on top of the stress of the life transition into residential care, consider reaching out to a financial advisor specialising in aged care for personalised advice.
Filling-in Forms Incorrectly
Services Australia needs to review your financial position to calculate your fees. To enable this assessment, you need to complete some forms and update Centrelink (or Veterans’ Affairs) records. Often, people will lack the knowledge or understanding of key terms and calculations when filling out these forms, which can lead to mistakes with the information provided. This could lead to incorrect fee calculations, which could have you ending up paying more, or cause long delays with the assessment. To avoid this, you can take these steps:
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Educate Yourself
Understand key terms and calculations by utilizing government resources. See Services Australia’s website
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Review Instructions
Read form instructions carefully to ensure accurate completion.
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Ask Questions
Contact Services Australia or Veterans’ Affairs for clarifications.
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Seek Professional Help
If unsure, consult a financial advisor specialising in aged care.
It’s important to take the necessary steps to avoid this common mistake, especially during this stressful transition in one’s life.
Get Aged Care Financial Advice
Even if your situation seems simple, there are so many aspects to consider in working out the best financial strategy. The value of seeking advice from an accredited aged care adviser is peace of mind to ensure you have made the right decisions to generate enough cash flow while protecting the value of your estate.
If you want to talk through your options or find out more information for your situation, call our office on 02 9894 1844 to arrange an appointment.
