Top tips (and traps to avoid) when navigating aged care

A guide to aged care dos and don’ts when navigating aged care decisions

Navigating aged care decisions, whether for yourself or a loved one, can be complex. Mistakes can come at a high price – both emotionally and financially – and in some cases can be impossible to undo. If you’re embarking on this journey here are the top tips (and traps to avoid) according to Aged Care Guru Rachel Lane.

Tip #1: Care for carers

Caring for a loved one who needs aged care can be emotionally and physically demanding, so it’s essential to make time to care for you too. Seek support from family members, friends, and support groups, and don’t hesitate to book in some respite stays when needed. Make time for self-care activities that help you recharge and maintain your overall health and well-being. Remember that taking care of you enables you to provide better support to your loved one and navigate the aged care journey with resilience and strength.

Tip #2: Get an assessment

Getting your care needs assessed can be a scary thought. It’s a good idea to think of the outcome of your assessment like a passport to government funded services – if you have been approved, you can access them, and if you haven’t you can’t without undertaking a new assessment. So, while what you may need immediately is a home care package, being approved for a respite stay or a permanent move into residential aged care doesn’t mean you have to use those services, it just means if you want to you can. Being approved for more services is not a bad thing, it gives you choices and flexibility around how and where you get your aged care.

So, where do you start when it comes to navigating aged care decisions? The starting point is to contact My Aged Care and arrange an assessment of your care needs. They will be able to organise an assessment, which is normally done in your own home. The assessments are free and easy, with questions about the things you can do for yourself and those you need help with. The team will talk to you about services that can help you. You have a say in the services you think you would benefit from, you can have an advocate present if you and if need an interpreter that can be arranged too.

Tip #3: Do your research

Doing your research regarding aged care decisions means that you will be well informed about which home care provider may suit you best or which aged care home you may want to move to in the future. Starting early reduces the likelihood of needing to make decisions under pressure and based on what is available at the time.

Getting a quote from a few home care providers to compare their services and prices is a good place to start with aged care decisions, and many will also tell you about other services (including free services) in your local area that may also be helpful.

Respite is a great way to try an aged care home (or even a few), as approval is for 63 days (9 weeks) per year before you decide which one to move to. It is also very affordable as there are no accommodation payments or means tested care fees you simply pay the basic daily fee of $61 per day plus any service fees for things like hairdressing, wine, and entertainment. If you’re unable to afford the cost of respite you can apply for financial hardship support.

Tip #4: Crunch the numbers

While both residential aged care and home care packages are means-tested, the assessments are different. In home care the means testing uses only your income. Full Age pensioners don’t pay an income tested care fee in home care while singles with income over $32,331/year and members of a couple with income above $25,054/year or $31,707/year for couples separated by illness can pay 50 cents per dollar above the threshold, capped at $6,544/year for part pensioners and $13,087/year for self-funded retirees.

In residential aged care the means test uses the same income test plus an asset test, combining the outcome of the two tests together to get your means tested amount. Under the asset test the first $58,500 is not counted, the assets between $58,500 and $197,735 are assessed at 17.5%, those between $197,735 and $476,306 are assessed at 1% and the assets above $476,306 are assessed at 2%. If your means tested amount is less than $67 per day you are classified as a low means residents and have your accommodation cost subsidised. If your means tested amount is above $67 per day you pay the market price for your accommodation and the amount above $67/day as a means tested care fee. The means tested care fee is capped at $32,719/year and there is a lifetime cap on means tested fees across both home care and residential aged care of $78,525.

Trap #1: Failing to plan

The old adage of failing to plan when it comes to aged care decisions is planning to fail is true when it comes to aged care decisions. Many families avoid talking about aged care decisions until there is a crisis, finding their options limited to what they can access immediately. Some people think that talking about aged care is a “Slippery slope to a nursing home” or that aged care services are going to start before they are ready. Rest assured that you are in control and you should expect to wait for many of the services and even the assessment to start receiving the services.

Trap #2: Thinking an aged care home will be more affordable than home care

Many people receiving a Home Care Package will reach a point where the package is not enough to give them all the care they need. At this point they face navigating aged care decisions, use their own money to pay for private care on top of their package funds or move into residential aged care. The decision is often made to move into an aged care home with the assumption being that it will be more affordable, in reality it can be tens of thousands of dollars more.

Trap #3: Moving into an aged care home before you know the cost

Possibly the most common mistake people make when navigating aged care decisions is to move into an aged care home before they know the cost. While the aged care home will tell you before you move in what the market price is for the accommodation and the details and costs of any additional services, your cost of aged care will be determined based on your means. The means test will determine whether or not you will be classified as a low means resident (with the Government subsidising some or all of your accommodation cost) or need to pay the market price will be based on your assets and income on the day you move in. It will also be used to work out how much you need to pay towards your cost of care through a means tested care fee. Unfortunately, many people move into an aged care home and complete the means assessment afterwards only to discover that they are slightly over the cut off of being a low means resident and it is too late to adjust their assets or income.

Trap #4: Rushing to sell the house

While the Refundable Accommodation Deposit (RAD) is normally hundreds of thousands of dollars, you don’t have to pay it as a lump sum. You can choose to pay by daily payment or as a combination of daily payment and lump sum including the option to pay a lump sum and have the remaining daily payment deducted from it. Funding the RAD is what often leads people to hastily sell the home. You need to think carefully about doing so because the home has a 2-year asset test exemption for calculating your Age pension and is only included in your aged care assets up to a capped value of $197,735.

Trap #5 Letting the kids pay the RAD

The perceived pressure to pay the RAD means that sometimes the kids “pass the hat around” and pay the RAD. While the RAD is an exempt asset for your pension it is included in your assessable assets for the aged care means test (regardless of who pays it). So letting the kids pay your RAD increases your aged care assessable assets, meaning your means tested care fee will go up. The other trap that often catches families comes when you leave aged care. The RAD is refunded to the resident or their estate, not who paid the money, so it is important to have any agreement documented.

Seeking advice from a specialist adviser will mean that you know the options available to you, what they will cost now, and in the future, and the smartest way to pay for it. Many people think they can’t afford financial advice but that’s normally a false economy with the value of advice being far greater than the cost.

About Rachel Lane

Rachel Lane explains the ins and outs of retirement living and aged care like no-one else. Her ability to break down complex arrangements and explain the pros and cons is embraced by millions of readers and she frequently speaks on radio and television. As Principal of Aged Care Gurus she oversees a national network of specialist financial advisers. Rachel holds a Masters in Financial Planning and has written several books including the best seller “Aged Care, Who Cares?”