By Mark Allara and Kerry Darton
Morgans Financial Limited is Australia’s largest full service retail stockbroking and wealth management network and has been providing advice to clients for over 30 years.
Kerry Darton, is an Accredited Aged Care Professional™ from The North Quay branch of Morgans in which Vincents hold an interest.
Aged Care Advisory Services
More than 1 million people in Australia receive aged care services and support. Approximately 200,000 of these people are in permanent residential care.
You, a spouse or a family member may have a need for care services and we can help navigate the aged care choices and how to fund them.
We spend our adult life building security and looking after ourselves and our families. As we age this ability to live an independent lifestyle can reduce. This is an emotional and often difficult subject for families to broach.
Aged care is a complex maze of accommodation decisions, government support and health care options. Thrown into this mix is the emotion and often unjustified guilt associated with someone no longer being able to fully care for themselves or informal cares (children, relatives and friends) no longer able to provide adequate care. Unfortunately the decision and timing of someone needing formal care can become urgent due to a fall, illness, loss or deteriorating health.
Our aged care team can assist and provide guidance and advice to the person requiring care or the family of someone requiring care. The assistance can be, but not limited to, understanding fees and costs, and making decision on funding options including how to pay for the care costs. We can help with future planning and crisis planning of aged care options.
Our team offers a broad service that can help inform, guide and provide funding options. They can help you understand the different levels of care available and the costs associated with the options. Care options include home care services to residential, respite and dementia care.
Aged care is tied closely to the Age Pension thresholds and there are changes to different rates, thresholds and payments applied each quarter.
Aged care rules are changing all the time and are based on when care is first commenced, therefore it important to get advice to clearly understand current aged care fee structures and rules and how it applies to your situation prior to and at the time of entering care.
The interest rate charge on the unpaid portion of the Refundable Accommodation Deposit (RAD) is called the Maximum Permissible Interest Rate (MPIR). Every quarter the MPIR is reviewed, from 1 October 2018 the MPIR will be 5.96% per annum.
Upon entry to an aged care facility the minimum amount of assets a resident must be left with if they pay at least part of the RAD is called the Minimum Permissible Asset Level. From the 20 September this amount is $49,000.
Aged care uses a different definition of assessable assets than the Centrelink /DVA assets test. The capped value of the home, not occupied by a protected person is currently $166,707.20. This threshold is set quarterly. The protected person definition includes a spouse.
Let’s look at how we can help clarify options
Barb and Fletcher own their home, are self-funded retirees, within their portfolio they had excess cash and fixed interest investments returning approximately 3%. Their assets are close to the maximum Aged Pension thresholds. Fletcher’s health has deteriorated and Barb is no longer able to look after him in their home. Barb knows of two aged care facilities that maybe appropriate.
Prior to accessing the aged care facility Fletcher will require an Aged Care Assessment Team (ACAT) assessment to be conducted. We have recommended getting their doctor to make the referral for this assessment via www.myagedcare.gov.au.
Barb will remain in their home. The facility that they have chosen has not been based on the accommodation fee being charged but the location. Barb feels that the aged care facility that is located closer to their home and other infrastructure will be the best option. This will enable her to visit more regularly and for their friends and neighbors to visit Fletcher more easily. She will be able to spend extra time with Fletcher rather than in travel to and from the alternative facility, located some distance away.
The initial ACAT was completed and the Permanent Residential Aged Care – Request for a Combined Assets & Income Assessment form (SA457) completed. Due to funding decisions, timing and changes in asset values the initial fee quoted in the letter from Department of Human Services was able to be reduced. The process involved various government agencies, a superannuation fund, a banking institution and the Residential Aged Care Facility. We were able to assist in ensuring that the correct documentation was provided to the various parties and a reassessment completed to reflect a lower means tested fee. These documents included, but not limited to powers of attorney, letter of capacity, evidence of withdraw, receipt of payment, Superannuation financial statements and reports and residential fees letter.
The decision was made to utilise the cash and fixed interest investments within the portfolio that was returning approximately 3% to pay the full $450,000 Residential Accommodation Deposit (RAD). This resulted in a saving as the current interest cost of the outstanding portion of the RAD is charged at 5.96% per annum.
We were able to assist Barb to consider not just the financial aspect of understanding the fees and how to manage their cash flow to fund the fees but also lifestyle and emotional considerations.
The documented advice included an illustration of the difference in the fees of the two facilities and the impact of paying a full versus partial Residential Accommodation Deposit (RAD). We provided her with a number of recommendations on investment options. The analysis took into account the initial and ongoing costs of the aged care facility and Barb’s ongoing expenses (due to staying in the home). Long term Estate planning and Centre link issues were also documented.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.