This was published 7 years ago
The reason for the focus on home care for the elderly
Have you noticed that all the talk about aged care at the moment is focused on home care? Well, there's some very good reasons for that. For starters, the overwhelming majority of people who receive aged care in this country do so in their own home – more than 1 million of them.
There are now more home care packages than ever before – the government released an extra 11,300 packages just last month and have announced that they will be releasing even more packages throughout the year, probably weekly.
More than 1 million Australians received aged care in their home.Credit: Louise Kennerley
Then there is the increased choice on offer, a result of the changes the government made on February 27. The new rules gave consumers the ultimate power when it comes to their home care package: the power to walk away and take their package with them. Until then, consumers needed to apply to the care provider for a package – and if they wanted to move they often needed to relinquish their package and find a new one.
"Older Australians want to be independent and to choose: where they live, which aged care provider they use and the way in which services are delivered," says Fraser Douglass from Oxley Home Care.
"It's an exciting time to be a provider; these changes have promoted competition and innovation. With greater choice and access to packages we are seeing more people comparing staying at home (and perhaps topping up their package) with moving into residential aged care.
"For example one of our customers, Mary, receives a level 4 home care package, the government provide $134 a day of funding and as a full pensioner Mary pays the basic daily fee of $10.10 a day – in total this gives her $52,593 a year to allocate towards her care. In addition she pays a top-up of $100 a week and we take her grocery shopping and cook meals in her home, transport her to medical appointments or to one of her regular catch-ups at the local bowls club – she doesn't bowl these days but she still enjoys the socialising after the game."
Rachel Lane, principal of Aged Care Gurus, agrees: "We are seeing increased demand for advice about home care – whether that care is in the family home (or perhaps a granny flat) or because they are downsizing to a retirement community and they want the comfort of knowing that the care they receive is affordable.
"Comparing different arrangements is like comparing apples and oranges in terms of legal, financial and means-testing arrangements. The easiest way is to split the costs into three domains: the cost of accommodation, the cost of care and the cost of personal expenses. The complexity comes from understanding the impact on your pension, cost of care, tax and estate planning – this is where specialist advice is often needed."
Let's take a look at how the figures would work if Mary, mentioned above, chose to move into residential aged care. We'll assume that Mary's home is worth $950,000 and she has $120,000 in investments and $10,000 of personal assets. She moves to an aged care facility where the refundable accommodation deposit (RAD) is $450,000 and the equivalent daily accommodation payment (DAP) is $71.26 a day. Her cost of care is a total of $133.90 a day or $48,873 a year (made up of daily costs: basic daily fee $49.07, DAP $71.26, means-tested care fee $3.57, personal expenses $10)
If Mary sold her house to pay the RAD, her means-tested care fee would increase to $45.66 a day and her pension would reduce to about $348 per fortnight. But this would need to be weighed up against the DAP of $71.26 a day.
A lot of people are confused by aged care, and it's easy to see why. Much of the confusion comes from the vast range of choices available – but that choice is a good thing. My advice to anyone considering aged care for themselves or a loved one would be to investigate your options, work out which one suits you best and then work out the best way to fund it.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noel@noelwhittaker.com.au