Moving into care – do I have to sell my home?

If moving into residential aged care, do you really have to sell your home? What are your choices? Myths and misunderstanding about the rules can add to anxiety and confusion.

The stress of moving into residential aged care can be compounded by anxiety around selling the family home. Some people may find it hard to part with their home or may not be ready to sell. This can raise concerns about how to afford the fees.

Knowing that you have choices, and accessing advice to understand these choices may help to reduce stress and create a better outcome.

Do you have to sell?

Some people panic when faced with paying several hundred thousand dollars for a room in aged care. But selling your former home is not your only choice. Some people choose to sell, others don’t.

The move into residential care is effectively just a move to a new home. Anytime you move homes, you can choose to buy or rent. Renting allows you to live in a home you can’t afford to buy, or don’t want to buy.

With residential care you have the same options. Your room price is usually quoted as a lump sum which can be converted into a daily fee using a specified rate of interest. Paying this daily fee (or “renting” the room) may allow you to keep your former home if that is your preference.

Example:

Catherine agrees to pay $600,000 for her room in residential care. At the current interest rate of 4.04% per annum, this converts to $66.41 per day (plus other ongoing fees). This gives Catherine the choice to “buy” the right to live in the room for $600,000 or “rent” the room for $66.41 per day. She could also choose part buy and part rent.

When to make a choice?

The decision whether to sell or keep the former home has many personal aspects, but accessing advice can help to reduce some stress.

Once you have been offered a room, you will be asked to sign a Resident Agreement. This is a contract outlining your rights and responsibilities and the obligations of the care provider. It includes the fees you can be asked to pay.

This agreement should specify the room price and show what this converts to as a daily fee. But you don’t have to make a choice then. You have 28 days after moving into care to let the provider know whether you want to pay the full price as a lump sum (refundable accommodation deposit – RAD) or daily rent (daily accommodation payment – DAP) or a combination of the two.

The 28 days gives you time to seek good advice to make an informed choice.

As Accredited Aged Care ProfessionalsTM we have helped many clients to make this choice. We help to find a choice that is affordable, as well as works best for the family and protects the value of the estate.

Call us today on 03 5330 3988 to discuss how we can help make your aged care experience less stressful.

IMPORTANT INFORMATION: This article has been prepared by Withani Retirement Solutions Pty Ltd, ABN 78 112 589 976 in its capacity as a Corporate Authorised Representative of Nextplan Financial Pty Ltd, AFSL 452996, registered tax (financial) advisers (24813566) based on our understanding of the relevant legislation at the time of writing. While every care has been taken, Withani Retirement Solutions Pty Ltd and Nextplan Financial Pty Ltd makes no representations as to the accuracy or completeness of the contents. The information is of a general nature only and has been prepared without consideration of your individual objectives, financial situation or needs. Before making any decisions, you should consider the appropriateness for your personal investment objectives, financial situation or individual needs. We recommend you see a financial adviser, registered tax agent or legal adviser before making any decisions based on this information. Current at 1 July 2021.

What was in the Budget for aged care?

‘Care, dignity and respect’ was the title of the Aged Care Royal Commission’s final report. This report threw out a big challenge to the Government to fix the current problems in aged care and build a future system that puts the needs of older Australians first.

The Government responded in this year’s Federal Budget with a five-year plan, covering all aspects of aged care across both home care and residential care. This included an additional $17.7 billion spend, bringing the total spent by Government on aged care over the next four years to $119 billion.

The good news for consumers is that no changes were made to increase how much you pay for aged care, at least not yet. This article provides a quick summary of the key proposals that were announced.

Simplifying home care

We currently have two home care systems (Commonwealth Home Support Program and Home Care Packages), with separate assessment pathways. This makes access and selection of the right option confusing. The two programs will be combined into one in-home care system from July 2023 to simplify the system and match needs more effectively.

More home care packages

With around 88,000 people waiting in the queue for a Home Care Package, the wait time can be long. This wait will hopefully be reduced with an additional 80,000 packages to be released over the next two years.

More care workers

One of the greatest challenges to providing sufficient and safe aged care, is having enough skilled workers. A number of measures, including staff bonuses, scholarships and increased training programs, were announced to attract more workers and increase the skill levels. A greater focus will also be placed on upskilling staff to support people living with dementia.

The Government plans to establish a national register to help care providers who are employing staff to identify and employ appropriate staff.

Increase residential care funding

While consumer contributions will not change, the Government plans to pay residential care providers an additional $10 per day per resident to help improve the quality of living services and meet operating costs. One focus will be on improved nutrition.

A new funding model will also be introduced from later this year to better match the subsidies received with the cost of providing care.

Personal care times

Receiving adequate staff time and attention is key to a good experience for a person living in residential care.

Providers will need to provide a monthly care statement to residents and families from July 2022, to give greater transparency on how that person is being cared for. From October 2023, residents will be able to expect (on average) a minimum of 200 minutes of personal care time per day. This includes 40 minutes with a Registered Nurse.

Star-ratings

Aged care star ratings will be introduced into MyAgedCare to help people assess and evaluate aged care providers across areas such as care time, food and nutrition standards and accommodation. This will help to compare aged care providers and should drive better standards of care.

Governance and regulation

At the centre of the reforms is the development of a new Aged Care Act. The current legislation was criticised by the Royal Commission for focussing too much on the rules for funding aged care, and not enough on the experience of the person accessing care. The new Act will focus more on the rights and needs of older people and quality standards for care.

To help government regulate and monitor the aged care system, new advisory councils and regulators will be set up, including a Council of Elders to give older people a direct voice to government.

Refer to the infographic for a quick summary of the reforms.

Talk to us

While many of us still might not want to access care, when the need arises, hopefully the reforms create a system that meets our needs in a timely fashion and treats us with dignity and respect.

The Australian aged care system is complex now and is likely to remain complex. This can make it difficult and confusing to navigate. But we are here to help. As Accredited Aged Care Professionals, we have the expertise to help you understand aged care and make informed decisions, with advice on appropriate financial restructuring. Call us on 03 5330 3988 to discuss aged care for you or a family member.

IMPORTANT INFORMATION: This article has been prepared by Withani Retirement Solutions Pty Ltd, ABN 78 112 589 976 in its capacity as a Corporate Authorised Representative of Nextplan Financial Pty Ltd, AFSL 452996, registered tax (financial) advisers (24813566) based on our understanding of the relevant legislation at the time of writing. While every care has been taken, Withani Retirement Solutions Pty Ltd and Nextplan Financial Pty Ltd makes no representations as to the accuracy or completeness of the contents. The information is of a general nature only and has been prepared without consideration of your individual objectives, financial situation or needs. Before making any decisions, you should consider the appropriateness for your personal investment objectives, financial situation or individual needs. We recommend you see a financial adviser, registered tax agent or legal adviser before making any decisions based on this information. Current at May 2021.

Retirement village or aged care?

Throughout our lives we make choices about where to live, largely driven by lifestyle, work or family. However, as we get older our health or increasing levels of frailty may have a greater impact on these choices.

Homes come in a variety of shapes, styles and legal structures. Planning ahead and researching options can help you to make a well-informed decision when you think you need to move.

Where we live in our older years is not just a decision about physical location but how we can access care and support. It is important to understand what is affordable as well as how your daily routine can be managed.

Accommodation versus care

When care is needed, many people compare the option of a retirement village against residential aged care. While both provide supportive environments for older people, they are not complete substitutes. The funding and care implications are quite different.

Don’t view the comparison as just a property transaction based on price and size. For example, in a retirement village you may have access to a whole unit or villa, while for a similar price in a residential aged care service, you have only a single room. You should also think about how much support you need each day.

Retirement villages versus residential care

Retirement villages offer the opportunity to live in a community of older people. The village operator will maintain the external building and community garden areas, but it is still independent living. For an additional cost, you may be able to access support inside your home but services vary from one retirement village to the next, and unless provided through a Home Care package, costs are not subsidised by the Government.

Residential aged care bundles fully supported living and care together with accommodation. This care is provided 24/7 and the costs are heavily subsidised by the government. The table below provides a basic summary of some of the key comparisons:

The value of advice

Pulling together the information you need to make choices can be difficult and stressful for you and your family. Emotions can run high.

Giving yourself time by starting your research early can reduce stress levels and for an older person, can ensure their voice is heard more clearly. Call us today on for advice to guide you through the process and help to create effective solutions for you and your family.

IMPORTANT INFORMATION: This article has been prepared by Withani Retirement Solutions Pty Ltd, ABN 78 112 589 976 in its capacity as a Corporate Authorised Representative of Nextplan Financial Pty Ltd, AFSL 452996, registered tax (financial) advisers (24813566) based on our understanding of the relevant legislation at the time of writing. While every care has been taken, Withani Retirement Solutions Pty Ltd and Nextplan Financial Pty Ltd makes no representations as to the accuracy or completeness of the contents. The information is of a general nature only and has been prepared without consideration of your individual objectives, financial situation or needs. Before making any decisions, you should consider the appropriateness for your personal investment objectives, financial situation or individual needs. We recommend you see a financial adviser, registered tax agent or legal adviser before making any decisions based on this information. Current at December 2020.