Top 3 facts to dispel aged care myths
Most of us want to remain independent throughout retirement and stay in our own home. But as we get older some things become harder to do on our own and help may be needed. Whether you access this help at home or in residential care, planning ahead is key.
How expensive is residential care?
Residential care costs are grouped into:
Accommodation
Daily care
Additional lifestyle services
The cost of daily care can be up to $151,000 per year, but a large portion is paid by the government. You will only be asked to pay a contribution between $20,757 and $51,331 per year, depending on your financial circumstances. For most people the biggest concern is how to pay the large amounts quoted for accommodation. These range to almost $2 million but are commonly between $350,000 and $600,000.
These lump sums are called Refundable Accommodation Deposits (RADs) and are often misunderstood. So, let’s clarify some facts.
Fact 1 – it is not lost money
The first thing to know is RADs are fully refundable when you leave care, unless you allow other fees to be deducted. The Federal Government guarantees repayment if paid to an approved provider.
Fact 2 – you don’t have to pay the lump sum
The cost is quoted as a lump sum but is also converted to an equivalent Daily Accommodation Payment (DAP). The current interest rate used for this conversion is 6.31% per annum.
You have 28 days after accepting a place to choose which option you want to pay. The care provider is not allowed to pressure you to choose any particular option.
Fact 3 – the RAD can be affordable
If you don’t have enough assets to pay the RAD you may qualify for concessions as a low-means resident if your share of assessable assets is less than $186,331. Otherwise, you need to find a way to fund the full payment.
One strategy option is to pay as much of the RAD as you can afford and instruct the care provider to take the DAP (on the unpaid amount) out of the amount you paid. This does reduce the RAD to be refunded but it may help you access the care you need.
Getting advice
Seeking financial advice on your options for payment may help to minimise your stress. Aged care personal advice from an experienced professional can help you to make the right decisions. Look for advisers who are an Accredited Aged Care Professional™.
Disclaimer: The information in this article is general and does not take into account your particular circumstances. We recommend specific financial, tax and/or legal advice be sought before any action is taken. Aged Care Personal Advice is a registered business name of Aged Care Steps Pty Limited ABN 42 156 656 843, AFSL 486723.