Questions About Care

With a growing numbers of seniors in our community going into aged-care, and numbers expecting to increase as our population ages, it is now more important than ever to understand the intricacies of engaging in aged-care services.

The aged-care industry is very complicated, and many decisions must be made, many of which involve large sums of money. Few people would engage in legal or taxation matters without seeking the advice of their lawyer or accountant, yet too many make the costly error of trying to navigate the aged-care maze without appropriate professional advice.

Q1: Why is aged care so expensive?

• Typical fees include bonds, daily fees, accommodation fees, retention amounts, extra services fees and
  income-tested fees.
• Very labour intensive.
• Expensive land and buildings.
• Owners must make a return.

Q2: Is the bond negotiable?

• The bond can be up to or beyond $1 million.
• It is negotiable in many cases, and can be as much as halved. Negotiability is very much dependent on supply and demand.

Q3: What alternatives are there for paying the bond?

• The bond can be paid as a lump sum in full, as interest only, or as a combination of the two.

Q4: Can I put up a bank guarantee for the bond?

• No

Q5: What is the Centrelink fee?

• It is an income-tested fee levied by the government and collected on their behalf by the care facility. It can range from nil to almost $74 per day.

Q6: Why is the Centrelink fee so high and how do I reduce it?

• The fee is meanstested and,thus, increases as deemed income increases. For example, a person deemed to earn $4500 per annum will pay approximately $1.65 per day, while a person deemed to earn $70,000 per yearwill pay just over $50 per day ($18,250 per year). There are, however, strategies available that can significantly reduce income (from Centrelink deeming purposes) and, thus, greatly reduce, or often eliminate, the Centrelink fee.

Q7: Why is the government taxing seniors?

• The standard daily fee of $46.50 per day does not cover the full cost of an aged-care bed. Therefore, facilities receive governmentsubsidiesfor each bed. The income-tested Centrelink fee enables the government to provide these bed subsidies.

Q8: What is the Extra Services fee and should I pay it?

• The Extra Services fee can be as much as $100 per day and gives the patient extra services, including more attention, podiatrist, hairdressing and other services. For some, it is well worth the added expense, however, its relevance to the individual patient’s circumstance should be considered carefully by the family.

Q9: Paying the bond will impact on my cash flow. What strategies are there for dealing with this?

• You can negotiate to pay some/all of the daily fees from the bond, which means that less of the bond will be returned at the end of the care period. The bond can also be paid via interest only, rather than as a lump sum, freeing up funds for day-to-day living. Q10: What implications are there for my social security or pension if I go into aged care?
  
  
• The bond is an excluded asset for social security purposes. Therefore, in some cases, where existing cash is used to pay for a bond, it can result in a new or increased pension entitlement. However, more often, a family home is sold to fund the bond. In this case, while the home itself was excluded, once it is sold, the proceeds are counted as an asset. As a result, the leftover cash after paying the bond can often result in a pension being reduced or lost entirely. Once again, however, strategies exist to deal with this eventuality and reinstate or increase the pension.

For a detailed breakdown of these costs and financial options, check out our complete guide to aged care costs.

Note: Figures are accurate as of the publication date