For many older Australians the process of entering into Aged Care is overwhelming. Not only is the individual and their family dealing with the home relocation and emotional stress, there is also a degree of financial stress.
Many questions arise for the individual and their family, such as:
- Should I sell my family home?
- Should I sell investment assets?
- Do I need to take out a loan?
- Will I have enough income?
The costs involved with Aged Care are complicated and there may be numerous potential solutions.
When individuals and families seek Aged Care placement they are often quoted the facilities’ Refundable Accommodation Deposit (RAD). This amount is generally upwards from $300,000. Whilst this is capped at $550,000 by the Department of Health, if the facility has sought approval from the Aged Care Commissioner, they can choose to request an amount above this.
Many clients approach me stressed about this initial amount, “How can I fund this for my parent?, will I need to sell my parent’s house?”
An option could be to pay this amount as a Daily Accommodation Payment (DAP). This is effectively the interest payable on the RAD. At present the interest rate for the DAP is 5.96%.
Therefore, on a $400,000 RAD, the DAP would be calculated as follows:
$400,000 x 5.96% = $23,840/365 = $65.31 per day.
In addition to these costs, all individuals will be asked to pay the Basic daily fee which is currently $50.66 and if the individual’s assessable income and assets exceed the respective thresholds, there will also be a Means Tested Care fee payable.
As an accredited Aged Care Professional, I aim to consider all scenarios and provide a solution which suits the individual’s and their family’s needs.
If you or someone you know needs assistance with Aged Care costs, please speak to a William Buck Wealth Advisor on (08) 8409 4333.
By ALESSANDRA FORERO, ASSOCIATE ADVISOR, WEALTH ADVISORY | ADELAIDE
Alessandra is a William Buck Wealth Advisor. With over 10 years industry experience, she aims to ensure high quality client service across strategic advice areas. When she is not at work, Alessandra is a mother to her little boy and has a passion for Flamenco dancing.