A common challenge facing ageing Australians is the financial implications of a spouse moving into aged care.
Emotionally, the separation of a couple due to health or other issues is difficult enough, but add financial stress into the equation and it can be an overwhelming time for couples and families.
At First Financial, we commit to forging a lifelong relationship with our clients – working with them through the inevitable life changes and milestones they will face.
Our suite of offerings includes aged care advisory services, and our aged care specialist advisers will take you through the process and provide a clear and effective solution for you, or your loved ones.
Financial implications of a spouse moving into aged care
When the time comes to move a spouse into aged care, you will need to complete an income and assets test to find out if there is an option to obtain government funding to assist with the care required.
For many couples, this will mean they do not have to pay the full cost of aged care accommodation, which can be a huge weight off their minds.
For some couples facing aged care expenses, selling off assets comes into question to pay for the costs of the aged care services.
In most circumstances, the family home is not counted as an asset in this income and assets test, but if you sold the family home and put the money in the bank, it would count.
Aged care costs for Australians
According to the Australian Institute of Health and Welfare, as at 30 June 2021, approximately 371,000 people were using residential aged care, home care or transition care in Australia.
The aged care reforms brought in from 2014 changed the landscape of aged care affordability for Australians.
The two major costs for residential aged care are the accommodation itself and the fees for care within this accommodation, depending on the level of care required.
The ways in which you can meet these costs come under two main categories:
- Refundable lump sum payment
- Rental-style daily payments
You can choose to pay a combination of the two, and the payment situation that suits you will be dependent on your individual circumstances and the level of care required.
Refundable lump sum aged care payments
There are two types of lump sum payments, depending on the outcome of your means assessment:
- Refundable accommodation contribution (RAC): This is when the government helps with the costs.
- Refundable accommodation deposit (RAD): This is when you pay the full amount yourself.
This lump sum payment for accommodation is fully refundable when you leave the residence or refunded to your family when you die.
At First Financial, we understand that navigating through the best options and the best way to structure your finances to pay for your aged care may not be easy.
Your financial adviser will model as many as five different scenarios, so you know when you make your decision, it’s the right one for you.
Example:
Bert wanted to keep his family home, but with little money in the bank, he thought he’d have to sell the house to pay for his accommodation.
His First Financial adviser showed him another way.
Instead of paying the full refundable accommodation deposit (RAD), Bert negotiated to pay part as a RAD and the rest as a daily accommodation payment.
To cover the payments, Bert rented out his house.
This strategy allowed him to keep his home and it also improved his cashflow with rental income and by maximising his age pension.
Financial aged care specialists
Partnering with a financial aged care specialist can make a significant difference to your financial outcome if your spouse or family member requires aged care.
At First Financial, we understand that planning for aged care for yourself or a loved one can be a very stressful time and getting specialist and timely advice and guidance is critical.
Contact our team today to discuss how we can help you to financially navigate through the process of aged care entry for a spouse or family member and protect your future at the same time.
