Have you and your family found yourself in the position of needing to seek Aged Care for a loved one? Or maybe your loved one has been receiving care for a little while.

Major changes to Aged Care will take effect on 1 July 2014. These changes will affect most people currently in or looking to join the system soon and could result in higher ongoing care fees. If you or a family member needs to move into aged care soon, now is the time to start planning.

For those who are already in the system, it could be beneficial to speak to your financial planner to re-evaluate your plan.

What Should We Consider Before Moving Into Aged Care?

While it’s important to consider the emotions of all parties involved when a family member needs to go into care, there are many other important considerations that fit into the puzzle.

You will need to consider all the costs, emotions and work involved around moving from the home into paid accommodation and then the handling of assets and investments.

Until now, many of these considerations have been determined for you through the Government reforms, however from July 1, the following changes to reforms will come into effect.

Summary Of Changes

From 1 July 2014, the distinction between high-level and low-level care will be removed, giving everyone the choice to pay their accommodation costs as a lump sum, a daily payment amount or a combination of both. You will also be able to select extra services for an additional daily fee in participating facilities. This could change the amount you are paying overtime significantly. We advise speaking to Balance Aged Care Specialists about how this may affect your budget.

The current income-tested care fee, which is based on assessable income, will be replaced with a means-tested care fee, which will be based on assessable income and assets. For many, this will mean ongoing care fees will be higher if entering an aged care facility on or after 1 July 2014 so it may be worth trying to get into a facility earlier than planned to avoid these additional costs.

However, if you do decide to enter a loved one into Aged Care before the reforms take place consider the following:

Until 30 June 2014 you may be required to pay either an:

Accommodation charge if you’re entering a high-level care facility or an accommodation bond payable as a lump sum, periodic amount or a combination of both, if you’re entering a low-level care or extra service facility.  Additionally, if you move your loved one into an extra service facility you may be required to pay an additional daily service fee.

From 1 July 2014 you will be able to choose to pay a refundable accommodation deposit, a daily accommodation payment amount, or a combination of both. All facilities (not just high care facilities) will be able to offer extra services for an additional daily fee.

Until June 30, if you’re not receiving the full Age Pension, you will generally be required to pay an additional daily fee based on your level of income.

From July 1, you are required to pay a basic daily care fee. If you’re not receiving the full Age Pension, you will generally be required to pay an additional daily fee based on your level of income and assets.

Those already in aged care can continue with their current arrangements unless they leave care and re-enter after a period of 28 days, or if they change facilities and decide to re-enter under the new rules.

If you enter aged care on or after July 1st, the value of your assets, which may include your home, will be used in the calculation of your ongoing care fees.

If you decide to keep your home, it is important that your accommodation costs are structured correctly in order to continue to receive favorable Centrelink treatment.

For over 50% of people, it can take more than a month after receiving an aged care assessment to enter a subsidised residential aged care facility, so it may be best to act sooner rather than later depending on how the reforms are destined to affect your family.

To ensure you will receive the most benefits from the new reforms speak to Balance Aged Care Specialists for tailored advice on how the new reforms will affect you.

Jordie Cox