Accommodation Options by Michael Gore

There is some confusion “out there” about the different forms of accommodation available when you decide to sell the family home & downsize. Of course you can simply buy another smaller dwelling which you would own, however many people want assistance as they age and start asking questions about retirement villages, assisted care, aged care etc. and are not clear of the differences.

This becomes more confusing when stories in the media (generally about disputes between residents and providers over money) toss around these terms as if they are all mean the same thing. They don’t.

I have put together a table (below) outlining the difference between the two major forms of accommodation in retirement: Retirement Villages & Aged Care.

RETIREMENT VILLAGE AGED CARE HOME
Regulation State Government Legislation Commonwealth Legislation
Funding Self-funded through residents payments, loans. Funding from C’wealth Govt & residents’ fees
Who decides who can live there? You decide – private contract between you and village Must be assessed by Aged Care Assessment Team (ACAT)
Types of accommodation *Self-care units

*Serviced units

*Ageing in Place

*‘Extra services’ – specific to facility

Initial payment Initial payment Entry Contribution:

*private contractual arrangement

*amounts vary from village to village.

*some villages offer rental units for people who can’t afford to pay

Accommodation Payments: *accommodation fee for all residents –(is not a purchase price)

*some homes have fully supported places for people who have less than the specified amount of assets

Are there ongoing fees & charges? Yes:

*fees vary with services & facilities at the village

Yes:

*basic daily care fee for all plus for some people:

*means tested daily care fee

*‘extra service’ daily fee

Tenure Most common:

*Loan/License

*Company title

*Leasehold

*Strata title

*Rental

Security of Place as specified by The Aged Care Act 1997 Security of Tenure as specified in The Aged Care Act 1997
Leaving Departure Fee or Deferred Management Fee

*Other contractual payments

Refund of Accommodation Fee – i.e. lump sum refundable accommodation payment
Rights Residents’ Rights under RV Act 1999 & Regulations 2009 Charter of Residents’ Rights and Responsibilities, in The Aged Care Act 1997

The rules governing these are completely different & should be understood by residents before going in. I can understand the confusion because the providers are often the same entities and they often exist on the same property (side by side).

The main difference are:

  • Retirement Village entry is a contract between you & the provider whereas Aged Care is governed by Commonwealth rules.
  • Retirement villages are open to anyone … generally over 55 years whereas Aged Care is restricted to those who have reached a certain level of impairment.

The financials of both are complex and help should be sought if you or a loved one are contemplating residing there.

 Retirement Village

 

Home Care

The other area that has a good deal of news recently is where people opt not to leave their home & instead receive care in the family home.

Aged Care is divided into two main areas;

  1. Residential Care
  2. Home Care

Over the past 10 -20 years reforming Residential care has been the Commonwealth Government’s focus. Recently however the government has switched that focus to home care. There has always been a form of home care but it was generally limited to not for profit (church, community groups) providing low cost minimal care. This has now changed.

 

How does it Work? Home Care Packages

The Home Care Packages Program helps you live independently in your own home for as long as you can. The Commonwealth now provides a subsidy to an approved home care provider towards a package of care & services to meet your needs.

Like Residential care there is now an assessment process to work out the level of care required. During the assessment it will be determined if you are eligible for a home care package and which package level best meets your care needs. There are four levels:

  • Level 1 – basic care needs
  • Level 2 – low-level care needs
  • Level 3 – intermediate care needs
  • Level 4 – high-level care needs.

Each level of home care packages provides a different subsidy amount. This amount is paid to your selected approved home care provider. The subsidy contributes to the total cost of your services and care delivery. It is expected that you will contribute to the cost of your care where your personal circumstances allow.

Note: the “package” is to you NOT the provider.

Costs

Your income assessment will determine if you need to pay:

  1. basic daily fee (17.5% of the single person rate of the basic age pension)
  2. an income-tested care fee (if your income is over a certain amount)

Your service provider may ask you to pay:

  1. basic daily fee (which everyone can be asked to pay)
  2. an income-tested care fee (worked out by the Department of Human Services)
  3. Additional fees for additional care or services not covered by your home care package.

 

Example:

Margaret receives a level 4 home care package, the government provide $134 a day of funding and as a full pensioner Margaret pays the basic daily fee of $10.10 a day – in total this gives her $52,593 a year to allocate towards her care. In addition she pays a top-up of $100 a week which provides grocery shopping, meals in her home, transport her to medical appointments or to one of her regular catch-ups at the local golf club.

 

Last year, more than 1.3 million Australians received aged care; about 82 per cent of those people received aged care at home. By the end of 2017, the number of Home Care Packages available will increase by nearly 30,000.

People will be able to shop around to compare and choose their preferred provider, and to change providers at any time. This new flexibility will also enable consumers to relocate and have their care package move with them, which is a big improvement on the current situation. Moving frequently may be expensive though – providers can charge exit fees, as long as they are disclosed in advance.

While they are called Home Care Packages, the fact is that these services are delivered into suburban houses, caravan parks, retirement communities, granny flats and many other living arrangements – basically anywhere someone calls home.

Summary

Growing old has financial (as well as emotional) speedbumps to contend with. One of the main ones being “where will I live as I grow old?” There are now a lot of choices but those choices come at a cost and must be affordable to you. As always it is best to seek financial advice before you make a decision you will regret.

 

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