When your parents are active and in good health it’s hard to imagine that one day they might need extra support.
Aged care can be a prickly subject to raise, as some older people think it’s something to be avoided at all costs. There’s also the question of how they will afford to pay for any care they might need, with money being another sensitive topic. Despite this, it’s important to start planning to find and afford the right aged care for your parents’ needs and budget.
A good place to start the conversation could be with the positive aspects of what today’s aged care really looks like and how much it has changed since your grandparents’ day.
“Your parents might not even realise how keen the government is to help people stay in their own homes for as long as possible,” Yvonne Chu, Head of Technical Services at Australian Unity says. “If they’re worried, it could be comforting for them to hear about in-home packages, which can include everything from shopping and transport to companionship and personal care.”
Your parents or loved ones may never need residential care but planning for a “just in case” scenario can also bring real peace of mind.
“If you can persuade them to visit a couple of different places, they’ll see the pleasant environments and high standards of care for themselves,” Yvonne says. “They need to understand that the change from being safe and comfortable at home to needing residential care can happen very quickly, perhaps as the result of an illness or serious fall. By then, their options could be very limited and there won’t be time to look around. The only suitable place available might be a long way from family and friends.”
It is surprising how many older people assume all forms of aged care are free.
“The federal government does provide funding to make aged care more affordable and accessible but, to make the system fair, anyone who can afford to contribute to the costs is expected to do so,” explains Yvonne
How much you pay depends on the type of help you need, the provider you choose, your financial situation and the services you receive. For example, if your parents were eligible for a Home Care Package, they may have to pay:
If they were eligible for residential aged care, the costs could include:
Most people moving into residential aged care will need to pay a lump sum, known as a Refundable Accommodation Deposit (RAD) to secure their accommodation. The government guarantees this will be refunded to a resident who moves into different care or to the estate if they pass away.
“Many people sell the family home to cover this cost,” Yvonne says. “You don’t have to do that ahead of time — you have six months to pay the RAD once you’ve entered residential care.”
The RAD can also be paid with a Daily Accommodation Payment (DAP) rather than a lump sum.
“If your parents don’t want to sell their home, renting it out could be a way to afford this monthly amount,” Yvonne says.
Recent research has shown that many older Australians consider downsizing—or “rightsizing” as it’s sometimes known—as a way of gaining a greater sense of security and financial control. Some use part or all of the proceeds of the sale of their home to boost their superannuation and, a couple of years ago, the government introduced new rules to encourage this. Broadly, if you’re over 65, a downsizer contribution of up to $300,000 to your super will be exempt from many of the normal limits and rules.
This approach can give your parents flexibility and choice, particularly if they need to access care quickly.
“It’s much easier to access your super than to free up the equity in your home and that can be very helpful in an emergency or to cover essential costs,” Yvonne says. “The danger is that some people might be tempted to spend their savings on something that would limit their choices later on, like travel or a new car.”
It’s important, therefore, to plan ahead, particularly if funding residential aged care in the future is part of the impetus for downsizing.
“The accommodation can vary from a room shared with two or three other people to a single room with an ensuite and five-star service,” Yvonne says. “Making sure you can afford the place you want can be a balancing act between enjoying a good lifestyle now and setting enough aside for the future."
Yvonne strongly recommends that any conversation about the affordability of aged care includes professional financial advice.
“Depending on your age and preferences there could be a number of strategies available to help you make the most of your assets, particularly if you have other investments such as shares,” she says.
She also emphasises the value in clear communication and planning well ahead.
“It’s helpful for everyone when family members know what their parents or loved ones want,” she says. “Having the discussions, doing plenty of research and establishing exactly what they can afford will take a lot of stress out of the equation.”
No-one wants to think their loved ones will ever be old or unwell enough to require aged care. But knowing the options and preparing for them in advance can help provide you with peace of mind and the freedom to choose what to do.
Find more information about the true costs of residential aged care. Australian Unity also has numerous aged care accommodation options for you to explore – each has different features and benefits to help you find the right option for your family, your parents and loved ones.