Aged Care and Asset Protection 2019

CrankyCarrot on 25/01/2019 - 15:55

Has anyone been through the rigmarole of finding a home for their elderly relatives lately?

I need to make long term plans for my father who owns his own 2 bedroom home and has some money in an investment/super/the bank.

As I understand it, when entering an aged care facility the patient's home is typically sold, and bank accounts emptied, to cover the deposit (ranging from 250k to 1m). This is not the case however if there is an immediate family member living in the home (ie their child).

I've moved back to the city to take care of dad and am presently working out where to live. So my first questions are, is the above true, and if so, is there a minimum period you'd need to be living with the parent and also how do you prove that you live there (driver's licence address, letters or bills with your name on them to that address?).

If need be I will seek financial advice from a professional, but surely the rules will be something someone on here is already familiar with so I'm trying to get a feel for what's what first on the forums.

Financial

Comments

  • Smiley82 on 25/01/2019 - 16:13

    Not quite that simple unfortunately.

    'If a partner is staying in the house, that is a key reason to keep it and, for Centrelink and aged care purposes, the house becomes a "protected asset". A protected person can also be a carer who has been there for two years and eligible for income support or a relative who has been there for five years and eligible for income support.'

    https://www.afr.com/personal-finance/superannuation-and-smsf…

    Huge amounts of info online about this, especially government sources.

    • CrankyCarrot on 25/01/2019 - 16:25

      Right, so I need to live with him for at least 2 years prior to him being admitted to an ACF, AND have been on a Carer Benefit for that same time?

      Thanks for the link. I will continue to scour the net for info.

      • Smiley82 on 25/01/2019 - 16:48

        Correct. You must be living with him and be his full time carer. My understanding is that you cannot have other employment during this time.

        This link might also help:

        https://financialcareservices.com.au/christine-hopper-insigh…

        It's such a tricky and complex area to navigate. If your Dad still has time before qualifying for a pension, there are options to restructure assets, but this is a whole other area of complexity, especially if other siblings are involved.

        • bobbieb on 25/01/2019 - 19:45

          This.

          If restructuring is remotely an option, then definitely pursue it.

          You have my sympathy @ThriftyTheo, the various regulations and policies in the space are complex to the point of being absurd.

          Shop around for a financial advisor with lots of current experience in this space…. I found knowledge of aged care sadly lacking. (to the extent where an advisor at a major institution asked if he could have the excel worksheet I'd been using to evaluate various strategies.)

          If your dad has enough liquid capital to buy his way into age care, then rent the house to provide funds for the accommodation payments and living expenses, then this may very well work to his advantage.

          • CrankyCarrot on 26/01/2019 - 20:04

            @bobbieb: @ bobbieb

            Thanks for the sympathy. Sounds like you're pretty familiar with the chaos I'm currently parsing.

            Ummm… Can I get a look at that spreadsheet too?

        • CrankyCarrot on 26/01/2019 - 14:31

          No other siblings.

          He's already on a part (almost full pension). See response to your other post below.

          You can earn $162 a fortnight (86 bucks a week) on a carer benefit. After that you lose 50c in the dollar.

  • Smiley82 on 25/01/2019 - 16:32

    Is your Dad receiving the Full Aged Pension?

    • CrankyCarrot on 26/01/2019 - 14:28

      No, but close to it.

      There's a whole lot of things that need fixing up around his place that will cost an arm and a leg. In theory by the time all that work is paid for his assets/means will be below the threshold required for the full aged pension.

      I'm going through everything in the links now, but off hand - will that change things?

  • 2jzzzz on 25/01/2019 - 17:13

    Some homes have a sliding scale on how much they charge. If someone goes in with a $1M,they will pay $100. If someone moves assets away from them, they go in with $100k,they pay $10. Obviously this isn't correct scales or anything, but explore selling and getting away from his name.

    • bobbieb on 25/01/2019 - 20:14

      Ouch… there be a few inaccuracies buried in the above.

      On the latter point about "moving away" assets, there are now safegaurds in place in the asset test prior to aged-care entry, specifically aimed tat catching people who attempt to do this. If you're a long time from aged-care, then you can certainly re-structure things in advance, but once it's imminent, it's much too late to move your assets away.

      One the first bit… the age-care sales folk like to describe it much the way you did, but it's very much far from the truth. The math behind how much you'll be expected to pay is absurdly complex, but simply put there are 3 parts what you pay:

      • the base room rate
      • a means tested care fee
      • the "accommodation payment"

      The base room rate depends on the quality of the facility/room. You can pay this in one, or both, of two ways:

      • Lay down a huge deposit, which is put in a government fund. The government essentially pays your rent using the interest they earn from your money.
      • Pay the monthly fee yourself.

      The catch in the above is that if you can't pull together the cash for the deposit by selling your stuff - a half decent facility will require in excess of $500k - and you don't have enough income coming in from investments to simply pay the monthly fee, then things get very uncomfortable. The government will subsidize this payment upto a maximum amount. This maximum amount is tiny and will barely support you in the cheapest room (ie. shared) in the nastiest of facilities.

      That's just the first level of fees. This is the sales dudes talk about as a "sliding scale", but the government isn't gonna subsidize anything above the bare minimum.

      Then, there's the means tested care fee… which is exactly what it says. If you have assets/income, you're expected to pay a portion of the costs of hiring 24x7 nurses to look after you.

      The accommodation payment is basically the same as a hotel's nightly rate. The better the facility, the more you will be expected to pay. Again, like the base rate, if you don't have the income to pay this fee on an ongoing basis, the better facilities will be out of your reach.

      TL;DR: The truth is, if you can't afford somewhere nice, the government will subsidize you to be in the crappiest shared room, in the most worst that australian aged care can offer. No more.

      Bring on the aged-care royal commission. We can only hope something good comes of it.

      • Strahany on 25/01/2019 - 20:32

        To understand your point of view, are you against the tighter regulations regarding moving of assets?

        • bobbieb on 25/01/2019 - 20:54

          I'm not sure that they could realistically be much tighter.

          You can restructure your own holdings as much as you like, and whilst they may be more tax-effective, they often do very little to reduce the feeling that government is acting like the archetypal parental abuser… taking everything you have saved and built over your life, and leaving you with a pittance of a stipend to live on.

          The gap they recently closed is that any "gifting" of assets in the years leading up to entry into aged care, is basically ignored for the asset tests. They're counted as if you still owned the.

          I don't personally have an issue with the latter, but between the two above, and an almost complete lack of financial instruments that would make preparing to fund aged care less onerous, there is definitely something wrong right now.

      • CrankyCarrot on 26/01/2019 - 15:21

        Shared room?!

        My octogenarian pop will be living in a dorm like a common backpacker??

        Damn.

        Thanks for all the info.

        Be curious to find out about this aged-care royal commission. Will Google.

        • bobbieb on 26/01/2019 - 16:43

          More like a shared hospital ward, but yeah.

          If you haven't already started, have a browse through your local facilities on My Aged Care website. The facilities are required to publish their rates via this site, so you can get a feel for the real cost.

          There's also an online estimator. Punch in room rates from the first to get a feel for what you can realistically afford.

  • Itburns on 26/01/2019 - 07:56

    I would strongly recommend you going to see an aged care financial advisor. I am in a similar situation to you & their advice (not cheap $3K+) saved a huge amount of hassle & stress for me & my father.

    • CrankyCarrot on 26/01/2019 - 15:18

      I am strongly considering that. 3k? Wow. Thanks for the ballpark figure, even if it's kinda bad news.

      First session is free though, right? I wonder how much useful info I could wring out of that first session…

      Oh, how many hours/sessions did 3k buy you?

      • Itburns on 27/01/2019 - 07:58

        Yep, first session free. General info, useful, covering all the options for ur Dad but no specific guidance. Second session covering all financial data (major detail) & income assessment forms etc, then final session covering recommendations with spreadsheets & steps to follow depending on type & place of facility. They also provide follow-up for free if laws or circumstances change.

        Expensive but it gave me real peace of mind I was doing the best thing possible with my parents assets.

        Try negotiating on fee if ur Dad is close to a full pension. Check providers locally as I found they also had some good info for local aged care facilities. I tried 3 advisors before I decided.

        • CrankyCarrot on 27/01/2019 - 15:53

          Right, so 3 free general sessions, then 3k for the in depth specific discussions with the adviser you felt was best.

          At this stage I'm working on keeping dad out of the homes and semi-independent as long as possible, since that's what he wants and it (if things hold) gives me time to get all the info together to make the smartest possible moves.

          • Itburns on 28/01/2019 - 09:51

            @CrankyCarrot: Exactly - my parents are also still at home & semi-independent too but all that can change in 5 mins with a fall, stroke etc etc but I now have a blueprint of what to do when that time comes (probably sooner rather than later) & I won't have to do everything at the last minute. The advisor is happy for me to go back to him to re-do the figures when that time comes as their asset base & the laws may have changed.

  • CrankyCarrot on 28/01/2019 - 11:05

    As far as the house being a "exempt asset," with a "protected person," ie the carer, living there for 2 years prior to admission, the only other thing I wanted to know was how you prove you were living there for that time.

    I found some info somewhere before saying you needed to have the place listed as your residence with 3 different sources, specifically; 1. Centrelink, 2. The RMS (ie on your driver's licence) and 3. On the Electoral Roll.

    Trying to find that source again now. Does anyone else know this? What if you were listed on all three of those but had a lease somewhere else? What if you were share housing elsewhere (and not on the lease)?

    I would live will live with him if it became feasible and necessary, but it will take a massive cleaun-up effort first. There simply isn't space at the moment as he has hoarded mountains of stuff.

  • CrankyCarrot on 29/01/2019 - 05:20

    PS Anyone making decisions re Aged Care Facilities, as I am, should watch this before placing their parents anywhere:

    https://www.youtube.com/watch?v=auI4rtc1oXs

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