1. 6 Friday, May 23, 2014
GOLDENYEARS
TheAustralianJewishNews – jewishnews.net.au
Ten most common
questions – and
answers – about
aged care
A
CCORDING to the Gen08 sur-
vey, the proportion of people
aged 85 and over in the Jewish
community is more than twice that of
the general population.
With growing numbers of seniors
in our community going into aged-
care, and numbers expecting to
increase as our population ages, it is
now more important than ever to
understand the intricacies of engag-
ing in aged-care services.
The aged-care industry is very
complicated, and many decisions
must be made, many of which
involve large sums of money. Few
people would engage in legal or taxa-
tion matters without seeking the
advice of their lawyer or accountant,
yet too many make the costly error of
trying to navigate the aged-care maze
without appropriate professional
advice.
Q1: Why is aged care so expensive?
G Typical fees include bonds, daily
fees, accommodation fees, retention
amounts, extra services fees and
income-tested fees.
G Very labour intensive.
G Expensive land and buildings.
G Owners must make a return.
Q2: Is the bond negotiable?
G The bond can be up to or beyond
$1 million.
G It is negotiable in many cases,
and can be as much as halved.
Negotiability is very much dependent
on supply and demand.
Q3: What alternatives are there for
paying the bond?
G The bond can be paid as a lump
sum in full, as
interest only, or as
a combination of
the two.
Q4: Can I put up a bank
guarantee for the bond?
G No
Q5: What is the Centrelink fee?
G It is an income-tested fee levied
by the government and collected on
their behalf by the care facility. It can
range from nil to almost $74 per day.
Q6: Why is the Centrelink fee so high
and how do I reduce it?
G The fee is means tested and,thus,
increases as deemed income
increases. For example, a person
deemed to earn $4500 per annum
will pay approximately $1.65 per day,
while a person deemed to earn
$70,000 per year will pay just over $50
per day ($18,250 per year). There are,
however, strategies available that can
significantly reduce income (from
Centrelink deeming purposes) and,
thus, greatly reduce, or often elimi-
nate, the Centrelink fee.
Q7: Why is the government taxing
seniors?
G The standard daily fee of $46.50
per day does not cover the full cost of
an aged-care bed. Therefore, facilities
receive government subsidies for each
bed. The income-tested Centrelink
fee enables the government to pro-
vide these bed subsidies.
Q8: What is the Extra Services fee and
should I pay it?
G The Extra Services fee can be as
much as $100 per day and gives the
patient extra services, including more
attention, podiatrist, hairdressing and
other services. For some, it is well
worth the added expense,however,its
relevance to the individual patient’s
circumstance should be considered
carefully by the family.
Q9: Paying the bond will impact on my
cash flow. What strategies are there
for dealing with this?
G You can negotiate to pay some/all
of the daily fees from the bond, which
means that less of the bond will be
returned at the end of the care period.
The bond can also be paid via interest
only, rather than as a lump sum, free-
ing up funds for day-to-day living.
Q10: What implications are there for
my social security or pension if I go
into aged care?
G The bond is an excluded asset
for social security purposes.
Therefore, in some cases, where
existing cash is used to pay for a
bond, it can result in a new or
increased pension entitlement.
However, more often, a family home
is sold to fund the bond. In this case,
while the home itself was excluded,
once it is sold, the proceeds are
counted as an asset. As a result, the
leftover cash after paying the bond
can often result in a pension being
reduced or lost entirely. Once again,
however, strategies exist to deal with
this eventuality and reinstate or
increase the pension.
Toseekfurtheradvicefromtheteamof
investmentmanagersandaged-care
specialistsatJosephPalmer&Sons(Vic),
contact(03)96016800,Level7,330Collins
St,Melbourne,orvisitwww.jpalmer.com.au.
Photo: Dreamstime.com
FAQs on aged-care
Rodney Horin is CEO of
Joseph Palmer & Sons (Vic),
investment managers and aged-
care
specialists.
Aged-care specialist Rodney Horin, CEO of Joseph Palmer & Sons (Vic) tackles 10 frequently
asked questions on the often-complicated field of aged-care services