Age care, to paraphrase a quote, sounds like another country. Most of us try hard not to think about it – let alone consider whether we will be able to afford it. But the need to know how aged care works and what is available is very real. And this was brought home this week with the Victorian Coroner’s Enquiry into Covid deaths at the St Basil’s aged care facility. The details are both alarming and distressing. At the very least, it seems that a combination of poor decision-making and a lack of care and responsibility contributed to the loss of many residents. This loss can clearly never be overcome.

This enquiry provides clear evidence of what happens when the system does not work properly. Most of the time, however, it functions reasonably well.

An interesting fact is that some 92% of Australians will draw their final breath in their own homes. Yes, that’s right, it’s only 8% of the older population who will live in an aged care residence. Therefore, when we talk about affording aged care, for the vast majority, it means the provision of services to our homes that will be our experience of aged care.

Briefly, there are three main types of support. All three are underpinned by Federal Government payments to a greater or lesser extent, depending upon your income. They are summarised below.

The main challenge while you are still active and independent is to think and plan ahead. If you are currently aged over 65, the odds are that you will live to 85 if you are a male, and nearly 88 if you are a female.

At some stage you may need to access one of the three primary forms of aged care.Thinking about this now may be useful if it prompts you to:

  • Be mindful of how age-friendly your home is and to try to keep it as accessible and manageable as possible
  • Project your own possible age care needs and whether you will need to supplement the base government support with your own income. And if so, how this might affect your retirement savings.

Commonwealth Home Support Program (CHSP)

This program provides low-level support at home. It’s designed for people who are generally able to manage but just need some help with daily tasks. Services may include access to nursing, meals, home modification and transport. This form of care is not formally means tested. You may need to pay a co-contribution payment, depending upon services required and the fees set by providers.

Home Care packages (HCP)

Higher level home support for those with higher or more complex needs. To qualify, you need to undergo an Aged Care Assessment and your assessor will grade you according to one of four levels, depending upon your level of need. Agreed services will be delivered by an authorised provider, who is paid directly by the Federal Government

Residential AC

This refers to full time accommodation and specialised care for those who no longer wish to live independently, or are no longer able to.

Payment is 85% of the single base Age Pension. A means-tested care fee also applies for those above a certain income.

The cost of this care may be paid up front by a refundable lump-sum deposit (RAD), as a non-refundable ongoing daily accommodation payment (DAP) or a combination of both.

This article provides a brief introduction to how recipients pay for Aged Care services. For a fuller coverage go here.

What you need to know about aged care? By Dr Deborah Ralston

Note: At the time of writing there was a review of the possibility of merging the CHSP and HCP. Retirement Essentials will report on this change if and when it happens.

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