Scenario:

Getting older is a part of life and as we move into a time where we may need to be placed in an aged care facility, it can be a daunting task for us and equally those in our family assisting us with the transition. There can seem to be much uncertainty and confusion as to how to negotiate this change of living.

Solution:

Firstly, I can highly recommend spending an initial $900-ish on an aged care consultant, a person who operates independently of the age care facilities, to research and provide you with the best priced and closest 'fit' to your or your loved one's needs. Facilities range in price and quality of facility and actual level of care, and spending your top dollar on a 'nice' facility could also net you a less than 'top' level of care. Again, an aged care consultant can often give you a good point of reference to bounce things off.

You are exposed to terms like RAD (Refundable Accommodation Deposit) which essentially is paid to the aged care facility as a lump sum - it is like a 'lease' or 'purchase' of a room for the time you are there. If you can meet the full price of the RAD any additional services offered are covered in the price. In conjunction with paying the RAD the facility will take about 85% (at the time of writing this page) of your old aged pension each month. This is part of covering your daily care needs such as food, personal care, cleaning and assistance.

The RAD is fully refunded to you when you leave the aged care facility or is paid to those who inherit your estate should you pass away. One cannot stress enough the importance to keep your will updated with a reputable lawyer to ensure your actual wishes are honoured.

If you don't have enough money to pay the full RAD, most facilities will enter into an arrangement that will still help fund your or your loved one's care by using the RAD as a source of funding your care, which means it reduces each month taking the extra services fee short-fall.

As an example, the RAD on a room might be $550,000, but you only have enough funds to cover $425,000 (so a $125,000 short-fall). Some facilities will still allow you to obtain a room complete with services, but they will take a combination of your pension, any other bank funds and a deduction from the RAD each month - so if your services fees are $500 extra per month then this will reduce your RAD balance to $424,500 - and so on.