PLANNING FOR AGED CARE

Transcription

1 PLANNING FOR AGED CARE This presentation is for general information only and must not be considered as personal financial advice UniSuper Management Pty Ltd (ABN ) is licensed to provide financial advice (Australian Financial Services License No ) and is the administrator of UniSuper (ABN ). UniSuper Management Pty Ltd (USM) provides advice under the name UniSuper Advice. UniSuper general advice representatives are employees of USM. They are remunerated by way of a base salary and potential bonuses (based on the quality, service and revenue targets). See the relevant Financial Services Guide for more details. UniSuper Ltd (ABN , AFSL ) is the trustee of UniSuper. For more information about your UniSuper benefits, refer to the relevant Product Disclosure Statements available on our website. 1

2 Agenda Living and care options in retirement Granny flat arrangements Retirement villages Home care Aged care Case study UniSuper Services LIVING AND CARE OPTIONS IN RETIREMENT Family home - Nil care support Family home home care support Granny flat arrangements Aged Care Residential Facilities (hostels or nursing homes) Retirement Villages Supported Residential Services 2

3 GRANNY FLAT ARRANGEMENTS Accommodation provided in exchange for a transfer of assets. Does not need to be a separate flat. Can be: Parent moves into child s home Child moves into parent s home Parent and child move into new home together Can transfer assets up to certain aged based limits without penalty GRANNY FLAT ARRANGEMENTS Practical and emotional considerations Care to be provided Holidays Contribution to outgoings What happens if care needs can no longer be met 3

4 RETIREMENT VILLAGES Accommodation for over 55 s regulated under State or Territory legislation Things to look for: Care Services Check the rules or contract to see what you are getting Like minded residents Established or financially sound provider Arrangements for moving to onsite aged care Costs they are expensive RETIREMENT VILLAGES COSTS Costs vary Commonly: Entry Fee (purchase price) Monthly service fee On exit: Deferred management fee Refurbishment costs Sales and legal fees Lifestyle choice not an investment 4

5 HOME CARE What are the options for home care? What kind of assistance is available? How do I access these services? What will it cost me? How do I work out which is best for me? WHAT ARE THE OPTIONS FOR HOME CARE? Department of Veteran Affairs DVA services for AVA Gold or White Card holders Call VHC Assessment Agency on Department of Veteran Affairs on May ask for a contribution of $5 - $10 per week depending on services 5

6 WHAT ARE THE OPTIONS FOR HOME CARE? Subsidised home care package MyAgedCare website or Need to be assessed as eligible. Waiting times for these services can be considerable Assessment is free and conducted first over the phone and then in your home Lower care packages (Level 1 and 2) can be more expensive than private services if not a full pensioner WHAT ARE THE OPTIONS FOR HOME CARE? Private services Contact a provider web search of providers in your area Considerable number of different models for care Differing pricing structures If looking to get subsidised home care package, check whether provider is an approved provider 6

7 TAKING CARE OF THE CARER If the carer does not stay rested and healthy will not be able to fulfil their role Take regular short breaks Prepare for longer breaks Take time to maintain friendships, contact with family and active in your own interests AGED CARE RESIDENTIAL FACILITY Residential accommodation and care subsidised and regulated by the Commonwealth Government Care provided according to needs, usually aging in place ACAT/ACAS assessment required (myagedcare.gov.au) Fees and charges are regulated 7

8 AGED CARE RESIDENTIAL FACILITY COSTS Accommodation Payment (bond or RAD). Government guaranteed and returned when resident departs; Care and service fees: Basic daily fee 85% full single age pension Means tested care fee $0 to $245 per day. Yearly and lifetime cap Additional fees Safety net for those who cannot afford a bond AGED CARE RESIDENTIAL FACILITY Things to look for: Locations Can I afford it (or can they afford me)?? Happy staff and residents Food and activities Fit and feel 8

9 AGED CARE FEES The fees payable in residential aged care are regulated by government and may depend on: The aged care service you select Your level of assessable assets and income The range of fees are shown in the diagram below Accommodation payment Basic daily care fee Means-tested care fee Additional services fees Published rates RAD or DAP Concessions if low means All residents $50.16 per day (indexed) Based on income & assets Annual & lifetime caps Fees for extra services May allow opt-in or out Set by service provider CASE STUDY Mary, widowed, age 82 Mary has been ACAT (Aged Care Assessment Team) assessed as requiring permanent residential care Mary has appointed her children Greg and Lucy, as her Power of Attorney Greg and Lucy have consulted Signpost Aged Care services and have signed a Residential contract to place Mary in a single room with ensuite at Cherry Tree Grove in Kingston which has a Refundable Accommodation Deposit (RAD) of $400,000 9

10 CASE STUDY: MARY S ASSETS Assets Owner Current value Annual income Home Mary $400,000 Home contents (Centrelink value) Mary $10,000 Total lifestyle assets $410,000 Cash savings Mary $47,000 $1,175 UniSuper Flexi Pension Mary $600,000 $42,000 Age Pension Mary $0 Total Investment Assets $1,057,000 $43,175 PRESENTATION NAME 19 WHAT SHOULD MARY DO? What is the better option? It depends on.. Estate Planning issues Emotional/family considerations Expected capital growth on home Potential value and use of former home Costs to make home rentable and maintain Ability to generate cash flow 10

11 CASE STUDY What should Mary do? Greg and Lucy (as Attorney s for Mary) would like to review options to pay for Mary s aged care accommodation and understand the financial impact of each option They have indicated that they do not wish to sell Mary s home They would like to minimise ongoing care fees where possible They would like to determine whether Mary has sufficient cash flow to meet her ongoing costs of care and living expenses CASE STUDY Mary s starting cash flow (Day one) Description Annual Income Income: UniSuper Flexi Pension (Tax free) $42,000 Interest from bank savings (@ 2.5%) $1,175 Aged Pension $0 Total: $43,175 Expenses: Basic daily care fee ($50.16 per day) $18,308 Means tested care fee ($29.68 per day) $10,834 Extra Service fee ($12 per day) $4,380 Daily accommodation payment or DAP ($62.88 per day) $23,080 Personal living costs $5,000 Home expenses (to maintain main home) $5,000 Total $66,602 Shortfall ($23,427) PRESENTATION NAME 22 11

12 MARY S AGED CARE FUNDING OPTIONS Fund the Refundable Accommodation Deposit (RAD) via a daily payment (DAP) Redeem $400,000 from Mary s Flexi Pension to pay the RAD in full Redeem $200,000 from Mary s Flexi Pension to pay 50% of the RAD and pay the balance via a DAP MARY S RAD FUNDING OPTIONS Assets Option 1 Option 2 Option 3 Home $400,000 $400,000 $400,000 Lifestyle assets $10,000 $10,000 $10,000 Flexi Pension $600,000 $200,000 $400,000 RAD paid as lump sum $0 *$400,000 *$200,000 Cash $47,000 $47,000 $47,000 Total assets starting position $1,057,000 $1,057,000 $1,057,000 Estimated assets after 5 year (present value) $750,900 $896,000 $812,000 *RAD deducted from Mary s Flexi Pension PRESENTATION NAME 24 12

13 MARY S CASH FLOW FOR THE OPTIONS Option 1 Pay full DAP Option 2 Pay full RAD Option 3 Pay 50% RAD Flexi Pension $65,427 $20,932 $46,143 Interest income $1,175 $1,175 $1,175 Age Pension $0 $22,144 $7,744 Total Income Year 1 $66,602 $44,251 $55,062 Expenses Year 1 Personal expenses & contingencies $5,000 $5,000 $5,000 Daily Accommodation payment (DAP) $23,080 $0 $11,540 Basic Care fee ($50.16 per day) $18,308 $18,308 $18,308 Means tested care fee $10,834 $11,563 $10,834 Extra Service fee $4,380 $4,380 $4,380 Property expenses $5,000 $5,000 $5,000 Total Expenses Year 1 $66,602 $44,251 $55,062 Net cash flow Year 1 $0 $0 $0 PRESENTATION NAME 25 MARY S CASH FLOW FOR THE THREE OPTIONS Recommended option: Redeem $400,000 from Mary s UniSuper Flexi Pension and pay 100% of the Refundable Accommodation Deposit (RAD) Retain the balance of Mary s Flexi Pension ($200,000) and draw sufficient income from her Flexi Pension (approx. $21,000 in the first year) to meet her total annual accommodation and living expenses 13

14 UNISUPER ADVICE BENEFITS FOR MARY Mary s long term net asset position may be slightly higher by paying the full RAD rather than incurring the ongoing interest cost of the DAP The return on paying the RAD is known whereas the investment return of the Flexi Pension is subject to market volatility By removing funds from Mary s UniSuper Flexi Pension to pay the RAD, Mary will reduce potential death benefits tax of 17% that her children may pay upon receiving her super death benefits The full RAD (less any discharge fee deducted by the facility) would be payable to Mary s estate and distributed according to her Will should she pass whilst in the Aged Care facility Mary will increase Age Pension as funds used to pay RAD are Centrelink exempt AVOID RUSHED DECISIONS 14

15 AGED CARE ADVICE UniSuper now offers Aged Care Advice to members and other family members We provide personal advice on residential care and general advice on home care Accredited aged care specialists in each state. AGED CARE ADVICE 2. How to pay? Lump sum/daily rate? Sell/rent/retain home 4. Optimise financial position Maximise Age Pension Minimise aged care fees 1. Review entire situation 3. Generate reliable cash flow to cover daily needs 5. End-to-end service Relationships with reputable placement providers 6. Peace of mind for yourself and loved ones 15

16 CONTACT US Complimentary initial appointment to determine your needs Advice fee can be deducted from your accumulation or Flexi Pension account (if related to superannuation) 1800 UADVICE ( ) unisuper.com.au/campusbookings 16