The reality of old age isn’t something that many of us like to think about
The idea that we—or our parents—will become reliant on someone else to get by can be confronting.
But sooner or later, most ageing parents are going to need some sort of care later in life. And, one of the biggest and often difficult decisions when looking at aged care options, is whether to go down the path of in-home care or residential care. Below we explore some of the differences.
Getting help at home
Most elderly parents, if asked, would prefer to live in their own homes for as long as possible. It’s a way of keeping their independence and staying in a community that they likely know well, with all the associated support and friendships. And these days, it’s a solution that is much more viable thanks to big improvements in-home care.
Subsidised by the Federal Government, in-home care provides access to affordable care services to get some help at home. These services can include a wide range of everyday tasks, such as gardening, housework, transport, nursing care, and modifications to the home. There are two types of ‘care at home’ options available:
- Entry-level care through the Commonwealth Home Support Programme. This option helps elderly parents to live independently and safely at home, with eligibility based on their age and needs. The programme best suits those who are mostly independent but require a little extra support with everyday tasks. The Government allocates funding to the Commonwealth Home Support Programme, however, your parents may need to contribute towards the cost of their relevant package if it is deemed that they can afford to do so.
- Support for more complex needs through Home Care Packages. On top of the care provided by the Commonwealth Home Support Programme, these packages provide more complex care services, such as bathing, nursing, and physiotherapy. Everyone’s needs are different and as a result, the packages offer different funding amounts based on the level of care required, from Level 1 (Basic Care) to Level 4 (High Care). The Government pays a subsidy for the Home Care Package to your parents’ relevant aged care service provider, however, at a minimum, there can be a basic daily care fee and an income-tested care fee payable.
While in-home care means that your parents can enjoy care in the comfort and familiarity of their own home, there can be a downside. In-home care is not available 24/7, and while this may be OK for a few years, it may become a problem as your parents age further and may begin to need round-the-clock help. It might be worth considering whether you are close by and available to help during night times if you go down the in-home care path.
It’s also important to note that care services have been largely developed from a care-needs progression perspective. For example, an individual may start with low-entry in-home care, transition to higher-needs in-home care, and then finally residential aged care.
Moving into residential care
Once elderly parents can no longer live at home, a common next step is moving into residential aged care. The obvious benefit of residential care is that your parents will receive care 24/7. But, it does mean moving out of their home environment, and this can be distressing for everyone involved, if not properly planned.
When it comes to finding residential care, leaving plenty of time for research to find a good fit (financially and otherwise) can be key. The costs for residential care can vary, depending on the facility you choose and your means assessment. Depending on your financial circumstances, some of these costs may be subsidised (or partially subsidised) by the Government. Residential care costs can include:
- A basic daily fee that everyone pays for day-to-day services at the home
- A means-tested fee towards the cost of care, based on your parents’ income and assets
- An accommodation payment—an amount charged for the room, and dependent on home quality, location and features. This fee is also dependent on the means assessment.
Generally, the accommodation charge is the highest of these fees, but there is often room for negotiation and options to help meet this cost. For example, it can be paid as a refundable bond or upfront lump sum—known as a Refundable Accommodation Deposit; a daily amount, known as a Daily Accommodation Payment; or a combination of the two. As with the Home Care Packages, financial hardship assistance is available if there are difficulties with paying.
Retirement villages and homes
Another option for ageing parents who are still reasonably active is to move to a retirement village or home. In some ways, this option offers the best of both worlds—care when it’s needed, with the freedom of independent living. It can be an option for parents who don’t yet need high levels of care, and don’t have a desire to continue living at home. Retirement villages and homes are usually occupied by retired people over 55, and can include self-contained villas, semi-detached units, and high-rise apartments.
Retirement villages can be expensive, and they’re not subsidised by the Government, so this option is a self-funded one, but there can be various purchase and fee-paying arrangements available.
When looking at retirement villages or homes, it’s important to bear in mind that the care needs of your parents will change over time, so locking into a long-term contract with a retirement village that does not offer a higher level of care when needed might cause problems later on. Just as important, is to check on their policies for things like pets and visitors, to make sure they line up with your expectations, and the expectations of your parents.
Getting the conversation started
Conversations about aged care can be highly emotional, and often upsetting. One of the best ways you can help prepare your elderly parents for their next stage of life, is to have open and honest conversations early on. Leaving plenty of time for parents to mentally adjust to their reality—and have a say in what gets decided—is crucial to help minimise any distress. Below are some ideas on the questions that can help kick start your conversations:
- Where do you see yourself getting older?
- Do you think your home will be suitable for you when you’re in your 80s and 90s?
- What level of care do you think you need right now vs in 10 years’ time?
- Does the idea of staying in your home, or being surrounded by people appeal more to you?
- Do you think you would get lonely being at home when you’re less able to get out?
- If you were to move into a residential facility or retirement village, what would you like to do with your home?
If you would like to talk to us about anything in this article, please get in touch.
This report is prepared by Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837 (Bridges). Bridges is an ASX Market Participant and part of the IOOF group of companies. This report is prepared by the IOOF Research team for: Bridges Financial Services Pty Limited ABN 60 003 474 977 AFSL 240837, Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323, Elders Financial Planning ABN 48 007 997 186 AFSL 224645, Financial Services Partners ABN 15 089 512 587 AFSL 237 590, Millennium3 Financial Services Pty Ltd ABN 61 094 529 987 AFSL 244252, RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429, Shadforth Financial Group Ltd ABN 27 127 508 472 AFSL 318613 (‘Advice Licensees’). The Advice Licensees are part of the IOOF group comprising IOOF Holdings ABN 49 100 103 722 and its related bodies corporate (IOOF group). The Advice Licensees and/or their associated entities, directors and/or employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this document or may provide services to the company referred to in this report. The document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of the Advice Licensees. The Advice Licensees and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. The document is current as at the date of issue but may be superseded by future publications. You can confirm the currency of this document by checking the intranet site (links below). The information contained in this report is for the sole use of advisers and clients of AFSL entities authorised by the Advice Licensees. This report may be used on the express condition that you have obtained a copy of the Advice Licensees Financial Services Guide (FSG) from their respective website. Disclaimer: The information in this report is general advice only and does not take into account the financial circumstances, needs and objectives of any particular investor. Before acting on the advice contained in this document, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before making a decision to acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance. The contents of this report should not be disclosed, in whole or in part, to any other party without the prior consent of the IOOF Research Team and Advice Licensees. To the extent permitted by the law, the IOOF Research team and Advice Licensees and their associated entities are not liable for any loss or damage arising from, or in relation to, the contents of this report. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team please visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process.