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Navigating the complexities of moving into residential aged care can be an overwhelming experience, fraught with potential pitfalls and challenges. It’s a time when families must grapple with intricate regulations, potential familial discord, and tight deadlines, all of which can lead to costly mistakes. Here’s a comprehensive guide to help you understand and avoid the common mistakes people make during this critical time.

1. Maximising Your Decision-Making Window

One of the most significant costs associated with aged care is the room price, often amounting to several hundreds of thousands of dollars. You have the option to pay this either as a lump sum or as a daily fee, or a combination of both. During the contract signing process, it’s crucial to resist the pressure to make hasty decisions, which could result in a hurried home sale or other financial missteps.

The aged care facility is obligated to provide you with a 28-day window post-admission to finalise your payment decision. Use this time wisely to explore all available options and seek professional advice if needed. If uncertainty prevails at the end of this period, opt to pay the daily fee, keeping in mind that you can switch to a lump sum payment at any point in the future. However, declaring your intention to pay the lump sum locks you into this decision, with a six-month timeframe to fulfill the payment.

2. Family Financial Involvement: Tread Carefully

In situations where liquid assets are scarce, or there’s a reluctance to liquidate assets, family members, often children, may step in to cover room costs. While this gesture is well-intentioned, it can have unintended financial repercussions. The payment of the lump sum refundable accommodation deposit (RAD) by family members increases the assessable assets, potentially resulting in higher ongoing care fees. Additionally, if deemed low-means, your contribution towards room costs could also see an increase.

If family assistance is on the table, ensure that it’s channeled towards covering ongoing fees rather than the lump sum payment, and only after seeking comprehensive financial advice.

3. Look Beyond Day One

While understanding the initial fees involved in aged care is vital, these are not set in stone and serve merely as a starting point. Decisions made post-admission and any changes in your financial situation can influence future fees. Engage in long-term planning, seeking projections for the next two to five years to gauge potential changes in fees, pension entitlements, cash flow, and asset values.

4. Avoid Bureaucratic Pitfalls

Post-admission, your financial situation will be reviewed by Services Australia to determine fee allocations. This process requires updating your records with Centrelink (or Veterans’ Affairs) and submitting an accurate assessment form. Errors in this process can lead to incorrect fee calculations or lengthy delays, so attention to detail is paramount.

5. The Importance of Professional Advice

Regardless of the simplicity or complexity of your financial situation, engaging with a licensed financial planner specialised in aged care is invaluable. Their expertise provides peace of mind, ensures sufficient cash flow, and safeguards your estate’s value.

Errors can occur, but with professional advice, you have access to complaint resolution services and professional indemnity insurance. To guarantee the legitimacy of the financial advice received, verify that your advisor is registered on the ASIC financial advisers’ register and possesses the requisite qualifications to offer specialized aged care financial advice.

Conclusion

Navigating the journey into residential aged care is fraught with complexity and potential pitfalls. By taking a measured approach, seeking professional advice, and being mindful of the common mistakes outlined in this guide, you can ensure a smoother transition and safeguard your financial well-being. Remember, the choices you make during this time have long-lasting impacts, making informed decision-making paramount.