February 15, 2012

Vol 1 Ed 1

Online at http://www.financialcareservices.com.au/newsletters/vol-1-ed-1

Financial Care Services

Newsletter Volume 1 Edition 1
Sent February 2011

Looking ahead to unrestricted user pays support services for our senior years Draft Productivity Commission Report  – Caring for Older Australians

A radical change in the availability and financing of aged care is proposed in the Draft Productivity Commission Report released in January 2011.  Rather than have the Commonwealth restrict the access to subsidised personal care and domestic help, older Australians could choose the kind of assistance they want and pay for it from their own resources.

The practical outworkings of the proposals include

•    Each person could choose where they wanted to live and meet the full costs of their accommodation and domestic services such as cleaning, laundry and meals.

•    Older Australians choosing to live in residential aged care would be charged a reasonable fee for their accommodation, payable via an Accommodation Bond or daily Accommodation Fee.  The Bond must not be excessive compared with the cost of the accommodation actually provided nor the Fee so low that the facility could not cover its lease payments or mortgage costs.

•    Anyone who needed assistance with personal care including long term nursing, could choose their level of assistance and their provider, and meet the full costs.  The care could be provided in their own home, a seniors living facility or formal aged care hostel.  The current limits on the hours of care available would be removed along with the subsidy for most clients.

•    Older Australians would not be forced to sell their homes to finance their care but their care costs could be met by drawing down on their equity in their homes.  Some form of Commonwealth Government endorsed reverse mortgage or loan scheme, is envisioned possibly similar to that operated by Centrelink for pensioners impacted by the Assets Test.

•    Safety net provisions would be included to ensure that all older Australians could access essential care and/or supported accommodation.

•    For the children of older Australians, there would be smaller inheritances after the actual costs of care are debited to the estate.

In summary, the government would become a gateway to unrestricted consumer financed aged care rather than a gatekeeper to community subsidized care.  Home equity release would be the new income stream to finance unrestricted consumer financed aged care.

Baby boomers beware; older Australians could be spending the kids’ inheritance on luxury seniors lifestyles and in-home care.

The proposed changes to the financing of care and support for older Australians could impact on the financial plans of both current retirees and their children.  The older generation could need to liquidate investments to meet the expenses of their care.  The younger retirees could inherit a smaller nest egg from which to finance higher expenses in the twilight years.

About Us

Clients of Financial Care Services receive impartial confidential financial advice from an actuary.  Financial Care Services is an independent professional financial advisory service which holds Australian Financial Services Licence number 299570.

Clients are charged flat fees for advice and assistance; no upfront commissions are accepted in respect of clients’ investments.  Home visits and out of hours appointments are available to assist client families.

For more information call Christine on 9808 0338 or visit www.financialcareservices.com.au

Financial Care Services specialises in advising seniors through life’s transitions.

Remember, referring your clients for impartial professional financial advice enhances your profile and reduces the potential for later complaints.

Christine Hopper
Fellow of Institute of Actuaries of Australia
Director and Authorised Representative
Financial Care Services
Telephone 03 9808 0338