Do I have to sell the house to pay for aged care?

Amongst the many decisions to make when someone you love needs to move into residential aged care lies the common question: Do we have to sell the house to pay for aged care fees?

Families are often worried about the need to sell the home and ask about alternative options.

Similar to the choice of buying or renting a home , the “buy” or “rent” option is also available to pay for the room cost in aged care, where the “buy” option is a refundable deposit, and the “rent” option is a daily payment There is also the option of paying for room costs through a combination of the two which provides a level of flexibility that can help with affordability, especially if there are not enough assets to pay the full lump sum or people don’t want to sell their assets, like the family home. There are important things to consider before making any decisions.

If you pay a lump sum (generally called a Refundable Accommodation Deposit or RAD) this money is exempt for Centrelink/DVA age pension purposes and its repayment is guaranteed by the Federal Government. The balance is refunded to the resident should they move facilities, otherwise to their estate on death.

Those funds paid as a lump sum will generally no longer be accessible by the resident during their stay in aged care and no interest is payable on the amount paid. However, by paying it as a lump sum you will reduce the accommodation costs you might have otherwise paid if you paid for the room using the rent option (generally called a Daily Accommodation Payment or DAP).

The decision on how to pay the aged care accommodation costs is not an easy one and requires a full analysis of the finances. This includes looking at what effect it may have on any estate plans, current family arrangements, the impact it can have on the total aged care costs, Centrelink/DVA pension benefits, and the need to retain access to cash to meet ongoing expenses.

We understand the costs associated with aged care can be daunting and require careful consideration. That’s why the team at Alteris Lifestyle and Care look beyond the immediate costs of aged care to consider and bring to attention the consequences and flow-on effects of a range of scenarios.

 

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