Retirement Planning if you get sick

Hi all

I have been listening to my mum talk a little bit about my pop who died when I was young. He did pretty well out of shares and was able to retire early. He then got very sick and had to go into a aged care home. Because he had money a lot of his bills were not covered by medicare and he ended up losing a lot of his money to the big costs involved before he died. I am not very knowledgeable on this subject and was wondering what I could do to offset some of these cost moving forward?

Does investing in a trust change they way the government see's your money? I just dont more money then is required taken away from me in retirement if I fall sick.

 

No not at all. If a trust is involved Centrelink will generally assume all the trust assets and income are that of the taxpayer. They send taxpayer forms that look like a phone book to complete. If there are two taxpayers they can apply that same view to BOTH of them. Sometimes the entitlement to past trusts assets and income etc can impact and some legal avenues are available to cease trust entitlements but its no scheme to bypass the rules. There are special rules for super etc. Assets and income tests can both be applied with gifting, deeming and other special rules.

Being ill and having assets is always preferable to having none. Many fear the "government" taking their assets or forcing the house to be sold. That is not true. Worse still is those who fear it and try to give it away. That can do more harm. Its like burning cash. Any taxpayer can choose free health options under Medicare. Someone with no financial capacity cant choose to go "private" or elective costs like specialist procedures, drugs etc. Private health limits the cost and retains some choices but is not a perfect system either. Aged care is also asset assessed with a ACAT assessment that consider needs AND financial capacity. Rules limit how much you must outlay and selling assets is not usually required but may be of assistance to access some better services.

Super accumulation is a long term scheme to assist retirement savings and objectives. Planning to maximise wealth may be a better strategy than avoiding wealth. Pop didnt live in a era when super was available. Its now normal to retire with $500,000 +

 

Is there an issue where 'aged care' homes essentially asset strip their vulnerable customers in order to make profits? I have seen this happen.

Also, aged care aspirations for many are to stay in their own homes.

I don't think we have a fair answer to care of the aged. So i think 'trusting' the system the government and the aged care places is a thoroughly bad idea

 

Ok thanks for that very helpful. Obviously the long term plan is to be wealthy. I just hear stories of my pop paying $50 for a script that used to be $6 and $400 for an amulance to transport 5 km when its normally free.

 

If Pop had $600K of super or was self funded as a retiree he wouldnt care about the cost of a prescription at chemist warehouse and might get free ambo which applies to pensioners who may get a small part pension...or self insure. Unfortunately he worked at a time when nobody had super and few looked at property as a nest egg. We see two groups. Those who will probably NEVER get a pension and those who wished they didnt just have a pension. There is a small group who seem to value a pension like its powerball and I dont actually get it. Its a safety net for some.

Its like choosing between camping and a five star resort. Camping may be OK but when you are young but at 80 its not much fun to camp and watch those at the resort

 

I must admit to having done the numbers to determine how a part pension may be possible... I’ve long since given up on the idea & would much rather retire more comfortably as I’d prefer to spend my way down to eligibility (if at all) rather than aim for it....

 

It's called the entry bond - in Sydney it can cost $1m, nursing homes see only able to take a small % for about 5 years (around $25-30k over 5 years IIRC). Not quite in the asset stripping genre.

Unfortunately the cost of 24 hour home care is quite high, someone who has a live-in carer and a funded govt package or NDIS can live quite comfortably at home.

 

In home care
3m in assets and 100k income and the fee is only
$582.54 per fortnight

Seems like a good deal to me.

 

I think there are some who see the pension rules as particularly generous and quite like the asset rich income poor status. Rambling house, unkempt garden, watching every penny. I don't think this is a small group although it might be reducing over time. Camping in a very nice mansion rather than camping in the street.

This might be very true of elderly ladies who have ditched the old fella (or he passed on) and who may not have had 40 years in the workforce. Remember they used to get it from age 60.

For reasons i won't go into, i can get a pension at age 60, and i have done the calculations. It still looks like a generous thing

 

Is that an actual figure? That's incredibly good value and should easily be afforded by most on this forum, by the time they need it.

Edit: Found it!

 

Still not sure if that's like 24hr care or exactly how much.
Tha just seems the max price.

 

The recent inquiry into aged care is interesting. Fundamentally the system is broke, concentration on task/$$ instead of quality of care. If i got sick now i would be not keen on aged care. I would be seeking NDIS support instead (at least until 65).

 

Being sick wont access NDIS. You must have a permanent and pre-existing ....disability. A illness is not in itself a disability and is a condition that may be medically treated or incapable of treatment where it is terminal or chronic. It may result in invalidity however. Thats a centrelink benefit = jobkeeper allowance (sickness allowance is no longer available) or possibly a disability support pension but its usually based on a physical incapacity not illness. Once the person hits pension age the age pension replaces jobseeker. No NDIS.

 

That'll be for a certain package, probably level 2 or 4. It doesn't get you much - Level 2 might get you 6 hours per week; not sure about level 4 because Dad died before it was offered to him (and then they kept sending reminders ).

Edit - 6 hours of 144 in a week is about 4% of the week.

 

Plus even if you habe a disability, NDIS make you jump through a million hoops and then only provide you with less then half the funding you need, and often making you, debate, beg, argue, and defend for that. I swear sometimes the goal is to make it so hard that people just give up altogether.

 

The info i mentioned came from a generic page about aged care assistance and not NDIS
Home Care Packages

And also:
You may be eligible if you have:

• noticed a change in what you can do or remember
• been diagnosed with a medical condition or reduced mobility
• experienced a change in family care arrangements, or
• experienced a recent fall or hospital admission

Acoording to the site the maximum payable is $582.54 per fortnight.

myagedcare.com.au
What will it cost me?
You’re expected to contribute to the cost of your care if you can afford it. Your contribution is made up of three types of fees:

1. Basic daily fee (up to $10.75 from 20 September 2020)
   Your provider may ask you to pay a basic daily fee based on your home care package level.
   
   
2. Income-tested care fee (up to $30.86 from 20 September 2020)

How much does the government contribute?
The Australian Government pays a different subsidy amount for each level of Home Care Package. The government subsidy for each package level is as follows:


Home Care Package level Approximate yearly government contribution
Level 1 $9,000
Level 2 $15,750
Level 3 $34,250
Level 4 $52,000

 

OK I've found a site that says L2 would get their client 4 hours per week and there will be some left over (this was in 2017, so may have changed):

" ... Homecare clients receiving a level 2 HCP ... A typical week could involve one hour of personal care and household assistance 3 times a week, and a two hour shopping trip each fortnight. This would still leave some funds left over for equipment hire or garden maintenance."

This site is more up to date - level 4 might get you a whole 14 hours per week! How many hours of care do I get from a Home Care Package?

That's for a cost of $583x52= say $30K plus $52K from the government - $82,000 p.a.

Pretty depressing, isn't it?

 

To avoid paying / contributing to all this age care I suggest you give all your money and assets to your children while you are young.
Your children will appreciate this and look after you forever and ever

<i>King Lear</i>

 

There also may be a upfront RAD as well as daily fees (DAP)
RAD = Refundable accomodation deposit. A financial bond of up to $550K or more
RAP = daily accomodation payment which is means tested
Residents may also be able to choose how they pay for their accomodation and can elect upfront, daily or even a combination.

This provides a good overview of many interactions with fees and assets and incomes and the role of Govt and age pensions
Making sense of RAD and DAP | Aged Care Online

 

Lol yes it is.
That works out to $113 hr. Much cheaper organising private cleaners and pay for medical as needed.