Home care – the value of advice

By Rachel Lane, Aged Care Gurus

The number of people accessing Home Care Packages is set to grow significantly. For anyone receiving, or hoping to receive, a Home Care Package it is important to understand the funding available through these packages and the costs associated with them. Let’s start with the funding.

There are four levels of Home Care Package: Level 1 provides a basic level of support with funding of $22 per day while at the other end of the scale, Level 4 packages provide support to people with high care needs giving funding of $134 per day. Additional funding is available for returned servicemen and people with special care needs.

Anyone who receives a Home Care Package can be asked to pay the Basic Daily Fee, currently $10.10 per day. In addition to this an Income Tested Care Fee can also apply – this fee is calculated using Centrelink’s Income Test and used to reduce the amount of funding the government provide.

Full pensioners don’t pay an income tested care fee. Part pensioners and self-funded retirees whose income exceeds $25,792pa (single) or $20,025pa (each member of a couple) are charged an income tested care fee at 50c per dollar above these thresholds. An annual cap of $5208pa applies to part-pensioners, and $10,416pa for self-funded retirees. In addition, a lifetime cap of $62,499 applies across home care and residential aged care.

Let’s look at an example…

June is a part-pensioner, she owns her home and has $250,000 in the bank. June has been approved for a Level 2 Home Care Package that provides $40 per day of funding.

June’s Income Tested Care Fee will be $3.19 per day and she will also pay the basic daily fee of $10.10. The total value of the care June can receive through the package is $50.10 per day ($10.10 + $40). June can choose the services she wishes to receive, who she would like to provide them and when they are delivered.

There are a number of financial planning strategies that June could look at to reduce her cost of care, which in turn can increase her pension entitlement, such as gifting, pre-paying her funeral expenses, purchasing an annuity or investing via a trust. The right combination of these could see June receive an extra $1560pa in pension and save $730pa in care costs. Specialist financial advice can make home care more affordable.