Getting the best care for your parents

If your parents are getting older, it’s important you understand as much as possible about their options, especially with new government age-care reforms just around the corner.

Your parents may have reached the stage where they need more help, and are counting on you to step in to help them make major life decisions, including financial ones. Even if this hasn’t happened yet, it’s important to be prepared. And this starts with being informed.

It’s no secret that Australians are living longer, and that our population is getting older as time goes on*. While in 2007, 14.5 million Australians were aged under 50 years — in just 50 years, 8.7 million of these people are likely to be aged between 50 to 99**.

Over the years, the Australian government has introduced measures to help meet the needs of our aging population, including compulsory superannuation for employees, and relaxing the laws on the retirement age. More recently, the Gillard government introduced a string of reforms that will affect the way we pay for aged care, most of which will come into force in 2014.

So here’s a rundown on some of the new government aged care reforms, and what to think about if your parents are considering moving into a retirement home.

Bonds and daily care fees

If your parents decide to move into an aged care facility, they’ll usually need to pay an accommodation bond. These can be quite substantial, with many people selling the family home to fund this expense.

In addition, your parents will need to pay a daily care fee, set by the aged care facility.

Currently, they may have the option to pay a larger bond upfront, often the full value they receive from the sale of their home, in return for lower daily care fees. By doing this, they can effectively reduce their means-tested assets, and may become eligible for a higher age pension.

What’s changing?

From 2014, this is set to change, with new laws capping accommodation bonds at $500,000.

This will push the cost of daily care fees higher. However, the new laws also set an annual cap of $25,000 and a lifetime cap of $60,000 for those living in residential care and nursing homes.

For people being cared for at home, there will be a cap of $5,000 each year for pensioners, and up to $10,000 for seniors with an income over $43,000.

How these changes may affect your parents

Under the new laws, if your parents decide to keep the family house, it will be exempt from means testing for the age pension.

However, if they choose to sell it to cover the cost of their accommodation bond and to pay for their daily care, they will no longer be able to protect some of the money from means-testing by paying a larger bond, as they can under the current laws.

Instead, any money remaining from the sales of the house will be assessed. This could have an impact when working out their aged-care contribution, daily fees and age pension entitlement.

How to help your parents

None of us looks forward to the day when our parents are no longer able to take care of themselves. But the time may come sooner than you think. That’s why it makes sense to talk to your parents now and find out what they want to do if they need more care in the future.

It’s also a good idea to find out more about what options they have. A good place to start is at agedcareaustralia.gov.au. The Aged Care Assessment Team (ACAT, known as ACAS in Victoria) can also explain what help is available to your parents, and what they need to do to access it.

You should also make sure they understand about the aged care law reforms and what it could mean for them. In some cases, your parents may decide it’s better for them act now before the laws change.

But if they don’t, it’s essential that they know how it could affect their retirement savings and their entitlement to the age pension. And as everyone’s situation is different, from the level of assets they have to the retirement home they choose — it’s important to seek professional financial advice.



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source: bigpondmoney.com.au

Medicare levy increase to fund disability plan

The average worker will pay an extra $1 a day in Medicare levies to support the federal government's national disability care scheme.

Prime Minister Julia Gillard on Wednesday announced details of the levy increase, which starts on July 1, 2014, saying the money raised will go into a special national fund.

'The choice that I and my colleagues have made is that DisabilityCare Australia should be supported by a 0.5 per cent increase in the Medicare levy,' she told reporters in Melbourne.

This would take the total annual Medicare levy on wage earners to two per cent.

Under the change, an average worker on $70,000 a year would pay the equivalent of $1 a day, Ms Gillard said.

The government then intends to use some of the money going into the special fund to make grants to the states and territories under 10 year arrangements.

A quarter of the total would be given to those governments to help them build up to running the full disability care scheme across the nation.




 After 10 years, there'll be a review of the funding share between federal, state and territory governments.

Ms Gillard says she'll take the levy increase plan to the next election due on September 14, after last year ruling out such a change.

She says the amount of tax money coming to the government isn't what they expected, adding that it's also clear the states need extra help to afford their share of the scheme.

The prime minister's acknowledged it's not an easy choice to make for Australian taxpayers, but it is the right one for people with disabilities and their families.

Ms Gillard stressed the money raised from the Medicare levy increase would not cover the complete cost of the disability care scheme when it was fully operational.

'The government will need to make savings for that full cost and there will be no free ride for states and territories - they'll need to step up too,' she said.

Treasurer Wayne Swan said money would accumulate in the fund during the early years from mid-2014, ready to 'kick-start' the scheme when it came into full operation in 2018/19.

The accumulated money would total about $20 billion.

The scheme will cost $8 billion a year, while the levy measure will raise about $3 billion.

Disability reform minister Jenny Macklin also tried to allay the fears of families worried about reports the government was planning changes to the disability support pension in the May budget.

'There will not be further changes to the disability support pension in the coming budget,' she said.

She noted changes to the pension in recent years had led to a drop in the number of new pension recipients.

'Major changes have been delivered but I do want to reassure those people who need the disability support pension ... that this very important part of the social security safety net will remain.'

Mr Swan said he expected some 'political pain' to come from the plan to raise the Medicare levy.

'There's a greater public good here,' Mr Swan said.

Ms Gillard said it was the right decision for Australia's future.

'I know I'm asking Australians in their millions to step up and pay an increase in the Medicare levy,' she said.

'Australians will be able to ask of themselves that question when they vote in September - whether or not they think it's worthwhile, just like Medicare is, when we all contribute and we all benefit to have DisabilityCare.'

'We are prepared to fight for this,' she said.

Legislation to support the levy rise would likely be considered by the next parliament.

'Obviously, we will see what the responses are in the parliament as to what people's dispositions are on the legislation but I anticipate the legislation will need to be dealt with in the next parliament,' Ms Gillard said.

The plan is expected to fund about 60 per cent of the commonwealth's additional expenditure for the scheme, Mr Swan says.

It will raise $3.2 billion for NSW, $2.3 billion for Victoria, $1.9 billion for Queensland, $976 million for WA, $727 million for South Australia, $216 million for Tasmania, $192 million for the ACT and $92 million for the Northern Territory.

'It's the same proposition that Labor fought for election after election ... on Medicare, which is that we all contribute and we all share,' Ms Gillard said.

Ms Gillard said federal Opposition Leader Tony Abbott also needed to step up.

'Mr Abbott needs to shoulder that burden too and if he's got a different way of doing this, spell out every dollar and every cent,' she said.

source: bigpondmoney.com.au