Aged care policy just as problematic as super

"financial-planning"/

6 June 2016
| By Mike |
image
image
expand image

The Federal Government not only needs to address some of its Budget superannuation changes but also Australia's highly problematic aged care regime.

That is the assessment of Brisbane-based adviser and aged care advice specialist, Robert Ross, who has pointed to the growing complexity of the aged care regime and the challenges it is creating for both advisers and their ageing clients.

He said that since Government changes implemented in July 2014, altering what individual consumers needed to pay for their own aged care, the amounts being demanded were horreondous.

"People are paying up to $550,000 (called a ‘Refundable Accommodation Deposit' (RAD)) for a room smaller than their kitchen at home," Ross said.

Further, he said that it could take up to a year after the death of the person before the estate received the money back, with the aged care facility paying the estate an interest rate of just three per cent.

"If the consumer cannot pay for the room but can pay for, say, half of it ($275,000) the balance due ($275,000) will be charged interest at the rate of 6.5 per cent or $17,875 per year," Ross said.

"This interest payment is called a ‘Daily Accommodation Payment' (DAP). If they don't pay the DAP it will accumulate as a debt against the $275,000 they did pay. When they die that unpaid DAP balance will be deducted."

Ross questioned how any regulator system allowed for the imposition of an interest rate of 6.5 per cent in the current market environment.

He also pointed out that the amount paid as a RAD was mean-tested against assets and income.

"Before January this year, the consumer in care could rent out the family house to help pay for care but since January the rent counts as income which has the effect of increasing income and increasing the amount of the RAD requirement," Ross said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

3 months 2 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

3 months 3 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

5 months 3 weeks ago

A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rule...

3 weeks 6 days ago

Prime Minister Anthony Albanese has confirmed who will succeed Stephen Jones to serve as the Assistant Treasurer and Financial Services Minister. ...

1 week 2 days ago

ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors. ...

3 weeks ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND