There are a few scenarios where the government’s Pension Loans Scheme can support those requiring residential aged care who need to keep their home.
The government’s Pension Loans Scheme (PLS) can assist in funding residential aged care costs where seniors don’t have the readily available cash but do own their home.
Many people needing aged care for themselves or their partner who want (or need) to hold onto the family home are not aware that PLS can provide them with the financial support they need. Put simply, many seniors in need of care and assistance can fund the help they need by releasing some of the equity in their home.
Moving into residential aged care is already a traumatic and stressful time not just for the person moving into care but for the whole family. Finding a suitable place can be challenging enough as it usually needs to happen in very short timeframes and unfortunately, the funding of residential aged care places can be complex, adding to the anxiety.
Pension Boost has produced an informative blog on how PLS can assist these families. Aged care specialist advice firm, Alteris Lifestyle and Care, collaborated with Pension Boost to produce case studies to guide seniors, their families and advisers on how the PLS might assist in situations where the home can’t be sold to fund care costs:
Bill and Beverley’s case study: Husband requires aged care, wife at home
Bill (85) and Beverley (83) are part pensioners living in Sydney and Bill now requires residential care. Their chosen facility has an accommodation payment of $450,000. The facility also provides additional services totalling $20 per day.
They have $550,000 in cash and savings and would like to use $450,000 to pay Bill’s accommodation payment as a lump sum Residential Accommodation Deposit (RAD) and maintain cash in reserve of $100,000. Their home, which they own outright, is worth $1.4 million and they have personal assets of around $10,000.
Under the PLS they can access a further $952 each per fortnight (extra $24,770 per year) to help top-up their income. Using the PLS, they chose to draw down $503 per fortnight ($13,078 per annum) to supplement their combined pension income and cover both Bill’s ongoing care costs and Beverley’s living expenses.
Jan’s case study – needs aged care and wants to keep unit for her children
Jan (89) is a full age pensioner living in Melbourne and requires permanent residential aged care. She owns her unit outright and it is worth $570,000. Jan does not want to sell or rent her unit to fund her accommodation or ongoing care costs because she wishes to leave her home to her children. Jan’s only other assets are $75,000 in savings and personal assets of $2,000.
Jan’s accommodation payment at her chosen Aged Care facility is $400,000 and she elects to pay this as a Daily Accommodation Payment (DAP) of $44.27 per day. This is in addition to the Basic Daily Care fee of $52.71 per day, and a Means tested care fee of $2.12 per day. In total Jan’s fortnightly aged care costs are $1,387.40 which exceeds her age pension of $952.70 per fortnight.
Using the PLS, Jan elects to draw down the maximum amount of $476 per fortnight to top up her income and cover her aged care costs as well help cover some of the cost to maintain her unit.
Conclusion:
These case studies demonstrate how seniors who need care and assistance can fund the help they need by releasing some of the equity in their home via the PLS.
