Strategy Talk | September 2018
Following the announcement of the Royal Commission into Aged Care Quality and Safety, we’re sharing some financial consequences and considerations when exploring aged care for you or your loved ones. Unlike what’s served up in some aged care facilities, we’re dishing up some flavour! More on that in this month’s edition of Strategy Talk.
HOW THE FAMILY HOME CAN AFFECT AGED CARE FEES
Residential aged care is playing an increasing role in helping many older Australians enjoy comfortable and carefree lives. However, one of the tasks for anyone assisting an elderly relative with the move into aged care is to investigate the various fees and charges, some of which are subject to both assets and income means tests. As the family home is often the largest asset and can be a source of income if rented out, it’s particularly important to understand how it is treated in relation to these tests[1].
Assets test
For individuals entering aged care the value of the family home is not counted as an asset if it is occupied by:
a partner or dependent children,
a carer who is eligible for government income support and who has been living there for at least two years, or
a close relative who is eligible for income support and has been living there for at least five years.
However, even if that is not the case, the value of the family home that is counted as an asset is capped at $165,271 (as at 20 March 2018). If the actual value is less than the cap then market value applies.
For a couple where neither partner is living in the family home, half of the net market value of the home will be included as an asset for each of them, up to the cap.
Income test
For people who entered aged care between 1 July 2014 and 31 December 2015, rent on the family home is exempt from the income test only if they are paying some level of daily accommodation payment.
Where aged care commenced after 1 January 2016, net rental income is assessable.
Split by health
Eric, 85, and Wendy, 87, own a home valued at $650,000. In June 2017 poor health made it necessary for Eric to move into aged care. Wendy remained in the family home so the house was exempt from the assets test, and as there was no rental income, there was no impact on the income test.
Reunited
In January 2018 Wendy’s increasing frailty also saw her entering residential care, fortunately in the same facility as Eric. Their former home was rented out and became assessable as an asset. As the value of the home is more than twice the current cap, they each have $165,271 included in their assessed assets.
Under the income test, half the net rental income is applied to each of their assessments.
Expert help
Aged care is a complex area requiring important decisions to be made at a time of high emotional stress. Expert advice can help to reduce that stress so talk to us early in the process of moving a loved one into aged care. It will make everything just that little bit easier for all concerned.
[1] Note that there are some important differences in the way the family home is assessed by Centrelink and the Department of Veterans’ Affairs (DVA) for aged pension or DVA pension purposes. This article only covers the rules that apply to aged care.
AGED CARE - HOW WILL IT AFFECT YOUR FAMILY
As older Australians make up a larger portion of our population, affordable and reliable care options for our seniors become paramount to more families.
Naturally, when investigating options for an elderly person, finding the right level of care is crucial, as is anticipating future care requirements and planning ahead.
Given a choice, most people would prefer to remain in their own homes but places are limited by the number of visiting carers and services available. The government has committed to ensuring that home care resources will be gradually increased over the coming years, including the provision of differing levels of home care. Costs associated with care are calculated on the single basic age pension and perhaps an extra income tested fee determined by the care required.
The rationale is that those who can afford to pay for care should do so, while the government will subsidise those who don’t have the capacity to pay. Fees are now capped on an annual or lifetime basis and indexed annually.
When entering aged care accommodation residents have the choice of paying a Refundable Accommodation Deposit (RAD) or making periodic Deposit Accommodation Payments (DAPs).
To safeguard against the care facility becoming insolvent and unable to repay bonds, the government undertakes to make the repayment to either the resident or their estate. Bond amounts are recovered by the government by it levying a regular fee against the care facility.
Other key aspects of the government’s aged care strategy include:
No difference between high and low care so that the level of care can be adjusted seamlessly as needed.
Care facilities are able to offer a wide range of extra-service packages. These are available to all residents for an additional fee, and residents can choose to opt-in or opt-out.
Rental income from the resident’s former home is included in the means test for those entering a residential facility.
The family home remains exempt from income and asset testing.
In an aging society, care for older Australians is a real concern for governments, communities and families. It requires genuine and careful attention. Ongoing reviews and reforms will help, but we can assist you to create a tailored strategy that will help you plan for your own family’s future.
The Truth About Curry
An authentic Indian explanation from the exquisite book, Tastes & Traditions: Stories of Food, Family and Culture from India’s Spice Coast.
The British, while in India, cultivated a taste for spices. Upon their return home they attempted to create those exotic flavours they had loved in India. The result was ‘curry powder’!
The word ‘curry’ is said to be the anglicised word from the Tamil word ‘kari’ which either related to the curry leaf (kari patha) or a dish with ‘gravy’. The British picked this word up (not knowing the meanings) and coined ’curry powder’ to describe their creation of an Indian spice blend. Unfortunately in doing so, the word ‘curry’ has not just become a general description for Indian cooking (colour, taste, style and method) but has also promoted the notion that one spice blend called ‘curry powder’ is the way to make an authentic Indian dish.
The word ‘curry’ in India simply means ‘gravy’ or ‘sauce’. In Kerala when the question is asked of the host, during a meal, ‘curry ondo?” the diner is asking, “what is there to wet my rice or bread?” The ‘curry’ could simply be yoghurt.
Masala
The Indian word to describe spice blends is ‘masala.’ Every cook, household and family has their own home-made blends for meat, fish, and vegetables. There is constant experimentation with new ingredients and spices.
As a result, there are lots of spice blends, constantly being created, changed and adapted across India - each uniquely made to suit individual preference and base ingredients eg. fish, meat, or vegetable.
When a new dish is presented the question that is asked is “what masala did you use?”
In Kerala they make both wet and dry masalas. Commonly used spices which are grown in Kerala include coriander, cinnamon, cardamom, cloves, black pepper, mustard and nutmeg which are added to various dry masalas. Freshly grated coconut or coconut milk, green and dried red chillies, turmeric and curry leaves may also be added.
These fresh ingredients are often part of a wet blend, ground together to form a thick paste and combined with dry spices or added directly to the cooking.
So the next time you want to make a curry, forget the curry powder and start experimenting with aromatic Indian spices to create your own ‘masala’.
Special Note: This article comes from a special publication entitled “Tastes & Traditions: Stories of Food, Family and Culture from India’s Spice Coast”. Written by Leelamony Pillai and Teresa George, it will expand your experience of India and awaken your taste-buds to a regional Indian cuisine which is tropical, colourful and fragrant. This masterpiece can be ordered here. Offering over 80 exquisite but simple recipes, the net proceeds from book sales will be donated to an Australian charity. We have been given permission to reproduce this recipe and hope that it inspires you to buy this beautiful book.