Retirement Villages and Aged Care Facilities

Getting Old

It will come to us all.  And when it does for you or your parents, you will need to face the myriad of choices on offer for residential care.

In summary, the main options are:- 

• to remain at home with the appropriate care packages that are available (which will require an assessment by an Aged Care Assessment Team (ACAT)
• a Retirement Village, usually with a minimum age limit of 55 which generally offer:
  • Independent living units (average age 74¹)
  • Supported living units (average age early 80’s²)
  • Also included in this category are Rental Villages or those run by a Church or Charity or even purpose built demountable Home Parks for retirees

Each of these can offer different sorts of titling arrangements.  These are mainly leases/licences or strata/group title, each of which offer different rights.

• an Aged Care Facility – either Low Care, High Care or extra services, which may all be offered in the one facility.

Costs of Retirement Villages

To further elaborate on the above here is a brief summary of the costs of Retirement Village options:

Depending on the type of Retirement Village, there are usually four main types of costs

1.    Buy in/Entry Costs.
If you are buying freehold (strata title) this will be what you pay to buy the unit.  If there is a leasehold/licence arrangement then usually you provide an interest free loan to the Developer of the Village.

2.    Service Charges
These charges cover the costs of running the village e.g. gardening, maintenance rates, repairs etc.

3.    Maintenance and Running Costs of your unit.
These costs cover the cost of repairs and painting internally, electricity, gas, telephone.

4.    Deferred Management Fee
This can be described in several ways but most commonly is a fee that represents a portion of the Village Developers profit, e.g. to cover the cost of infrastructure and the common facilities, such as the administration office, pool, common area, fencing etc.  This fee can be calculated in several different ways.

If you need help with the legal aspects and implications of your proposed choice, we can help. 

Hostels, Nursing Homes = Aged Care Facilities

It is now common for Aged Care Facilities to cater for different levels of care, known in aged care language as ‘Low Care’ ‘High Care’ or ‘Extra Services’.

This approach is in line with the trend of Ageing in Place (AIP), which refers to living at home for as long as possible as well as being able to remain in the same Aged Care Facility as your health declines and your care needs increase.

Also there is the service of ‘Respite Care,’ which is available in some Aged Care Facilities – this is to provide short term care for a temporary resident and in some cases to give the facility a try out before any commitment is made.

To source and find the right facility, it is necessary to determine the level of care required.  This is done by an Aged Care Assessment called an ACAT.  You also need to consider whether it is likely that the level of care will increase over time, from low care to high care, in which case it would be preferable to choose a facility that offers both, to avoid having to move to another facility.

For list of facilities and other information see www.agedcareonline.com.au.

There are also differing financial arrangements to consider and these include the necessity in some cases for an Assets Assessment.  This can be a complex process and you may need to seek some professional advice from a financial advisor that specialises in this area.

Residential Care Agreements & Accommodation Bonds 

Residential Care Agreements

If you move into an Aged Care Facility on a permanent basis (rather than as a respite patient) you will be required to sign a Residential Care Agreement. This sets out the rights and responsibilities of the parties and states:
• Your date of entry; whether you are a low or high care resident & if you have agreed to pay for any extra services.
• The amount of the accommodation bond and method of payment and other details.

There is a 14 day cooling off period after signing if you change your mind.

Accommodation Bonds

If you have received an assessment from ACAT and you enter an Aged Care Facility as a low care resident then you will pay:
• Accommodation bond (if your assets exceed $39,000)
• A daily care fee
• Income tested fee

As a high care resident, you will pay:
• A daily care fee
• Accommodation charge (in lieu of an Accommodation Bond)
• Income tested fee

If either a low or high care resident with extra services, you will pay:
• Accommodation bond
• A daily care fee
• Extra services fee
• Income tested fee

The amount of accommodation bonds vary depending on:
• Location & age of facility
• Level of Scheme Operators debt on construction of the facility
• Standard & price of bonds of other aged care facilities in the area
• Demand for the facility
• Level of government funding
• Resident’s capacity to pay

Aged Care facilities will assess bond amounts either on an assets assessment of the resident or by the market value or price of the service to be supplied.
 
Retention Fees

Aged Care facility Operators are able to charge a monthly Retention Fee for a maximum of 5 years.

Bond Refunds

If you leave the Aged Care facility of your own choice or pass away, the Operator is required to refund your bond, less the retention fee, usually within 14 days of leaving or if you pass away, within 14 days after your estate has obtained a Grant of Probate of your Will.

Make no mistake, navigating your way through the maze of requirements for Aged Care is complicated – specialist financial advice is recommended and we can help point you in the right direction to get that advice and also provide you with advice in relation to the documents you are signing to enter the Aged Care Facility.

If you require assistance with assessing and understanding the legal documentation for an Aged Care Facility, please contact Christine Matsinger or Malcolm McColm at MMLaw. 

¹ Aged Care Who Cares 2011 Noel Whittaker and Rachel Lane 
² Aged Care Who Cares 2011 Noel Whittaker and Rachel Lane