Do I need a retirement village or an aged care facility?

Do I need a retirement village or an aged care facility?

Many of our clients express some confusion between what is a retirement village and an aged care home. Whilst both are aimed at seniors there are important differences between them. Broadly speaking retirement villages are aimed at people in early post retirement with an emphasis on independence, active lifestyle, and community. By contrast aged care homes are aimed at people in late post retirement with an emphasis on support and care for people who are frail.

Retirement Villages

Some people who are still mobile and active, usually in the earlier stages of retirement, may start thinking about domestic chores associated with maintaining the house and garden as well as concerns about companionship. Retirement villages may be an attractive option for them because it provides older people who are still active with an independent lifestyle while being part of a community of people in the same stage of life.

Usually residents live in a unit or villa within a complex and keep their own furniture and possessions and prepare their own meals and laundry. The village may provide a range of facilities such as a recreation hall, bowling green, tennis court, coffee shop, or gym although there is no laws which regulate the list of services or facilities that must be provided by a retirement village. Residents may participate in organised activities such as happy hour and excursions.

Some villages also offer serviced units (also known as assisted living) which provide meals and cleaning services for a fee. An assisted living unit provides a higher level of assistance than is provided by an independent living unit. It is important to understand that these units do however still fall under the Retirement Living Framework and NOT the Aged Care Framework. Assisted living does not provide care related services. Resident can elect to receive care related services through the government sponsored home support and care programs.

There are various arrangements for ownership of a unit in a retirement village and these may include purchasing a unit under strata title or company title but it is probably just as common to acquire the right to live in the village through a lease or licensing arrangement. The most suitable for you may depend on a variety of factors specific to your circumstances.

Most retirement villages will require you to pay a range of fees including an entry cost (the purchase price), ongoing service charges (insurance, rates, general lighting, staff wages, repairs & maintenance), and a variety of exit fees (deferred management fee, reinstatement fee, and capital replacement fee). Residents are also liable for paying their own internal maintenance and electricity. On departing their unit residents may also be able to share in any capital gains or losses.

There are few regulations which prescribe who can live in a retirement village. The only stipulation is that residents and their partners must be older than 55. Residents are free to choose to enter or not to do so and entry is via a private contract between the village and the resident. Costs are self-funded by resident and the government does not provide any financial support for residents.

Residential Aged Care

Residential aged care services provide accommodation for older people who for a variety of reasons can no longer live independently in their home and who need substantial levels of care. They are aimed at frail aged and people needing personal care and support. Most people who move into Aged Care are in their mid-eighties and their entrance to care usually follows a medical event resulting in their no longer being able to take care of themselves.

Aged care homes are owned and operated by organisations that have the approval of the Australian Government to provide care. Aged Care facilities are regulated by the government and must comply with required standards. Staff must be appropriately trained and a minimum range of services must be provided to all resident, including: Meals, cleaning and laundry, assistance with daily living activities (including bathing, dressing, eating, and medication management), social activities, and nursing and health related care.

In modern aged care facilities living arrangements are typically independent rooms with an en-suite bathroom or shared rooms. Accommodation and furniture is provided and resident are able to bring a limited amount of personal possessions. Residential aged care can be offered as either permanent or short-term care. Short-term care in an aged care home is called residential respite care.

If you are considering moving into an aged care home, you will first need an assessment with a member of an Aged Care Assessment Team – An ACAT is required prior to gaining access.

The cost of residential aged care can be complex and difficult to understand? The aged care fee system is highly regulated and very intricate. Navigating through the options and the best way to structure your finances to pay for care may not be easy. Your contribution to the cost of your care can be divided into three broad categories:

  • Accommodation payments – pay for your room and amenities. They can be paid as a Refundable Accommodation Deposit (RAD) or a Daily Accommodation Payment (DAP or a combination of both;
  • Daily care fees – pay for daily living expenses and nursing care. Daily care fees include a Basic Daily Care Fee and a Means-Tested Care Fee;
  • Additional services fees – pay for additional package services and lifestyle choices.

The cost of care is heavily subsidised by the government but based on your assets and income, you may be asked to contribute to the cost of your care. All residents need to complete a Centrelink Request for a Combined Assets and Income Assessment in order for the government to establish how much subsidy they will provide.

Follow Chris Nothling:

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