Nursing Homes remain a grey area for many

NOT many people admit that they like getting old.

Fewer still are happy about entering a nursing home.

More people than ever are moving into care and their retirement income and life savings are also being locked up along with them.

Entering aged care is a tricky area of law with legislation often changing or being reviewed.

When going into care, an elderly person, who might be frail and not as quick minded as they used to be, faces complex legal structures. There are residential agreements to be assessed and accommodation bond agreements to be understood.

But the first step for a potential resident to consider is whether the care provider can ask for an accommodation bond. Accommodation bonds are based on assets the person has.

Typically, the assets have to be cashed in and the money held in trust while the person is in the home. This can lock up the money for many years.

The assets include things such as property, shares, household contents and personal items. (The value of household contents and some personal items is set at $5000 in the absence of any formal valuation.)

Interest earned on the money held as a bond goes to the aged care provider as well as fees of about $3000 a year.

Respite residents and people who have assets valued at less than two and a half times the annual single age pension - about $33,000 - do not have to pay a bond.

Residents in financial hardship and those who have not paid a bond within 21 days of moving in, or have gone to an uncertified facility, also do not have to pay a bond.

Generally, the amount of bond is negotiated between the resident and the provider. Providers can charge whatever bond they like provided the resident is left with assets of at least two and a half times the annual pension. Again, about $33,000.

The bond can be paid as a lump sum or periodic payment. But the aged care provider must be able to show they have sufficient ongoing ability to repay the bond if the resident leaves at any time.

The provider must also keep a written liquidity statement, maintain a bond register and information on their financial position.

AGE PENSION

aged care might affect a pension because of asset or income changes. If a resident pays an accommodation bond when entering a home, the refundable amount of the bond is not counted under the pension assets test.

A person's home is also not counted as an asset toward the bond or for social security for two years after entering care while their partner still lives in the home or while they receive high level of care. -

Source: Katherine Towers is the YourMoney legal writer.

Aged Care Placement Information Directory

Nursing Homes remain a grey area for many

NOT many people admit that they like getting old.