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Amanda struggles with everyday tasks such as preparing food, washing her hair, and doing up buttons. She also takes a lot of medications to alleviate her almost constant pain. Amanda’s husband passed away 3 years ago, she has no one there to help all the time and her condition has progressively worsened. Amanda’s sister, Dorothy, and her friend, Marge, both reside at the local residential aged care facility and Amanda visit

Assignment Task

The purpose of this assessment is to develop your skills in analyzing client information in order to identify valid strategies to fund the costs of Residential Aged Care. This is a ‘guided’ strategy advice so even though it is not set out as a ‘Statement of Advice’, you should do more than just simply answer the questions.

Scenario

For this case study your client is Amanda Frogmore, an 80-year-old widow with severe arthritis who is considering the move into residential aged care. Amanda’s assets and income are limited, these are illustrated in Table #1 below:

 

 

 

 

Assets

 

 

 

 

  

 

 

 

Asset Value

 

 

 

 

  

 

 

 

Income

 

 

 

 
 

 

 

 

Family home

 

 

 

 

  

 

 

 

$700,000

 

 

 

 

  

 

 

 

Pension $26,689

 

 

 

 

 

 

 

 

(including supplements)

 

 

 

 
 

 

 

 

Bank Account

 

 

 

 

  

 

 

 

$  80,000

 

 

 

 

  

 

 

 

Interest income

 

 

 

 
 

 

 

 

Lifestyle assets

 

 

 

 

  

 

 

 

$    5,000

 

 

 

 

  

 

Amanda struggles with everyday tasks such as preparing food, washing her hair, and doing up buttons. She also takes a lot of medications to alleviate her almost constant pain. Amanda’s husband passed away 3 years ago, she has no one there to help all the time and her condition has progressively worsened. Amanda’s sister, Dorothy, and her friend, Marge, both reside at the local residential aged care facility and Amanda visits them when she can. She has stated that Dorothy and Marge are happy with the care they are receiving. She notes, with dismay, that the aged care facility has a published Accommodation Deposit (RAD) of $500,000. Amanda struggles with everyday tasks such as preparing food, washing her hair, and doing up buttons.

She also takes a lot of medications to alleviate her almost constant pain. Amanda’s husband passed away 3 years ago, she has no one there to help all the time and her condition has progressively worsened. Amanda’s sister, Dorothy, and her friend, Marge, both reside at the local residential aged care facility and Amanda visits them when she can.

She has stated that Dorothy and Marge are happy with the care they are receiving. She notes, with dismay, that the aged care facility has a published Accommodation Deposit (RAD) of $500,000.

Questions

Accurately complete the table in ‘Strategy Advice Part 1’, to compare the following two (2) options available to Amanda to fund her aged care costs.

1. Renting Amanda’s home and paying for her aged care accommodation as a Daily Accommodation Payment (DAP)

2. Selling the home to pay the full $500,000 Refundable Accommodation Deposit (RAD). The balance of the sale proceeds, minus the selling costs of $30,000, will be placed in a Term Deposit account earning 2.0% per annum.

3. Based on your research, explain whether Amanda is likely to be eligible for subsidized aged care and why; how she can apply for an assessment, and who undertakes the assessment.

4. Identify three (3) distinct advantages of retaining the former home and explain to Amanda why this option may be suitable for her circumstances.

5. If Amanda elects Option 1 and decides to retain her home and rent it out to pay for her accommodation costs as a daily accommodation payment (DAP), will her age pension entitlements increase/decrease/stay the same? Your response should clearly explain, with reference to Centrelink rates and thresholds, how and why her pension payments would/would not be impacted. You are not required to calculate the pension amount, but should focus on the direction in which the pension entitlement moves, and explain, in detail ‘why’.

6. The cash flow position for each of Options 1 & 2 falls somewhere between negative $15,000 and negative $35,000, upon entry into residential aged care. Critically evaluate how the shortfall could be funded for each of options 1 & 2. Your response should be based upon the client circumstances and the statistics available on the average time that residents spend in an aged care facility.

7. Under option 2, the home would be sold and Amanda’s accommodation costs would be fully paid using the sale proceeds. IF Amanda chose an aged care facility with an advertised RAD of $650,000 (instead of $500,000), analyze whether her annual aged care fees will increase/decrease/stay the same. To address this you should make reference to the methodology used to calculate the Means Tested Amount (MTA). You are not required to provide Amanda with a calculation, rather, you should explain to her how the MTA would/would not move if she chose a facility with a higher advertised accommodation cost. Assume that the extra $150,000 required to pay the higher RAD would reduce the term deposit from $170,000, down to just $20,000.

8. If Amanda continues to retain the home, Identify how Amanda’s age pension entitlement will be affected after two (2) years and clearly explain, with reference to Centrelink rates and thresholds, both how and why her age pension would be impacted. Your response should speak directly to Amanda in a way that she could understand, and display empathy for her situation. Calculations are required for this exercise.

 

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