Around two thirds of retirement village residents go into aged care when they leave their retirement village, so it is worth understanding what happens when this occurs.
Before reading further, please check out our article on the difference between retirement villages and aged care.
Research from the Retirement Living Chapter of the Property Council of Australia shows that living in a retirement village delays a resident’s entry into aged care. This is a good outcome for residents and validates the retirement village value proposition for ageing-in-place. Residential aged care isn’t exactly what I would call aspirational, in that no-one particularly “wants” to go to aged care.
Residential aged care becomes necessary when a person needs continual care or medical supervision, or struggles with daily living tasks such as showering, dressing and eating. Dementia (and other versions of cognitive decline) is a rapidly-growing illness among older people and becomes an issue with living independently if there is wandering or a danger to the resident from cooking facilities (1 in 12 people aged 65 and over are living with dementia in Australia, and it is the leading cause of death for females. The number of people with dementia is projected to double by 2058). Home care packages that provide care into the home are suitable up to a point, but typically cannot provide constant care and supervision.
As noted in the article on the Difference between Retirement Villages and Aged Care, you currently need an aged care assessment (ACAT) determination that your health needs are high enough for residential aged care, in order to secure a government-funded place in an aged care facility. Regardless, residential aged care facilities prefer residents with higher needs, as this increases the funding they are able to secure from the Government. Private aged care facilities do not require an ACAT, but you typically won’t receive government funding. They are also very expensive and only an option for the wealthy retiree.
Transitioning to aged care
Your exit from a retirement village into aged care is no different to any other exit – you leave, the unit is reinstated and resold, then your exit entitlement is refunded. For more information on the intricacies around the exit process read the article HERE and HERE.
If you are transitioning to residential aged care, an issue arises where you are required to pay your Residential Accommodation Deposit (RAD) prior to the resale of your unit and return of your exit entitlement. Typically, you have to pay the RAD within 30 days of moving into the residential aged care facility. Given that it can take up to eight months to re-sell your retirement village unit and refund your exit entitlement, this can present a problem. Furthermore, you will be paying the DAP (Daily Accommodation Payment) in your new aged care home from the day you arrive, as well as the village fees on your recently vacated retirement village unit – in Queensland, you continue to pay fees on your retirement village unit for up to nine months following your exit from the village (other states are different). Most retirement village operators will allow you to accrue the village fees and deduct them from your exit entitlement if you plead financial hardship.
In Victoria, the retirement villages legislation has something called the “aged care rule”, where retirement village operators are required to pay the resident’s DAP, if requested, up until the unit is resold and money refunded. This applies only to residents exiting from lease or licence contracts (not strata/freehold) and the funding requirement caps out at 85% of the residents estimated exit entitlement.
Co-located residential aged care and retirement villages
Some retirement villages are co-located with a residential aged care facility that will typically have mutual ownership. The selling point here is that you only need to move once, and it is particularly attractive for couples where one may require aged care before the other.
The move to aged care is often a gradual decline over time, giving you the space to familiarise yourself with the adjoining facility, however it may also come on suddenly after a fall or illness. The residential aged care facility cannot realistically guarantee a place for residents from the adjoining retirement village, as they may not show preference to particular people (they will likely spruik this in the sales pitch though!). There is a benefit though, in that you can get to know the aged care staff and, as your needs increase, be on their radar for when a vacant room and your higher care needs align.
A final note
The financial arrangements for moving into residential aged care are complex and forever changing. I highly recommend hiring a financial planner that specialises in aged care transitions to ensure you get the very best outcomes for your personal needs and financial situation. Make sure they are an aged care specialist – a lot of planners may say they can assist but look for one that advising on aged care as their full-time work.