* This article has been updated to correct and clarify the fee structure.
There is a new form of aged care blossoming, led by Queenslanders. It’s called ‘private aged care’ and it is being offered by retirement village operators.
I believe it’s a great concept for several reasons. Most importantly it gives control and certainty to the person who will be needing care as they enter their later years. Once they have bought into the private care retirement village it is highly unlikely they will have to move again – ever. The dread of being forced to move to an aged care home is taken away.
Likewise, the family’s emotional minefield around ‘when is the right time to move to higher care’ and how to have that conversation, is also no longer required. And couples don’t need to be separated.
By all reports, the bottom line cost of private care is not much different to the traditional entry into an aged care home. Here is how it works.
An innovative fee structure
You ‘buy’ into a private aged care village just like any other village; in most cases you receive a ‘lease for life’. The village will have a DMF structure of around 40 per cent over four years, meaning your estate will get back 60 per cent of what you paid when you leave the village.
“The government subsidy for home care and aged care will be drawn upon and then topped up by the ‘insurance’ that you have been paying in the village”
In this model you will pay the standard mandatory weekly village fees (usually around $200 per week) plus an additional fee for meals if you choose to take that option (around $100 per week).
But here’s the difference: You then pay an additional weekly fee, like an insurance policy, for the expense of your care to be covered for the rest of your life. The amount can be around $200-$250 per week or $13,000 a year. The government subsidy for home care and aged care will be drawn upon and then topped up by the ‘insurance’ that you have been paying in the village.
The average stay is about 4 years, so your care will cost $52,000 over 4 years, less what the government contributes for your home care and aged care. At first you most probably won’t require much care but as you age, you are likely to need more.
Adding it up
Speaking to some of the operators of these villages, the finances work best for part-pensioners and self-funded retirees. They claim that your net payment across your last four years will be about the same as if you had followed the aged care home path.
And customers are saying this all works too. In QLD there are now about 15 of these private care retirement villages and more are being built. The popular brands have been Seasons, Tall Trees and Freedom, plus up-market Henley on Broadwater.
Now the big operators are taking notice. Australia’s second largest village operator, Aveo, last week purchased all the 15 Freedom villages across four states for $215 million; and announced they are going to expand the concept across other Aveo villages.
This is positive news for ageing Australians because it expands the choices that we have and it gives back control… which has to be a good thing.