Because aged care is an underfunded, supply-constrained sector, advisers should start making plans when clients are in their 40s and their parents are in their 70s, Australian Unity has said.
The '40-70' rule is popular in the United States, according to Australian Unity head of retirement living Derek McMillan – and advisory groups in Australia are starting to pick up on the idea.
Starting the conversation early has the added benefit of including the ageing parents in the discussion, he said.
If things are left too late, conversations within the family often devolve along the lines of 'What are we going to do about Mum?', said Mr McMillan.
When it comes to choosing between residential aged care facilities, there are generally three options available to advisers: 'low care', 'high care' and 'ageing in place' facilities, he said. The latter combines the features of the first two.
“I would avoid a low care-only facility, because what's likely to happen is that the client will need to move into high care or have to relocate to another facility,” he said, adding that the client will not only suffer a disruption in their life, but there will be added financial costs and the possibility of waiting lists.
The supply-constrained nature of the sector is a result of governments attempting to control and manage the costs of aged care, he said, but for some people, restricting the supply seems to be “nuts”.
“Imagine if you’re a diabetic, and only 10 people in every suburb can get insulin. It doesn’t make sense, does it?” said Mr McMillan.
If someone needs insulin they get it, he said – but aged care doesn't work that way.
“The government allocates a number of places per geographic region, and when those places are full it means no one else can get service even if they have the need for that service,” said Mr McMillan.
As a result there can be long waiting lists, which means advisers must put plans into place as early as possible, he said.
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