5 common errors when planning for aged care 

Most older Australians will inevitably experience some form of aged care if they struggle to look after their homes and themselves in the latter stage of their life.

In many cases, family members will take the first steps towards arranging care and support services, even if they have little or no knowledge about what a very confusing process can be. From November 1, 2025, the revamped Aged Care Act 2024 will give older Australians stronger rights and choice in care, as well as introducing measures designed to strengthen home-based care.

Nevertheless, there will still be challenges and Gina Somers, a specialist in financial planning for aged care at Mercer Financial Advice, has highlighted the five following areas for consideration.

Holistic planning and preparation gives individuals’ control, financial security and peace of mind.

Often overlooked, financial planning in advance for aged care is crucial to ensure finances and assets are structured to fund any future care needs and protects eligibility for any government support. Somers says financial planning for aged care could also include actions such as appointing a power of attorney or organising an advance care directive.

An advanced care directive is sometimes called a ‘living will’, it outlines your preferences for your future care along with your beliefs, values and goals.

You can also choose to appoint a ‘substitute decision maker’ or ‘support person’.

• A substitute decision maker - makes decisions on your behalf when you no longer have decision making capacity.
• A support person - assists you to make decisions for yourself, by collecting and interpreting information or assisting you to communicate your decisions.

A financial adviser specialising in aged care and associated specialists can assist elderly people and family members with these decisions as part of the transition into aged-care arrangements.

Too many families put off discussions and planning for aged care until a serious health event occurs, such as an unexpected hospital admission after a fall, or being incapacitated after a heart attack or stroke.

When decisions are made in haste, aged care choices may be limited and families could have to settle for the first available service, rather than the most suitable option. This increases stressors for all involved and can have serious health outcomes for the aged care recipient.

At a very simple level, many families may not know how to choose between various forms of care, including residential aged care (long-term accommodation and support), respite care (short-term relief for families and carers), palliative care (comfort for those nearing end of life) and ageing in place (staying in the same facility as care needs rise).

“A lot of families are, for various reasons, being forced to make aged care decisions while in the midst of a crisis, sometimes for themselves, more often for a loved one,” Somers says. “And it can be extremely stressful, so it’s really important to try to plan ahead as best as possible to avoid this situation.”

An Aged Care Assessment Team (ACAT) check is the key test for people who want to access government-funded aged-care services in Australia.

There are two broad ways to access aged care – through an aged care facility, or via care at home. The ACAT test determines care needs and any eligibility for benefits – and completing it in advance of when care is needed can smooth the path to getting the right support.

The ACAT test is a rigorous process and typically starts with contacting a My Aged Care representative (phone 1800 200 422 or visit www.myagedcare.gov.au) to answer any initial questions about a person’s health and care needs. The next step is getting a referral to an ACAT team in your area comprising healthcare professionals such as doctors and nurses. The actual ACAT assessment can be done in your home, or in a hospital or aged care facility. Finally, you will receive an assessment letter detailing the agreed level of care that you require, as well as information on how to access aged-care services.

Given a significant backlog with ACAT assessments and long waits in some cases for home support, Somers advises families to be proactive in pursuing future care and support needs.

The biggest errors – and shocks – with aged care often come because of mistakes and misunderstandings related to upfront costs, ongoing care fees, and any exit fees.

At a basic level, it is crucial to understand your aged care funding options; know how decisions about funding for care may affect your cash flow and asset longevity; and gain sufficient knowledge to avoid surprise fees and unexpected invoices from aged care providers. Such issues should be addressed before your loved one moves into aged care, and on the back of advice from a specialist aged care financial adviser.

“Aged care costs include accommodation deposit payments, daily fees, home care contributions and other expenses which can be substantial and complex,” Somers says. “It’s important to have a really good understanding of these fees and certainly to talk to your financial adviser to get a better grasp on what the best funding options are for you and your family.”

As a person gets older, family members may want to be on hand to help meet all their needs.

However, the best outcomes typically occur when the care load is shared, and experts are brought in to handle specific issues as they unfold. Family members who try to ‘do it all’ will often experience a heavy burden that affects their own lives, while potentially compromising the care of their loved one in the process.

Somers has witnessed the elderly, or family members, trying to navigate the aged care maze on their own. “It often involves legal, financial and care-related decisions. So, engage with your family, get assistance and don’t try to do it yourself.”

To find out more about your retirement and how to plan financially for aged-care, speak to a Mercer Financial Adviser.