The disaster scenario is that the operator goes belly up and, as is inevitably the case in insolvencies, the unsecured creditors — in this case elderly residents — stand behind a lot of other creditors in the wash-up. Staff get paid first, then naturally the liquidators feast on their pound of flesh, followed by secured creditors such as the banks. Bringing up the rear, with little spectre of any return in a liquidation, are grandma, grandpa and the Australian Taxation Office.
In the event of a calamity, government would no doubt step in and put taxpayers up to foot the bill. Do retirees know, are they told, they are not really buying an asset but actually financing a property developer?
Can they be turfed out and their loans put back to them? The lines often blur in this sector, even in the distinction between aged care which typically uses another debt instrument, bonds and retirement living. Retirement villages often have aged care attached. Lend Lease: double dipping and Dutch tripping.
Aveo and Lendlease declined to respond to questions for this story. Stockland was upfront, confirming the retiree loans were in fact loans and could be deployed for any purpose. For example, in some states a statutory charge applies, or is registered over, the retirement village land to secure the repayment of the monies. This applies regardless of whether the amount is paid by the resident by way of loan or otherwise e. While it is true that, in the case of retirement villages, the operator is the one taking the loan, not making the loan, this concept of elderly, interest-free financiers is not widely known.
And unlike the banks, who are bound by a broad raft of consumer finance legislation and attendant duties of disclosure, the retirement village operators wear no such burden. Defending the banks is not a popular activity these days but they do pay for their money — usually via interest rates on deposits and bonds. The retirement village operators borrow from the banks too, yet even in their public materials you have to fossick hard to find a mention about who the owner of the retirement asset is.
In its annual report to shareholders which was filed with the ASX in late September, Aveo made this disclosure in the notes to its accounts:. If so, then a sale is recognised on the occupation of a retirement unit and a resident loan is not recognised.
The Group believes that those risks and rewards have not been transferred in respect of any of its retirement units, regardless of the legal form of title granted to the resident, which may be freehold or leasehold. Consequently, the Group recognises resident loans in respect of those of its retirement units that are occupied by residents.
This disclosure is not apparent in earlier Aveo accounts. There is nothing awry in the tremendous commercial advantage to be had as a retirement village operator. Disclosure and regulatory stewardship of the sector however must surely be in consideration for the looming Senate inquiry.
As Stockland is also the developer it makes, under this example, another There is a market here, plenty of rival operators, so the prices, while tilted heavily in favour of the operators are at commercial rates. The issue for public interest is with disclosure and when undue advantage is taken of the commercial opportunity.
Subsequently, two class action lawsuits were announced into gouging of elderly residents. Aveo rejects the allegations and is defending the actions.
Aveo is by no means alone in being subject to allegations of gouging. The Senate Inquiry will hear from a number of industry players as it canvasses options to better protect the elderly. Another other conundrum is delivering an eldercare set-up which will withstand the explosion in numbers under care in coming years — and getting the balance right between private profits and public funding. The three players mentioned in this story are large but a fraction of the total picture. None of them pay much in the way of tax.
Stockland is only in retirement villages and, although these are feeder systems for aged care, has no formal age care facilities of its own. Lendlease is in a similar position, having sold out of aged care in , but — as laid down in the investigation linked earlier in this story — has adopted aggressive tax positions in its eldercare operations, having shifted away from leases to loans.
Contact the plan directly to find out the exact terms of its nursing home coverage. The term nursing home can refer to different types of places, including rest homes, nursing homes, board-and-care homes, assisted-living facilities, congregate living homes, and sheltered care homes.
This type of custodial long-term care is not covered by Medicare. At the other end of the nursing home spectrum is high-level inpatient medical care, referred to as skilled nursing or rehabilitation care. Under certain circumstances, Medicare Part A covers this skilled care for a limited time while a patient is recovering from a serious illness, condition or injury.
In order for someone to receive nursing home coverage under Medicare, a number of different conditions have to be met:. If a person can meet the qualifying conditions for Medicare coverage of nursing home care, Medicare will contribute a partial payment of a limited amount. If the patient has a private Medigap supplemental insurance policy, that policy might pay some or all of this coinsurance amount.
After days in a covered skilled nursing facility in any one benefit period, Medicare no longer pays any of the cost.
Contact the plan directly to find out what its nursing home coverage and payment terms are. Medicaid is a federal government program administered jointly with state governments, and it pays long-term nursing home costs for people with low income and few assets other than a house they own.
Each state administers its own Medicaid program, with slightly different eligibility rules. In some states, Medicaid pays some of the cost of assisted living for eligible residents in participating facilities. Medicaid nursing home coverage is available only to people who are unable to care for themselves at home.
Be aware, however, that some nursing homes only accept Medicaid payment for a limited number of residents. The income limits for Medicaid nursing home coverage eligibility are different for an unmarried, divorced or widowed person than for a married couple.
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Single person — State Medicaid programs limit the income of an unmarried nursing home resident in two different ways. One way, used by some state Medicaid programs, establishes a monthly income eligibility limit. Find out more about state specific income eligibility rules. For initial eligibility for coverage of nursing home care, Medicaid only considers income in the name of the person entering the nursing home.
Income in the name of the community spouse is not counted at all; the community spouse can keep all income in his or her name. Once a married person in a nursing home has become eligible for Medicaid coverage, new income rules kick in. Find out more on how the MMNA works. Any remaining income in the name of the nursing home resident goes to Medicaid, to offset the cost of the nursing home.
To qualify for Medicaid coverage of nursing home care, an unmarried person is allowed only limited assets. In some states, an unmarried person can also keep his or her home if declaring in writing, upon admission to the nursing home, an intent to return home. However, states that permit this usually put a 6- or month limit on the length of time a resident can keep the home without actually returning to it. Medicaid looks at the combined assets of both spouses.
From that combined amount, Medicaid allows the community spouse to keep:. The asset eligibility limit is set differently by each state. Find out more about state-specific asset limits. And the VA pays a small part of the cost of residence in State Veterans Homes for some veterans who are not eligible for direct VA nursing home care. Community Living Centers are another type of VA long-term care facility. They provide a combination of short-term residential care options similar to assisted living and ongoing community care to veterans with chronic, but stable conditions, including:.
Most Community Living Centers provide short-term rehabilitative or end-of-life care for up to days.