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Finance - family solutions to aged care |
Compulsory euthanasia for any chronically infirm person over the age of 70 is not a policy that any civilised society would adopt willingly.
Even voluntary euthanasia poses ethical dilemmas. Nevertheless most of the western world including Australia will be facing population pressures of a type not previously seen.
The population is aging, people are living longer and the number of chronically ill people will rise dramatically.
A number of studies have indicated that it will be healthcare costs that will cause the greatest financial strain for governments. The Intergenerational Report released by the Government earlier this year predicts that the proportion of the population aged 65 and over will double within 40 years and the proportion of people aged 85 and over will triple.
One of the biggest problems will be aged care. Even now the aged care industry is in crisis with accommodation severely limited.
The IGR predicts that the cost to the community of aged care facilities will escalate dramatically over the next few decades. Even if extra places were made available, many people with an aversion to institutionalised care would prefer to remain with their families if possible. So are there any solutions?
Apart from euthanasia, one alternative is to encourage people to become self-funding in relation to long term healthcare – much like the Government is encouraging self-funded retirement incomes. This was proposed years ago but nothing has been done.
For the baby-boomers, the strata of society causing the problem, it is probably too late. Many have retired already and many are not far off. Their ability to save is limited.
Another solution is to put the focus, where possible, back on the family. This happens already of course but there are good reasons why it should be more formalised and encouraged by Government.
In a paper presented to the Australian Law Reform Commission, Brian Herd, a Brisbane based lawyer, has proposed greater use of a family agreement. The aim is to provide incentives for children to care for aging parents without causing ructions within the family. The whole family however would have to agree.
The family agreement would, he believes, overcome a number of problems:
Financing a granny flat. Many people wanting to accommodate an aging and possibly infirm parent would need an extension on their house. If they were not able to do this themselves the aged parent could sell her home and lend some of the proceeds to the child. The agreement would specify that on the death of the parent the loan would be repaid to the estate. This would pacify other family members worried about their inheritance and one child receiving more than another.
Compensation: Caring for an aged parent can take up a great deal of time. It may mean that the adult child would have to stop work or reduce the time spent at work. It may even mean bringing someone in to help. The agreement could specify the type of care the adult child would provide. Compensation could be by way of an hourly charge at appropriate rates. The parent could either pay this in cash from the proceeds of the home or have it deducted from the loan.
Monitoring. A third independent party could be appointed to monitor the agreement and if the conditions were not fulfilled it could be terminated. If that happened the loan made to the adult child would have to be repaid immediately.
Mr Herd believes that formalising these types of arrangement by way of a legal agreement would reduce family disputes by making the arrangement fully transparent. It would also give greater comfort to the aging parent.
There are some problems however that would need to be addressed by the Federal Government. Providing gifts or loans can result in a reduction in age pension entitlements. While there are reasons for this rule, in these circumstances they act as a disincentive to families wanting to provide for their parents.
The situation of the adult child would also need to be examined in relation to any compensation paid. Would any income received by the adult child be regarded as income for tax purposes? If the care provided by the child reduced the debt owing would this be regarded as income for the child or as a repayment of a private debt? Would the child be regarded as an employee or a contractor? The answer has implications for workers compensation payments, superannuation payments etc.
If these problems can be resolved then the family agreement may become a useful way of making older people more comfortable about their future care needs and at the same time reduce the stress on aged care facilities.
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