After months of negotiations between the essential parties, the government has made a decision announced will implement Senior Care Team Recommendations.
The government already reported in March that it is going to not impose a new tax or levy on aged care.
Today’s announcement focuses on how wealthier people will contribute to the overall costs of residential aged care and residential care services in the future.
While some people is not going to welcome having to pay more, these changes are mandatory to make sure the long-term sustainability of the aged care system.
What is changing in inpatient care?
In December Task Force made 23 recommendations geared toward supporting:
a senior care system that’s sustainable, fair and conducive to greater innovation in the sector.
By adopting these recommendations, the Government has committed to maintaining financial support for clinical care for all residents and providing a financial safety net for residents with low financial means.
The three most significant proposals for residential care are:
1. Examination of funds to cover the “hotel allowance”.
Currently, taxpayers are contributing to the costs on a regular basis life for all residents, no matter their means. Daily services include catering, cleansing and laundry.
People with high means (assets price greater than A$238,000, income of greater than A$95,400 or a combination of each) will now not receive this subsidy and can have to pay an extra amount to cover these costs.
2. Introducing deferred rent payment.
This is a charter fee for individuals who pay for their accommodation using a refundable lump sum. This fee could be taken from their refund fairly than becoming an extra fee.
This would help overcome a long-standing problem that has seen many providers lose money on accommodation costs.
3. Abolition of income-related care fees.
Instead, a new means-tested contribution to non-clinical care will likely be introduced. It will cover the costs of non-clinical care similar to bathing, mobility assistance and the provision of lifestyle activities.
What impact will these changes have on older people?
Many people is not going to be affected by the changes. Under the ‘no worse off’ principle, those already living in residential aged care will proceed to pay as they do under their current arrangements.
Similarly, individuals with low means, typically retirees without significant assets, is not going to be affected. The government will proceed to totally cover the costs of their clinical care, non-clinical care and accommodation, in addition to supplementing their day by day living costs through a hotel allowance.
Pensioners will proceed to make use of their Age Pension to fulfill day-to-day expenses, as much as 85% of their Age Pension (reminiscent of $445 a week).
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At the other end of the scale, those with significant means, similar to self-funded retirees, pays an extra means-tested hotel fee to cover the full cost of food, laundry, cleansing and utilities. This fee (as much as $88 per week or an extra $4,581 per yr) would increase their total contribution to day by day living services to $533 per week.
In addition, while the government will cover the cost of clinical care for self-funded retirees, they’re expected to contribute to the cost of non-clinical care services through a means-tested non-clinical care contribution. This contribution is capped at $101.16 per day (or $708 per week), which the resident will stop paying once they reach the $130,000 limit or 4 years (whichever comes first).
There will likely be no change to the treatment of the family home under the new means testing arrangements. The value of the family home included in the means test will remain capped at $206,039 (indexed), despite the fact that the arrangements ignore the assets of individuals with homes above that limit.
Finally, part-time pensioners and self-sufficient pensioners who pay for their accommodation with a refundable lump sum deposit pays a new annual deferred contribution charter fee equal to 2% of their deposit per yr.
The $550,000 room will incur a charter fee of $212 per week ($11,000 per yr), which will likely be deducted from the $550,000 security deposit when the room is returned to the tenant or his or her heirs at the end of the stay.
By comparison, if someone desired to pay for the same room using a day by day payment method, it could currently cost them $882 per week.
Currently, each resident’s day by day payments are set at the price once they begin residential care. However, in the future, resident payments will likely be indexed twice a yr.
The focus is on improving equality and sustainability
It will take a while to analyse the full implications of today’s announcement, which also included essential changes to the Home Support Scheme and the new Aged Care Act.
However, the proposed changes are more likely to improve the sustainability and equity of Australia’s aged care system.
More than half of all care homes for the elderly are operating at a loss, and over the past 4 years these homes have cumulative losses of $5.6 billion. This shouldn’t be sustainable, and each home that closes means fewer opportunities for older people to receive the residential care and support they need.
The proposed changes, particularly those regarding accommodation, will help make sure that service providers have sufficient revenue to cover the costs of the services they supply.
The introduction of more means-tested arrangements for on a regular basis living costs and non-clinical care will allow taxpayer support to be higher targeted to those with low financial means.
Perhaps most significantly, increasing contributions from older individuals who can afford it is going to improve intergenerational equity by relieving taxpayers of the rising costs of providing subsidised care for older people.