The five major changes coming to aged care this year

Since 2014, aged care in Australia has undergone a radical transformation. In the past decade, home care packages have overtaken residential aged care beds.

Aged care reforms from July 1 will change the services the government funds and how much the new Support at Home programs will cost those considering aged care. These are the five most significant changes:

Home care has overtaken the number of traditional aged care beds.Credit: istock

No basic daily fee

At present, people receiving a home care package can pay a basic daily fee of about $13 ($4745 a year) regardless of whether they receive services. This will be abolished. Under the new system, you will pay when you receive services.

Fully funded clinical care

The government will cover the full cost of clinical care such as nursing and physiotherapy – and no means test will apply.

There will be means-tested contributions towards everyday living services, such as cleaning and gardening, of between 17.5 and 80 per cent. For independence services such as showering and dressing, the contribution will be between 5 and 50 per cent.

Means-testing of assets and income

Means-testing today is solely based on income, but both assets and income will be assessed under Support at Home.

The means test is in line with the age pension. Thresholds will depend on whether you are single or a couple, and your homeowner status. The test, whether assets or income, that creates the greatest contribution is the one that will apply.

For a single homeowner, as an example, if assets (excluding the home) are below $314,000 and annual income is below $35,266, the payment will be 5 per cent for independence services and 17.5 per cent for everyday living services.

For assets beyond $913,442, or annual income of $99,025, people will pay the maximum contributions of 50 per cent for independence services and 80 per cent for everyday living services.

With assets or income between the thresholds, contributions will be calculated pro-rata.

More funding

Four levels of package will increase to eight, with maximum funding rising from $56,000 a year to $78,000. Eliminating the need to “save up” funds, there will be immediate funding for assistive technology and home modifications (up to $15,000) and end-of-life care (up to $25,000). Saving up is of limited benefit as only $1000 or 10 per cent of your annual budget can be rolled over.

Higher lifetime cap

The lifetime cap on means-tested fees covering home care and residential aged care will increase to $130,000 (from $82,000), and the home care annual cap ($13,670) will be abolished.

People who were either approved for a package, were in the queue or were receiving a package as of September 12 last year will be protected by a “no worse off” principle that applies to home care and means-tested fees if they later move to residential aged care.

Perhaps the most exciting part of these changes is the promise that it will reduce wait times. At present, there are 83,000 people in the home care queue, and it takes 11 months on average to get the package you need.

The reforms aim to reduce the wait time to three months. The cost of care and how much funding is available mean nothing if you can’t get the care you need.

Rachel Lane is author of the bestselling books Aged Care. Who Cares? and Downsizing Made Simple with fellow finance expert Noel Whittaker. The new edition of Downsizing Made Simple is now available online.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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