Aged care reform and major changes coming in new deal struck by Australian government

Prime Minister Anthony Albanese has announced his government is providing the “greatest improvement” to aged care in 30 years.See what’s afoot and how it impacts you.

Prime Minister Anthony Albanese has announced his government is providing the “greatest improvement” to aged care in 30 years.

Under a new deal with the Coalition, Labor is introducing a new Aged Care Act and a total of $5.6bn will be invested in a reform package which includes several major changes, including $4.3bn investment in Support at Home to come into effect on July 1 next year.

“At the heart of our government’s aged care reforms is a simple set of principles – providing dignity, choice, respect and quality of care to older Australians,” Mr Albanese said.

“I know older Australians worry about going into aged care … this is about caring about the generation that cared for us.

“We will deliver historic aged care reforms to ensure the viability and quality of our aged care system.”

See what it means for you and your household below:

What is changing?

The Albanese Government and Coalition have reached a deal to require some Australians pay more toward their residential aged care or the non-clinical parts of their home care package.

The cost for individuals will be recalculated based on a range of factors including means testing of assets and income and a lifting of the maximum room price in residential care.

Why are the changes happening?

Aged care is one of the top five expenses for the federal budget, with taxpayers expected to be hit with even higher costs as Australia’s population grows olders.

The changes are designed to make the system more sustainable long term, by investing in improved care and clearing waiting list backlogs as well as increasing the contribution from older Australians with a certain level of income or assets, not including the family home.

The net impact of the changes is a $930 million spend over four years and a $12.6 billion save over the next 11 years.

Who do the changes impact?

A “no worse off” principle means Australians already in aged care or on a waiting list are not impacted.

The changes will apply to anyone who enters residential care or joins a wait list from July 1, 2025.

Is the treatment of the family home changing?

No.

What is the maximum cost?

A lifetime contribution cap will apply across the aged care system that means no one will contribute more than $130,000 to their non-clinical care costs – no matter the type or length of their care.

What is the government paying for?

The government will cover 100 per cent of clinical care costs, regardless of individual means, and the majority of aged care costs overall, including 73 per cent of residential care costs and 89 per cent of Support at Home costs.

What does it mean for full pensioners?

Full pensioners who do not own a home will remain largely unaffected.

A full pensioner who rented before entering aged care and has about $10,000 in assets would go from a residential care contribution of 16.7 per cent to 16.9 per cent, which at current rates is an increase from $23,200 to $23,500 annually.

In the example of a full pensioner who owned a home worth $600,000 and had about $150,000 in assets, their contribution would go from 17.8 per cent to 20.6 per cent, which at current rates would be a jump from $24,700 to $28,800 per year.

What does it mean for part pensioners?

A part pensioner with $40,000 in come, owns a home worth $1.1m and had other assets worth $350,000 would go from paying 22.6 per cent ot 25.7 per cent of their residential care annually. At current rates this would be an increase from $31,300 to $36,000.

What does it mean for self-funded retirees?

In the example of a self-funded retiree with no pension, $70,000 in other income, a home valued at $1.6 million and other assets worth $500,000 their residential contribution would rise from 35.6 per cent o 44.8 per cent.

At current rates this is a cost increase from $49,400 to $62,800 annually.

What is happening with home care packages?

Everyone who is currently receiving a Home Care Package, on the National Priority System, or assessed as eligible for a package, will make the same contributions, or lower, as they would have under Home Care arrangements.

How much someone contributes will be based on the Age Pension means test and highly dependent on their personal circumstances, from the level of support they are assessed to need, to their combination of income and assets.

The government has pledged to get waiting times down from the current average of 12 months, to three months.

There will also be support offered for eligible home modifications, with up to $15,000 to make homes safer.

The changes also include faster access to assistive technology, like walkers and wheelchairs, including a new equipment loan scheme.