By David Crowe
Older Australians will be given more support to live at home for longer under a major federal policy that offers $4.3 billion to expand in-home services but expects those with greater assets to pay more when they move into residential aged care.
Retirees with more than $500,000 in assets on top of the family home are forecast to pay $13,400 more each year for residential aged care once the new regime takes effect, although there will be a cap on the amount people are required to pay over their lifetime.
The changes will be limited to those entering the residential aged care system from July 1 next year to spare today’s residents from sweeping changes to the financial arrangements.
Prime Minister Anthony Albanese speaking about aged care on Thursday.Credit: Alex Ellinghausen
The plan will inject $930 million into aged care over the next four years but will curb the growth in spending over the longer term, resulting in a $12.6 billion budget saving over a decade.
About half the residents moving into residential aged care from July 1 are expected to contribute more over time, allowing growth in federal spending on aged care to fall from 5.7 per cent each year to 5.2 per cent.
Prime Minister Anthony Albanese outlined the changes with Aged Care Minister Anika Wells and Treasurer Jim Chalmers on Thursday after sealing an agreement with Opposition Leader Peter Dutton to ensure the new approach had bipartisan support.
Wells said the objective was to ensure aged care offered a better service, with more nurses and a higher standard applied by regulators.
“We are not asking people to pay more for the same standard – we’ve been working for two years to lift that standard,” she said.
Opposition aged care spokesperson Anne Ruston said the Coalition had pushed the government to “grandfather” arrangements for those already in care and stop payments for lifetime residential care after four years.
“Australians who have worked hard their whole life must be dealt a fair deal,” Ruston said.
Aged care providers hailed the bipartisan agreement for giving them a funding model to end an investment drought in new aged care homes.
“We will need at least 10,000 new beds to be opened per year for the next two decades to keep up with demand,” Aged and Community Care Providers Association chief Tom Symondson said.
“We need investment to turn the situation around, and this legislation will enable that.”
The government says everyone who qualifies for full care under the current means test will be spared from contributing more, while 70 per cent of full pensioners and 25 per cent of part-pensioners will not pay more. The means test for the pension excludes the family home, but the means test for aged care includes up to $206,000 in the value of the home, so not all pensioners qualify as fully supported residents.
While this means half of new residents will pay more under the changes, the government will set a lifetime contributions cap of $130,000 for each person for in-home and residential care.
The lifetime cap will be higher than the current level of $79,900, but the government stepped back from the idea of an even higher cap after pressure from the Coalition to make the limit as low as possible and ensure it applied to both in-home and residential care.
The government has vowed to continue public funding for all clinical needs in residential aged care, but the rules will change the approach for other services such as accommodation, food and help with showering and cleaning.
Explaining how the rules would work, the government said a self-funded retiree with no pension and about $70,000 in annual income, as well as a home, would pay more once they entered residential care after July 1. Their annual contribution would rise from $49,400 a year under the current rules to $62,800 a year under the new plan, an increase of $13,400.
A key objective of the new policy is to make it easier for people to stay in their own homes.Credit: istock
Annual contributions for a part-pensioner with total income of $40,000 including the pension, as well as a home and other assets of $500,000, would increase from $34,300 to $47,700, also an increase of $13,400 a year.
The changes would be much smaller, however, for full pensioners. Someone on the full pension and a home worth $600,000, as well as other assets worth $150,000, would see their annual contribution rise from $24,700 to $28,800 – an increase of $4100 a year.
A full pensioner with no home and about $10,000 in other assets would be fully supported under the scheme and would see their contribution stay the same at $23,200 a year, which means about 78 per cent of the government pension would cover the private cost of non-clinical care in the aged care home. This assumes a separate federal subsidy worth $116,600 a year for the aged care place.
Aged care providers have been calling for a bipartisan agreement in parliament so they have more certainty about their funding, given warnings from a taskforce last year that the sector needed investment worth $56 billion by 2050 to ensure there were enough residential aged care places for a growing and ageing population.
A key objective of the new policy is to make it easier for people to stay in their homes and postpone a move to residential aged care, mostly by relying more on home care packages that offer federal funding for cleaning, nursing and other services.
The Home Care scheme will be expanded with $4.3 billion from July in a bid to cut the average waiting time for assistance – a significant source of frustration in the community – and help more people.
The changes are forecast to support another 300,000 people over a decade and will add financial support for more services, including $15,000 for home modifications so that older Australians can stay at home as they become less mobile.
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