The taskforce ruled out meeting the increasing cost of aged care through a tax or levy pointing to the “substantial intergenerational equity issues in asking the working age population,which is becoming proportionately smaller”. Instead,it said the solution is to increase participant co-contributions.
Aged care residents could be expected to pay more for their everyday expenses under a new model.Supplied.
The taskforce also made it clear that government funding should be directed towards care services rather than everyday living expenses,on the basis that people have met these costs at every other age in their lives.
The amount you pay for residential aged care has three components:accommodation (paid by a lump sum,a daily payment or combination),a basic daily fee,currently $61 per day covering everyday expenses such as meals and laundry,and a means tested care fee which is used to offset government funding for your care.
Currently,the government provides an $11 per day supplement to the basic daily fee for all residents and pay the majority (94 per cent) of care funding,with means tested fees making up just 6 per cent ($800 million).
The taskforce recommended increasing the amount you pay towards accommodation and living expenses through:
When it comes to how much you should pay for your care,the taskforce gave conflicting statements,saying the government could elect not to charge a co-contribution for care,or they could choose to remove the current annual caps ($13,100 for home care and $32,700 in residential aged care) and lifetime limit of $78,500.
The taskforce also recommended that Home Care Services be split into three categories:
The report did not provide details on the means testing for co-contributions,it simply suggested a tiered approach based on whether you receive a full pension,part pension or are a self-funded retiree.
It also said that means testing could be “simpler and fairer by addressing inequities in age pension and aged care means assessments”. Currently,the biggest difference between pension and aged care means testing is the treatment of your home.
For pension your home is exempt while you or your partner live there and for two years from the date the last person leaves. Aged care means testing exempts the home if a “protected person” lives there,which includes your partner and can also include a carer or close relative.
Which,if any,of the proposed changes the government will choose to implement is still unknown. With the new Aged Care Act due to commence on 1 July the changes could come quickly.
Rachel Lane is the author of the bestselling bookAged Care,Who Cares? andDownsizing Made Simplewith fellow finance expert Noel Whittaker. The new edition ofDownsizing Made Simple is now available.
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