Due to the rapidly ageing population in Australia our aged care sector has long been in need of reform.
We can thank the previous Labor government for finally introducing much needed change with the Living Better, Living Longer reforms. With aged care costs skyrocketing in recent years as a share of federal government expenditure the aim of these reforms is to make the system more ‘user pays’; where people have a capacity to pay for their own care.
However with the 1 July 2014 start date rapidly approaching there are increasing signs of confusion over accommodation bond changes. Are aged care reforms a mess?
A recent newspaper article indicated that some financial planners are reporting confusion about new bond rules amongst their clients. And while a great piece in the Sydney Morning Herald explained the thrust of the changes very well, it seems education of the public and industry is lagging dangerously behind.
In many cases it appears the changes to accommodation bond rules and aged care fees will have the effect of increasing residential aged care costs post 30 June 2014. So as we get closer to the end of financial year there is a very real risk of a ‘rush’ into aged care admission by families seeking to avoid the new regime and potentially higher costs. This is yet another reason why the government and the industry need to do more immediately to educate the public on Living Better, Living Longer.
We will have more to say on the aged care reforms over the coming months, but for now here is a shortlist of key changes that families and residents will experience after 1 July 2014;
– Abolition of retention amounts from accommodation bonds
– Means testing to now be undertaken by Centrelink not the aged care facility
– Much more complex means testing regime, including assets and income (not income alone)
– Removal of choice over payment of accommodation bond amount payable
– Resident no longer able to negotiate the bond amount – the aged care provider sets the cost at market price
– Change of name for Accommodation Bonds to ‘Refundable Accommodation Deposits’ (RAD)
– Change of name of Accommodation Charge to ‘Daily Accommodation Payment’ (DAP)
As you can see, the ‘aged care minefield’ is set to become even more complex and difficult to navigate. We strongly recommend you call us to ensure you get the best financial outcome for your circumstances .
Regards, Phil
