Government support

 

Aged care services are operated by private groups (including charitable and religious organisations) as well as private operators, but the government pays a large part of the cost. This helps to ensure you can afford to access the care you need.

Over one million older people receive some form of aged care each year, with more than 10% of people over the age of 70 living in permanent residential care.

Did you know?

 

 

There are more than 195,800 operational residential aged care places provided through 2669 residential care services.

In addition, around 79,000 home care packages are available to provide people with care and support at home instead of moving to residential aged care.

Source: 2015-16 Report on the Operation of the Aged Care Act 1997, Department of Health. Figures current to 30 June 2016.


To help meet the needs of our ageing population, the Government provides;

information, assessment and referral mechanisms
support for carers looking after older people living at home
support for people with special needs in the community
a choice of service types
accessible and affordable care, and
a safe and secure aged care environment.

Government funding and support covers both at-home care and residential care services.

How much will the government pay for my care?

How much the government pays depends on an assessment of your needs.

Your care needs are assessed in two stages:

  1. The Aged Care Assessment Team/Service (ACAT/ACAS) determines whether you need home care or residential care. This gives you the approval to look for a place in a service and confirms your eligibility for government subsidies.

  2. After you move into residential care, the care staff will conduct a further assessment to develop a care plan for you and work out the government subsidy under the Aged Care Funding Instrument (ACFI).


This government subsidy is paid directly to the aged care provider to help cover the cost of your care. The fee you pay is then based on your combined assessable income and assets (refer to the page on Cost of Aged Care). The more you pay, the less the government pays on your behalf.

If you are experiencing financial hardship you can apply to the Government for help under the hardship provisions. This may grant you a permanent or temporary exemption from fees to ensure aged care is accessible and affordable.

 

Did you know?

 

A large percentage of the total cost for residential care is paid by the Australian Government. This is currently a cost of around $11.4 billion a year for residential aged care. On average, the Government pays subsidies of $63,400 per year for a person in aged care.

Source: 2015-16 Report on the Operation of the Aged Care Act 1997, Department of Health

What if I don’t have enough assets to pay for accommodation?

If you don’t have enough assets to pay the full refundable accommodation deposit (RAD) you may need to pay some of the requested accommodation payment as a RAD and convert the rest to a daily accommodation payment (DAP). The aged care service can calculate the conversion for you.

You can also then instruct the provider to take the DAP out of the lump sum RAD paid. This reduces how much RAD you have refundable, but can help you manage your cashflow and expenses.

But if you have 'low means' you might qualify for concessional treatment and the government will help to pay the cost of your accommodation. Generally you will need to have less than $162,087.20 in assets (including your former home unless a protected person such as your spouse still lives there). But as the calculation to determine if you are low means includes both assets and income it is not quite this simple.

If you think you might be eligible you need to complete a Permanent Residential Aged Care Request for a Combined Assets and Income Assessment form and send this to the Department of Human Services (DHS), or Veterans’ Affairs if you are a DVA client.

DHS (or DVA) will use this information to calculate your means-tested amount (MTA). If this is less than $55.09 you will be eligible for support with paying your accommodation costs.

Accredited aged care services may need to hold a certain number of beds for low-means residents. If you are approved as low-means and the service is willing to offer you a place on this basis the amount you pay for accommodation will depend on your MTA calculation and the government pays additional subsidies on your behalf.

The amount you pay can go up or down each quarter as the calculation changes in line with changes to your personal and financial circumstances. But if you were approved as low-means at entry, you will keep this status while you live at that residential facility.

Example: low-means

 

Romano has been living with his wife, but due to his deteriorating health he is moving into residential care and his wife will remain in the home (which is therefore an exempt asset).

He applies to Centrelink to assess his MTA based on his half of income and assets. The home is excluded and his MTA is calculated as $30. This means he qualifies as a low-means resident.

The residential service he has been looking at was asking for a RAD of $400,000 (converting to a DAP of $63.34 per day). However they are willing to offer him a place as a low-means resident.

Romano will only be asked to pay a daily accommodation contribution (DAC), starting at an amount equal to his MTA of $30 per day. He can pay this as a daily fee (in addition to his daily care fees) or he can convert it to a refundable accommodation contribution (RAC) of $189,446 at the current interest rate of 5.78% or he can select a combination.

The accommodation contribution payable by a low-means person can be paid as a lump sum refundable accommodation contribution (RAC) or a daily accommodation contribution (DAC) or a combination.

How will the move to aged care affect my Age Pension

If you receive a means-tested Centrelink or Veterans’ Affairs (DVA) pension, you will need to advise any changes in your finances or circumstances within 14 days of the change. This includes changes to where you live and the assets or investments you own.

Depending on your full change in circumstances, your Centrelink/DVA pension may go up or down after you move into aged care.

 

Potential impact ...

Rate of pension payable

If you and/or your spouse move into residential aged care you will be classified as an illness-separated couple (even if you share a room in aged care).

The maximum pension is higher as you can each receive up to the single rate of age pension. The income and assets test assessments are still based on the combined rates for a couple but the cut-off thresholds are higher.

Assets test status

If you move from your own home to residential aged care you will continue to be assessed as a homeowner if your spouse is still living there.

Otherwise, you will be assessed as a homeowner:

  • until you sell your home, or
  • for up to two years from when you move out of your home.

The former home is an exempt asset during this time. At the end of this period, you will be reassessed as a non-homeowner and the home will become an assessable asset.

Note: different asset test rules may apply if you moved into aged care before 1 January 2017. Further, how any rental income is assessed will depend on your circumstances and fee structure – refer to the page 'Implications for your former home' for more information.

 

If you sell your house, the extra money that is invested from the sale proceeds may affect your pension payments significantly. In some cases you could lose the pension and the pension concession card, but may still qualify for the Commonwealth Seniors Health Card.

Harry and Mavis

 

Harry’s health is declining and his wife Mavis is no longer able to care for him at home. Harry moves to a residential aged care service.

They have been receiving the full Age Pension. Mavis tells Centrelink that Harry has moved and they are reclassified as an 'illness-separated couple'.

This change will help pay their fees as their Age Pension increases from a maximum of $669.60 per fortnight each to a maximum of $888.30 per fortnight each, assuming they qualify for the full Age Pension.

What if I receive payments from Veterans’ Affairs?

Veterans’ Affairs (DVA) looks after the needs of people who have served in the armed forces and their families.

DVA offers a range of specific health and care support services as the veteran population makes up about 25% of all residents in aged care facilities.

If you receive a non-means tested pension, such as the war widow’s pension, this payment is included in assessable income and you may be asked to pay a means-tested fee towards the cost of your care. Former prisoners-of-war will not pay either the basic fee or the means-tested fee as the government is prepared to fully subsidise their cost of care.

Family and members of the veterans community should contact DVA for information on specific support.

This article is prepared by the strategy specialists at Aged Care Steps, a company supporting financial planning advisers who provide planning advice for aged care. To find a professional adviser who specialises in aged care advice go to www.agedcaresteps.com.au and click on the Find an Adviser link.


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