Pensioners should pay more: Bupa

A shock increase in aged care costs could be included in this year’s Federal Budget if Treasury heeds a call to force pensioners to pay more for nursing home services.

The proposal by insurance company Bupa recommends that the capped value of people’s homes be increased from the current $162,087.20, so those with valuable homes are asked to pay more for care.

The capped value is used in an assets test to determine how much out-of-pocket individuals using aged care will be if they do not sell their home.

On average, the Government forks out about 70 per cent of aged care costs, leaving elderly individuals to pick up the balance.

The company’s suggestion is contained in its 2018-2019 Pre-Budget Submission.

In the submission, the insurer urges the Government to “seek out and carefully consider the views of Australians on the Productivity Commission’s and Tune Review’s recommendations” to hike up the cost of aged services for individuals.

Bupa believes it is necessary “to increase consumer contributions to aged care from those who can afford it, while providing a safety net for those who cannot”.

Before changing aged care funding policy, the insurer “strongly encourages” the Government to consider “at least increasing the capped value of the owner’s home in the means test and increasing the annual lifetime caps”.

The number of Australians aged 85 and over is projected to more than quadruple by 2050 to 1.8 million people, according to the Australian Bureau of Statistics.

However, last year Aged Care Minister Ken Wyatt said that up to 1.3 million people had  received some form of assisted care in the previous 12 months. The Government spends more than $17 billion a year on the sector and Mr Wyatt projected this would rise to $21 billion in 2019.

Bupa argues the future older demographic will stretch demand and spending on nursing care for the elderly. It added that in part, the situation will worsen because of the “expected relative decline in family support and informal carers”.

More than 200 submissions seeking to influence the direction of the Budget have been published by Treasury since September.

Opinion: Aged care costs leave elderly out in the cold

Bupa – a foreign health insurer that collected $6.7 billion in earnings last financial year –  is telling our Government to jack up the cost of aged care for our most frail Australians.

Headquartered in London, and originally known as the British United Provident Association, the company operates 70 aged care facilities across Australia housing 6700 residents.

Bupa’s proposal is designed to save the Government money, it claims. A spokesperson from the company told YourLifeChoices that its recommendation was designed “to grow the pool of money” required to fund aged care services in a climate facing “budgetary constraints”.

Phew! For a minute I thought it was a bald-faced grab for pensioner savings.

However, the lack of transparency surrounding the Government’s method of assessing how much the elderly should cough up remains frustrating.

The system by which the Government decides how much an elderly homeowner should contribute to aged care costs is a total mystery even to many professionals working within the sector.

One such consultant, Jillian Slade of Oasis Aged Care Solutions, told YourLifeChoices the means test is “very complicated”.

“There is no formula, no one rule. Every case is different and it is very difficult for people to understand how much it will cost them to move into aged care when they need to,” Ms Slade said.

“Often, when I meet a client I begin to find out that what they thought would be a clear cut case is not. All sorts of issues complicate their circumstances, such as whether they hold their property under a tenants in common agreement or if there is a surviving partner who continues to live in the family home, and so on.”

It seems that trying to estimate how much care will cost when you are no longer able to care for yourself is like guessing the length of a piece of string.

Before governments and nursing home providers discuss increasing costs for the elderly, it would be useful for the assets test to be more transparent.

As things stand, older Australians are in the dark about their nursing home options. Further,  by the time they have no choice but to move into an aged care facility, their prospects of understanding their financial circumstances are possibly very encumbered.

The Government has been talking about making the aged care sector more sustainable for too long. It is time that it finally spelt out its plans in a way that is less opaque than it has been thus far.

Do you know if you will be able to afford aged care in the future? Do you believe people who hang onto their expensive homes should be forced to pay more in a nursing home?


Related articles:
What is aged care?
Comparing aged to home care
Sex and the nursing home

Written by Olga Galacho


Funding aged care – home care versus residential

Case studies in June's example compare cost of home vs residential care.

Older Australians fight for their right to have their sexual needs met

Sexual intimacy in aged care is a basic human right that's currently being neglected.