Aged Care Reform – what are the changes?

By Craig Munter & Michelle Barraclough, Makinson d’Apice, Lawyers, Sydney

msi - aged care reformWith a rapidly ageing population and longer life expectancy it is no wonder the Australian government has started to implement legislative reforms in an attempt to create a more affordable and sustainable aged care system or should we say “aged living” system.

On and from 1 July 2014 new residents entering residential care could be required to pay the following four fees depending on their income and assets:

  1. A basic fee;
  2. A means tested care fee;
  3. An accommodation fee; and
  4. Any fee for extra or additional optional services.

The basic fee, which pays for meals and other everyday expenses, is the one fee that can be required to be paid by all residents’ entering residential care, which was the same prior to 1 July 2014.

Prior to 1 July 2014, whether a resident was required to pay the equivalent fee to the means tested care fee was assessed on the resident’s income only and not assets. On the other hand, the test for whether a person was required to pay the equivalent to an accommodation fee was asset based. This meant that the asset rich and income poor residents’ were paying high amounts for accommodation costs and low care fees and the asset poor and income rich were paying high care fees and low accommodation costs. The new dual income and asset test for both the means tested care fee and accommodation fee is aimed at creating more consistency for all future residents.

  • The new fee structure only becomes applicable for residents already in residential care prior to 1 July 2014 if they:move to another residential care facility after 1 July 2014; or
    leave (excluding approved leave) the residential care facility for 28 days or more, then upon their return to the residential care facility the new fees will apply.

Further, the reforms provide more flexibility for residents as to how they pay their accommodation fee. Post 1 July 2014 all residents who have to pay an accommodation fee, regardless of whether they are high care or low care residents, have the choice of whether they pay the fee via a lump sum (Refundable Accommodation Deposit), a daily payment (Daily Accommodation Payment) or a combination of both.

The above are just a few of the legislative changes that need to be considered by aged care consumers and approved providers.

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