The Aged Care Bill, tabled in Parliament on 12 September 2024, brings changes to the costs of age care from 1 July 2025. At this point, the proposals are not yet law, but the Bill has been tabled with bipartisan support, so significant changes are unlikely.
What are the proposed changes and what do I need to consider?
The new home care system will combine the Commonwealth Home Support Package and Home Care Package from 1/07/2027, and clients will pay a higher contribution from 1/07/2025.
The Support at Home Program will have a single assessment replacing the Regional Assessment and ACAT assessment and will be divided into three key service groups:
- Clinical care
- Independence support
- Everyday living expenses
Retirees on the full pension will be fully supported for clinical care but, from 1/07/2025, will pay up to 17.5% for everyday living expenses such as cleaning, meal delivery and gardening.
Self-funded retirees, in contrast, will pay between 50% and 80% for both independent support services such as transport, bathing, social support and everyday living expenses.
Grandfathering of existing fees and existing home care packages will apply to retirees who are currently registered or are in the queue waiting for funding.
Residential Aged Care fees are on the rise for both residents who choose to pay a lump sum Residential Aged Care deposit (RAD) or Residential Aged Care Contribution (RAC).
From 1/07/2025, Aged Care providers will deduct 2% per annum (up to 10%) of the Residential Aged Care deposit (RAD) and Residential Aged Care contribution (RAC) paid by the incoming resident.
The basic daily fee payable by all aged care residents ($63.57 per day, 20 September 2024) will increase by up to $12.55 per day based on income and asset test assessment.
The calculation of the means-tested fee will change from 1/07/2025. Care costs will be divided into clinical care and non-clinical care. The Government will fund clinical care costs, but residents will be means-tested on their non-clinical care contribution, and there will be a new lifetime cap of $130,000 that will apply for up to 4 years.
What does this mean in real dollar terms?
If Joe agrees to pay $500K RAD in full, the Estate of Joe will lose $10,000pa and only $450K will be refundable at the end of 5 years.
Alternatively, if Joe decides to pay a daily accommodation fee (DAP), he will incur a maximum permissible interest cost of 8.38%* (As of 20 September 2024) PLUS indexation twice per annum.
If Joe’s assets exceed $502,981, from 1/07/2025 Joe’s basic daily fee will increase by $4,580 per annum ($12.55per day) and his maximum means tested fee could be up to $101.16 per day until he reaches his lifetime cap of $130,000.
What is the impact if I enter care before or after 1/07/2025?
Residents entering care before 1/07/2025 are estimated to pay 50% lower fees than entering care post 1/07/2025 with the higher fees applicable.
If you or a family member are considering moving into care, advice is paramount to understand the financial impact of making this decision before or after 1/07/2025.
We are here to help you navigate the changes in aged care services and costs and plan for the care you need.