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Aged Care fees could be changing..

A government task force looking into the aged care sector in Australia has recommended that those of us with the financial means should pay for our own living and accommodation costs. This would be a substantial change to what currently happens.

Currently, the taxpayer covers most of the expenses for aged care – around 75% of residential care costs and 95% of in-home care costs.

What are the proposed changes?

For in-home care, there is a recommendation for a new “fee for service” approach, which would see the government pay for the care itself (e.g. cost of a nurse) but expect residents to pay for costs they had been expected to pay all their lives, such as food.

For residential care, there is a recommendation to move to a fee supplement on top of the basic fee. The government would pay the supplement for low means residents, but those that can afford it would pay it themselves. The task force is also recommending phasing out the option to pay for accommodation via a lump sum deposit.

The purpose of the option to pay for accommodation via a lump sum has been to allow the aged care facilities to invest the lump sum and generate a return whilst they hold it. However, the task force did not believe the deposits were achieving their desired purpose and have suggested all nursing home residents move to a daily payment (rental) model.

Why are these changes being considered?

Over the coming years, Australia will have more retirees needing care and needing it for longer. At the same time, the working- age population, whose taxes fund aged care, is shrinking. Therefore, the aged care sector will not be able to meet the expected demand.

Older people today (generally) are wealthier than previous generations, in particular superannuation balances, hence the recommendations for people to use income from superannuation to cover health and aged care costs (along with drawing down on super to cover lifestyle and other living expenses).

This is not yet government policy as the recommendations need to go through cabinet.

 

If you or a loved one are entering Aged Care and you need assistance to determine the fees and other financial implications, please contact our office on 8378 4000 to arrange an appointment with Matthew Kelly.

Author
Certified Financial Planner ® | B.Bus | Dip.Bus | Authorised Representative No. 314983

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