CPSA is very proud of the outcome of its No Flogging of the Family Home for a Nursing Home campaign.
The family home will NOT be included in the aged care means test. There will NOT be a reverse mortgage scheme to tip proud home owners back into debt.
The Government’s own secret opinion polling (if it did any) must have shown it what two published opinion polls had shown: there was no community support for forcing the sale or reverse mortgaging of the family home to pay for aged care.
CPSA’s opinion poll found that two-in-three Australians rejected the notion that anyone should be forced to sell or reverse mortgage the family home to access aged care, as proposed by the Productivity Commission report ‘Caring for Older Australians’.
Previously, a member survey by National Seniors had shown a similar outcome.
What readers need to remind themselves of though, is that the new measures will reform aged care funding, they won’t reform aged care.
Quality is unlikely to improve because of these measures, only profits.
The Government’s aged care announcement marks a missed opportunity to start a transition from institutionalised care in residential aged care facilities to the building of apartments and townhouses clustered around a dementia wing and hospice.
The Dutch experience suggests that people needing care would be queuing up to buy into them and very keen to sell their family home to move into something where the vast majority of them could stay until they died and which would be a valuable asset of their estate.
So what will change in aged care, if the measures announced by the Government on 20 April 2012 are passed by the Parliament?
home bonds are here
CURRENTLY, residential aged care providers can only ask for an accommodation bond for low care nursing homes.
However, the distinction between low- and high care will be abolished.
This will have the effect of enabling residential aged care providers to ask for accommodation bonds for any level of residential aged care.
Very wisely, the Government has said it will regulate what nursing homes charge for accommodation and care.
Each facility will need to make application to a new pricing authority so that its maximum charges can be determined.
The result of this should be that excessive bonds will no longer exist and it may also lead to lower bonds across the board.
Residents who can afford to will pay:
• A basic fee of up to 85% of the single full rate pension (exclusive of supplements) - this fee is payable by all residents, even full rate single pensioners;
•An accommodation charge, which reduces the accommodation supplement paid by the Government – the accommodation charge can exceed the level of the accommodation supplement, and this is where bonds come in; and
• A care fee, which reduces the Government’s care subsidy – the care fee cannot be higher than $25,000 a year and has a lifetime cap of $60,000.
As an alternative to bonds, people will be able to pay accommodation charges periodically as well.
Bonds and the family home
BECAUSE the family home will continue to be excluded from the aged care means test, technically no one will have to sell their house to be admitted to a nursing home.
What will happen in practice is less certain.
At the moment, people without any significant other assets than the family home are often finding it impossible to get into a nursing home for low-care without putting up a bond.
That bond is usually paid for out of the proceeds of the sale of the family home, even though the family home is excluded from the aged care means test.
The same could happen after 1 July 2014, when low- and high care no longer exist as categories.
There are a few things that may prevent this from coming to pass.
First, there will be a dramatic increase in the number of what are currently known as Community Aged Care Packages, but what will be called Home Care Packages.
There are 40,000 packages now; this will go up to 100,000 by 2021-2022.
Obviously, if it is easier to get a Home Care Package, it’s easier to stay out of a nursing home and not pay a nursing home bond.
Second, the Government is increasing its Accommodation Supplement by about 60 per cent.
The Accommodation Supplement is paid where residents are unable to partly or fully contribute to the cost of their accommodation.
This increase will almost certainly prompt investment in nursing home construction and will lead to an increase in available places.
The effect could be that nursing home operators, to fill their homes, will be obliged to take in residents without the means to pay for their accommodation costs.
However, bonds will be here from 1 July 2014, and it’s something that CPSA will watch very closely.
People already in residential care will not be affected by the changes.
Home care packages
HOME Care Packages will attract two fees. There’s the basic fee, up to 17.5 per cent of the full rate single pension.
The Government is introducing a new Hardship Supplement for those unable to pay the basic fee.
Then there is the care fee, which is not payable by full rate pensioners, but will attract a charge commensurate with income levels.
The price will be capped at $5,000 a year for part-pensioners and $10,000 a year for self-funded retirees.
No one will be asked to contribute more than $60,000 during their lifetime.
New packages start on 1 July 2014. People already on a package before that date will continue unchanged.