Aged Care

01 October 2007

Amendments to Aged Care Act

The Aged Care Amendment (Securing the Future of Aged Care for Australians) Bill 2007 (Cth) (Bill) proposes to make amendments to the Aged Care Act 1997 (Cth) that will take effect from 20 March 2008. The changes are aimed at improving fairness in the system of finance for aged care and create greater access to capital for high care providers.

Generally, the new amendments will provide self-funded retirees with greater access to funding and support. This will be achieved in several ways:

• through self-funded retiree residents with few assets becoming eligible for accommodation assistance for the first time
• through a broadening of the eligibility requirements for certain aged care grants
• through a revised income test aimed at treating all types of income (personal or pension) in the same way.

Accommodation assistance

From 20 March 2008 accommodation providers will receive $26.88 per day in accommodation payments for all new residents entering high care, either as a Government payment or a resident contribution, or a mixture of the two on a sliding scale, depending on the value of the new resident’s assets.

The maximum accommodation payment from the Australian Government for those new residents least able to pay for themselves will increase to $26.88 per day. This will be made for all new residents entering high or low care who have less than $34,500 in assets. For those with more assets, this payment will be reduced, with no accommodation supplement being payable for those with more than $90,564 in assets.

The accommodation supplements will be paid to approved providers (in respect of care recipients) provided that:

• the care recipient was provided with residential care (other than respite care) through the residential care service in question for each day for which supplement is claimed, and
• the care recipient was eligible for an accommodation supplement. The care recipient will be eligible so long as:
• the care recipient’s classification level is not the lowest applicable classification level
• the care recipient is a supported resident
• the residential care service is certified, and
• the residential care provided to the care recipient is not provided on an extra service basis.

These supplements will replace a number of existing accommodation supplements paid for pensioners, including those currently paid for people with low assets.

Aged care grants

The criteria for the allocation of a `residential care grant’ has also changed, with the addition of a new class of `supported residents’ being added to the list of groups for which a residential care subsidy is payable. The new class of will be added to the list of groups for which the Secretary may determine the proportion of care that must be provided in the allocation of places for each subsidy type. Under the new system, the new `supported residents’ will be eligible for new accommodation supplements while current `concessional residents’ will continue to receive existing supplements.

A consequence of the introduction of this new class of recipient is that accommodation supplements will no longer be restricted to pensioners only. Such supplements will also be payable for self-funded retiree residents with few assets at the same rate as for pensioner residents with the same assets. However, some supported residents may be required to pay an accommodation bond (under section 57-12) or an accommodation charge (under section 57A-6) but this will depend on their level of assets.

A person is a `supported resident’ if:

• the person is being provided with residential care (other than respite care) through
• a residential care service
• the person is a `post-2008 reform resident’ (that is, they entered a residential care service after
  20 March 2008), and
• the person’s assets are below a certain level. The threshold amount will be determined by legislative instrument, which will be begin (on 20 March 2008) at $90,564.

Income test

The Bill will also introduce changes to the income tests currently applied to aged care recipients. As its stands, current aged care income tests treat income derived from an Australian Government income support payment (`pension income’) differently to all other income (`ordinary income’). The amendments will change the income test to treat all income (pension income and ordinary income) equally. It applies to the total assessable income of a care recipient (the sum of pension and ordinary income).

Under the new arrangements, the amount of the income-tested fee (and hence the subsidy reduction) for a care recipient will be equal to 5/12 of the care recipient’s `total assessable income’ above the `total assessable income free area’. The total assessable income free area is equal to the maximum total income for a full pensioner (currently $663 per fortnight). For a pensioner, this has exactly the same result as calculating 25 per cent of the pensioner’s ordinary income in excess of the ordinary income free area.

The maximum income-tested fee, which currently differs for means tested pensioners, non-means tested (blind) pensioners and self-funded retirees, is simplified to a single cap of 150 per cent of the single basic age pension (which equates to the current cap for self-funded retirees).

A care recipient’s income-tested fee will still be capped by the value of the Australian Government basic subsidy and primary supplements payable in respect of their care.

Flexible care grants

The Bill also introduces an insertion of Part 5.2A to provide for the allocation of `flexible care grants’. These grants will provide contributions for the costs associated with projects that are undertaken either to establish flexible care services or to enhance an aged care providers capacity to provide flexible care.

The grants will only be allocated to an approved provider whose approval includes flexible care, and who holds an allocation of places for flexible care subsidy under Part 2.2 (whether or not it is a provisional allocation), being places that are, or are to be, included in the flexible care service in respect of which the grant is payable.

The considerations taken into account for the allocation of a flexible care grant are:

• whether there is a need for the flexible care service, or proposed flexible care service, to which the grant would relate
• whether the grant would assist people in rural or remote areas or Aboriginal and Torres Strait Islander communities
• such other criteria as will be specified in the Flexible Care Grant Principles.

For further assistance or enquiries please contact Tim Longwill.