Today, aged care fees change as the Living Longer Living Better (LLLB) package takes effect. While there will be significant reform of the fee system in that for most people, aged care will be more expensive, there is next to nothing in the package that will improve care standards. In short, older people will have to pay more, but there’s no guarantee they’ll get better care in return.
From today, aged care recipients with higher wealth will pay more for their care whether they receive it in the home or go into a nursing home. For home care, some part-rate pensioners could be asked to pay 25% to 30% of their income in fees. Pre-1 July, their fees were capped at 17.5% of the base rate of pension – just under $3,500 per year.
But it’s in residential care where things will get really pricey. LLLB deregulates accommodation fees. Don’t listen to providers complaining that pricing regulation continues. Yes, the Aged Care Pricing Commissioner must vet prices over a threshold of $550,000 for a bond. None of the 124 facilities that applied to set their accommodation fees above this threshold has had their application knocked back.
New residents will have their capacity to pay assessed under a means test that factors in both their income and their assets. If they own their home and no ‘protected person’ lives in it (a spouse, dependent, etc.), the home’s value will be capped at $154,179.
If the capacity to pay is assessed as being at or above $52.49 per day, they will have to cover the full cost of their accommodation and may have to contribute towards the cost of their care. This would be on top of paying 85% of the pension ($46.50 per day) as a basic daily fee.
The $52.49 per day figure happens to be exactly the amount a full-rate pensioner whose sole asset was their home would be assessed as being able to pay. That means that they would have to meet the full cost of their accommodation, even if it exceeded $52.49 per day. They’d also have to pay the basic daily fee, so their total daily fees would be at least $99 per day, providing their accommodation cost $52.49 per day.
The single pension on the other hand is only $60.20 per day. To fund the difference between their total income and the cost of their nursing home, they’re going to have to either rent out their home or sell it to fund a bond. Once they sell it, the home’s value cap will disappear and their fees will rise accordingly.
Accommodation fees vary widely, but many places are charging over the $52.49 per day mark. One facility in Sydney is asking $317 per day just for accommodation. The Government argues that residents who have to meet the full cost of their accommodation can negotiate a lower price or apply for financial hardship. How is someone with advanced dementia going to negotiate with their local nursing home a more affordable price? And why should the Commonwealth pay for unaffordable accommodation via financial hardship claims without providers having to justify the cost?
The most appalling thing out of this reform package is that although providers will be getting more cash, they won’t have to spend it on improving care. The only skerrick of quality reforms is the piloting of three quality indicators later this year.
Otherwise, providers are free to carry on as they currently do, albeit with more of their residents’ money.