Aged Care Reforms are Coming

Aged Care has always been a complex area and with new legislation being implemented on July 1st 2014, it’s important to be aware of the latest changes and developments.

The planning process of Aged Care can be a sensitive and emotional area. As they get older,  many people experience the concern of caring for elderly parents, trying to navigate through organising accommodation, care and finances for their family. It can be an overwhelming task and ever changing legislation makes it all that more complicated.

The previous Labour Government announced wide ranging reforms designed to transform the aged care system over the next ten years. The new Government has now followed through on the new legislation and 1 July this year is the deadline for the new rules to come into play. The question is – how will these changes affect you?

Who will be affected?

The new rules will apply to every person who moves into residential Aged Care after 1 July 2014. For those who are already in residential Aged Care at 30 June this year, they will not be affected by the new rules – except if moving from a low care situation to a high care situation after the 1 July deadline.

How are the costs changing?

A crucial difference under the new system is that there will be only one set of funding rules which will apply to both low and high level care.  While this will ensure equality in the system, depending on your financial circumstances, it may mean higher costs in some cases. Generally, those who receive a full Age Pension will not be affected, but Part Pension or Self-funded Retirees are likely to pay more. On a more positive note, the new provisions encourage predictability and ensure you have the time to make considered decisions.

The new provisions include:

Entry fees

You have the choice to make your payment as a lump sum refundable deposit (on which the facility is entitled to collect the interest earnings), or in periodical instalments, or a combination of both. The payment strategy and method will be at the resident’s discretion, which may relieve the issue of urgently selling the family home.

The institution is required to disclose their fee structure in promotional material so you can make an educated and informed decision. A cooling off phase will apply, which allows a new resident 28 days (after entering the accommodation) to decide on their preferred entry fee method. Full Government subsidy will be available for those who have inadequate financial resources to meet the residential care costs.

Ongoing fees

The associated costs will be determined by a single means test, which replaces the current combination of assets and incomes means tests. At a minimum you will be charged a proportion of your Age Pension; however, in addition, you may be required to pay a proportion of your assessable income. In regards to the family home in the means testing sense, this remains unchanged and will be exempt from the means test calculations as long as the home is still occupied by a spouse or a protected person.


Still have questions and concerns?

If you are unsure of any of the regulations, or wish to gain additional clarification, it is highly recommended to seek professional financial advice. A Financial Adviser has the knowledge to provide you with options based on your individual requirements and can establish the most effective solution to minimise costs and maximise your entitlements and income.

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