Aged care – Securing the future of aged care for Australians – introduction of the Aged Care Funding Instrument

From 20 March 2008 there will be a new aged care funding instrument to assess the subsidies paid by the government for each resident of funded aged care homes. At a cost of $393.5 million over four years, the new system means the government will increase the subsidy paid on behalf of those residents with the highest care needs.

Page last updated: 08 May 2007

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Why is this important?

  • The Government pays a care subsidy for each resident of funded aged care homes. It is important that the subsidy levels match the care needs of the residents.
  • The current approach using the Resident Classification Scale (RCS) is time-consuming and has led to too much paperwork.
  • The introduction of the new Aged Care Funding Instrument (ACFI) from 20 March 2008 will deliver more money for those with the highest care needs. The maximum care subsidy will increase from $123 per day to more than $160 by 2011.
  • The new method is simpler with three basic funding categories rather than seven, and two new supplements to ensure that funding better matches the needs of people with dementia or other complex health care needs.

Who will benefit?

  • Residents in aged care homes will benefit from receiving care payments that better reflect their care needs. Residents with the highest care needs will receive higher levels of care subsidy.
  • Residents and staff will benefit from less staff time being spent assessing residents for funding, and more staff time available for providing care.

What funding is the Government committing to the initiative?

  • The introduction of the ACFI will cost $393.5 million over the first four years. Existing residents will not have their payments reduced.

What have we done in the past?

  • The Australian Government announced in the 2004-05 Budget that it would provide an additional $2.2 billion over five years for aged care. Since then the Government has announced the provision of a further $1.6 billion over five years as part of the new aged care funding package called Securing the Future of Aged Care for Australians.

When will the initiative conclude?

  • The ACFI will replace the RCS for all residents who enter care from 20 March 2008 and will be ongoing.

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