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Living Longer. Living Better – Fairer means testing for Home Care packages

Printable PDF version of Fairer means testing for Home Care packages (PDF 31 KB)

May 2012

Key Points:

The Government is proposing significant reforms to the way in which aged care is financed to ensure that older Australians will continue to be able to access the care that they need, when they need it. This means some care recipients with greater means will be asked to contribute more to the cost of the care they receive. The Government will still remain the majority funder of care for most care recipients and will ensure that no one is denied access to care because of an inability to pay.

The Government is significantly expanding the number and level of Home Care packages available to support people whose care needs become increasingly complex but who have the capacity, with support, to remain living at home.

The Government will more than double the number of Home Care packages available across Australia over the next 10 years – more than 80,000 new packages by 2021-22. The level of Government care subsidy for Home Care packages will range from $7,500 to $45,000 a year.

The Government will continue to be the majority funder of Home Care packages. Currently, the Government pays around 84 per cent of the total cost of Home Care packages. The proposed means testing arrangements reduce the Government share to around 76 per cent.

Some care recipients will be asked to contribute more to the cost of their care through an income tested care fee on top of the current basic fee that all care recipients can be asked to pay. The new arrangements will replace the additional contributions that some Home Care recipients are currently paying and will ensure that people with similar means pay similar fees, with safeguards for those who can least afford to pay.
Care recipients who can afford to do so will make a means tested contribution that will reduce the amount that the Government pays toward their care. Care recipients who can afford to will pay:

• a basic fee of up to 17.5 per cent of the single basic pension (currently $3,163 per annum, although many care recipients pay less); and
• a means tested contribution to their care (‘the care fee’) that reduces the level of the government care subsidy.

No one will be asked to pay a care fee greater than the cost of their care. Full pensioners will not pay a care fee. In addition, annual caps of $5,000 and $10,000 (indexed) will apply to the care fees of part pensioners and self funded retirees respectively, together with a lifetime cap of $60,000 (indexed).

The Government is also introducing a new Hardship Supplement, in line with the arrangements for residential care, for care recipients who cannot afford to pay their care fees.

Implementation arrangements:

The new arrangements will be introduced on 1 July 2014. People in receipt of a Home Care package on 30 June 2014 (including care recipients on leave) will not be subject to the new arrangements while their current episode of care continues.

What the means testing changes will mean

From 1 July 2014, the Government will introduce means testing arrangements for people receiving Home Care packages after this date. This will improve the sustainability of the aged care financing arrangements and improve the consistency of fees policy between residential care and Home Care.

As is currently the case, a care recipient's assessable income will be determined using the same rules as used by Centrelink for pension purposes. Income also includes income support payments from the Australian Government such as the age pension.

Full pensioners, and older Australians with the same level of income

Care recipients with assessable income¹ less than the maximum income level for a full pensioner – $22,700.60 for singles and $17,604.60 share of assessable income for a member of a couple as at 20 March 2012 – will not be asked to pay a care fee.

Part pensioners, including self funded retirees with the same level of income

Where care recipients have assessable income greater than the maximum income level for a full pensioner, but less than the maximum income level for a part pensioner – $43,186 for singles and $33,046 share of assessable income for a member of a couple as at 20 March 2012 – then their care fee will be calculated as 50 per cent of their assessable income above the relevant threshold up to an annual cap.

Care recipients whose level of income would make them eligible for a part pension under the income test for pensions will have their annual care fees capped at $5,000 (indexed).

People with income greater than the maximum income for a part pensioner

Where care recipients have assessable income greater than the maximum income level for a part pensioner, then their annual care fee will be equal to $5,000 (indexed) plus 50 per cent of their assessable income above the relevant threshold. The care fees of these care recipients will be capped at $10,000 (indexed) per annum.

No individual’s care fee can be greater than the level of Government subsidy payable in respect of their Home Care package. A lifetime cap on the care fee of $60,000 will protect all care recipients who receive care for a longer than average period of time. Contributions that care recipients may make as recipients of Residential Care will be taken into account in calculating lifetime care expenditure.

Background information

The Government is delivering on its commitment to make aged care reform a second term priority, with a reform package that provides $3.7 billion over the next five years.

Further Information
For more information please visit:www.agedcareaustralia.gov.au

1 Assessable income does not include the Minimum Pension Amount and the Seniors Supplement of $842.40 per annum for a single person and $634.40 per annum for each member of a couple.