Living Longer. Living Better.
Residential Care
Better support to build more residential care facilities ($486.9 million)
Although older Australians prefer to receive care at home for as long as possible there will also be an increasing demand for residential care. The Government is reforming aged care financing arrangements to give aged care providers the certainty they need so that more aged care homes can be built, and existing homes can be significantly refurbished.The Government currently pays an accommodation supplement in respect of residents who cannot meet all of their own accommodation costs. From 1 July 2014, the maximum level of this supplement will be increased to $52.84. This recognises the true cost of providing aged care accommodation and will secure further building of facilities and provide a greater level of certainty for the industry. The increased accommodation supplement will apply to aged care homes that are built or significantly refurbished from 20 April 2012.
Maximum accommodation supplement July 2007 to July 2014
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Accommodation supplement by year
- July-2007 - $23.68*
- July-2008 - $26.88
- July-2009 - $26.88
- July-2010 - $26.88
- July-2011 - $30.55
- July-2012 - $32.58
- July-2013 - $33.35**
- July-2014 - $52.84**
- * reflects the combination of concessional supplement and pension supplement
- ** estimate only
More consumer protection
The Government will also provide older Australians entering aged care homes with more flexibility and choice about how they pay for their accommodation costs. From 1 July 2014, all residents who can afford to, will have the choice of paying for their accommodation through a fully refundable lump sum or a rental style periodic payment, or a combination of both. Aged care providers will not be able to choose between care recipients on the basis of how they elect to pay for their accommodation. A new cooling off period will mean that residents will not need to decide how they intend to pay for their accommodation until they have actually entered care. Aged care providers will also be required to insure any lump sum bonds that they hold and will not be able to retain any component of the actual bond. This will give added reassurance to older Australians.The current exemptions for accommodation payments within the Age Pension means test will be maintained. In addition, residents will be better protected by the new Aged Care Financing Authority, which will be required to approve the level of lump sum payment or equivalent periodic payment for each aged care home to ensure that these charges truly reflect the value of the accommodation services offered.
Greater choice and control ($65.4 million)
The current split between low and high level care is outdated. Older Australians receiving low level care are currently required to purchase their own continence aids and walking frames, whereas this is the responsibility of the aged care provider for older Australians receiving high level care. Older Australians receiving low level care have also had less access to subsidised nursing and therapy services. This distinction is not in line with the Aged Care Funding Instrument, which funds all care recipients according to their needs.There is currently little scope for care recipients or their families to purchase additional amenities or supplementary care services from their residential care provider. Consumers are increasingly seeking to have the opportunity to purchase extras, such as more expensive food and entertainment options. The families of care recipients also sometimes want to purchase supplementary care services above those that are clinically necessary.
Following a review of the Schedule of Specified Care and Services, the Government proposes to allow two levels of additional charges for amenities and hotel type services over and above basic specified care and services. Under this arrangement, residents in all aged care homes would be able to purchase optional extra services, such as enhanced entertainment or lifestyle choices, for an additional fee. In addition, subject to approval by the Aged Care Financing Authority, homes will be able to offer a capped number of aged care places dedicated to the provision of services solely on an ‘extra service’ basis, which will offer residents a higher level of amenities and hotel-type services. All aged care homes will still be required to offer the option of a basic standard of services, in line with the specified care and services, to residents.
Following an initial focus on consumer directed care for care delivered in the home, it will be trialled in residential care.Top of page
Ensuring the sustainability of aged care servicesin regional, rural and remote areas ($108.0 million)
In general, it is more expensive to deliver aged care services in regional, rural and remote Australia than in urban areas. To ensure access to these services for all older Australians wherever they live the Government provides a viability supplement to eligible providers, on top of other funding. The viability supplement is also paid to providers that care for specific groups of highly vulnerable older Australians, including Indigenous Australians and older people who are homeless or at risk of homelessness.Since 1 January 2010, the Government has increased the level of the viability supplement by more than 40 per cent in recognition of the higher costs faced by these providers. As a result of the aged care reform package, the Government is projected to provide more than $280 million in viability supplements to aged care providers over the next five years.
Aged care homes in regional, rural and remote areas can also face higher building costs than those in urban areas. The Government will continue to provide access to low cost finance to build or expand services in targeted areas through the one remaining round of the Zero Real Interest Loans Program. The Government is also streamlining its assistance to providers in these areas by combining its current aged care capital grants programs into a single Rural, Regional and Other Special Needs Building Fund. Around $51 million will be available for the Fund each year.
Fairer means testing arrangements for residential aged care (-$378.0 million)
In order to ensure the sustainability of the aged care system so that all Australians get the care they need, the Government will strengthen the means testing arrangements for people entering residential care from 1 July 2014. It will combine the current income and assets tests to ensure a consistent fees policy. This will address the issue of asset-rich, income-poor residents paying for all of their accommodation and nothing for care, and income-rich, asset-poor residents paying for their care but not for accommodation.The treatment of the family home will not change. It will continue to be exempt from the aged care assets test if occupied by a spouse or other protected person. An annual cap of $25,000 will apply to a resident’s contribution to their care costs, together with a lifetime cap of $60,000.
People in residential care on 30 June 2014 will continue under their current fee arrangement.
Improving the Aged Care Funding Instrument (-$1.6 billion redirection)
The Government will refine the Aged Care Funding Instrument (ACFI) so that the funding claimed by aged care providers better matches the level of care being offered.This will free up funds for much needed aged care reforms and allow the Government to better target these resources to the areas of aged care where they are most needed. In particular, an adequately skilled and qualified workforce is needed to deliver quality aged care in aged care homes and the community.
Expenditure and estimated on aged care from 2006-07 to 2015-16 ($ billions)
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Expenditure and Estimated Expenditure on aged care by Year ($million)
- 2006-07 - 7,799.7
- 2007-08 - 8,439.9
- 2008-09 - 9,325.8
- 2009-10 - 10,203.7
- 2010-11 - 11,278.2
- 2011-12 - 13,028.5
- 2012-13 - 13,503.4*
- 2013-14 - 14,329.1*
- 2014-15 - 15,220.3*
- 2015-16 - 16,052.7*