Residential care fees and means testing – Webinar

This webinar gave aged care providers and older people, families and carers an overview of how residential care fees are changing under the Aged Care Act from 1 July 2025.

Audience:
General public
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Webinar video

00:59:23

[Opening visual of slide with text saying ‘Australian Government with Crest (logo)’, ‘Department of Health and Aged Care’, ‘Residential care fees and means testing’, ‘11 February 2025’, ‘agedcareengagement.health.gov.au’]

[The visuals during this webinar are of each speaker presenting in turn via video, with reference to the content of a PowerPoint presentation being played on screen]

Nick Hartland:

So welcome everybody. Thank you for attending today’s webinar. I’m Nick Hartland, the First Assistant Secretary of the Systems, Engagement and Contributions Division in the Department of Health and Aged Care and I’ll be taking you through this seminar today. And I’ll be joined today by Susan Trainor, the Assistant Secretary of the Contributions and Accommodation Reform Division.

So I’d just like to start by acknowledging the traditional custodians of the lands on which we are meeting virtually today. So I’m based in Canberra and for me that’s the Ngunnawal people. I’d like to acknowledge and pay respect to their continuing culture and the contribution they make to the life of this city and this region. And I’d also extend that acknowledgment and respect to other families with a connection to this region and any other Aboriginal or Torres Strait Islander people who are here with us today.

So we’ll be talking today about residential aged care means testing. There will be a Q&A session at the end of this webinar and you can submit questions on Slido which is to the right hand side of your screen and we’ll attempt to respond to as many questions as we can in this session. We’ll be focusing on questions relevant to the webinar topic, residential care fees and means testing. And these webinar slides will be made available on our website. This session is also being recorded and will be published on our website in the coming days. And just a reminder for you that there’s no option for you to turn on your video or microphone in this setting in case any of you were inclined. 

Now as I said today’s webinar is going to cover residential aged care consumer contributions and means testing. So we won’t dive into accommodation cost, the higher everyday living fees or subsidies and supplements today. And we’re focusing on residential care not Support at Home. There will be other upcoming webinars where we talk to you about that and you’ll have a chance to ask questions about that if those are the things that are really of interest to you.

So just one more thing from me for context. So look we’re in the middle of I think what’s fair to say is the biggest changes to aged care that we’ve seen in generations, and certainly the biggest investment as well. So these reforms will make a fundamental change to the lives of the people that we assist and to the people that need aged care services. And I think the other thing to say about context is that these contribution reforms were really crucial to getting agreement and support for these reforms so it’s a really important part of the overall reform package.

So with that context I’ll ask Susan to take us through the slide deck and then Susan and I will answer any questions that you have as a result of that. Thanks very much Susan. 

Susan Trainor:

Hi everyone. I’m Susan Trainor, Assistant Secretary, Contributions and Accommodation Reform Branch here at the Department of Health and Aged Care. The Aged Care Taskforce found that our current aged care funding arrangements are not sustainable for a growing and ageing population. So we’re making some important changes from the 1st of July this year. Importantly there are some bits that will not change. For example people who cannot afford to make a higher contribution will continue to only pay the basic daily fee. However residents who can afford to do so will be asked to make a contribution to their aged care costs. The means testing reforms that we’re talking about today will result in around half of new residents entering from 1 July 2025 paying more for their residential aged care than they would under the current arrangements. The reforms will include means testing the hotelling supplement which is currently paid in full by the Government for all residents, abolishing the current means tested care fee and associated annual lifetime caps, and introducing a new means tested contribution to non-clinical care, a daily dollar based cap and lifetimes caps that are both dollar based and time based for this non‑clinical care contribution. In addition there will be new reporting requirements for residents and providers to notify the Government of changes in their circumstances that would result in a change to the residents’ means tested fees.

We’ll go to the next slide. A no worse off principle will apply to everyone in residential aged care as of 30th of June 2025. This means that those who are living permanently in residential aged care on the 30th of June will have their current means tested fee arrangements maintained until they leave care. Their accommodation payments will also not change as they have already signed a contract with their provider. The new arrangements for means testing will only apply to those who enter residential aged care permanently from the 1st of July this year. There is also an exception for individuals who were receiving a home care package or approved for a home care package as of the 12th of September 2024. This group if they enter residential aged care will pay contributions under the current system unless they choose to opt in to the new means testing arrangements that we’ll talk through today even if they don’t enter residential care until after the 1st of July.

Now some aspects of the residential care contributions and means testing will remain the same under the reforms. The Government will remain the majority funder of aged care costs covering around 73% of aged care costs in residential care. For every $1 an older person contributes to their residential aged care the Government will contribute an average of $3.30. All residents will continue to pay the basic daily fee which is set by Government at 85% of the single base rate of the aged pension and that rate will not be changed. This contribution partially funds services like meals, cleaning and laundry and is not changing under the reforms.

Fully supported residents will continue to pay only the basic daily fee and partially supported residents will continue to pay only the basic daily fee and a contribution towards their accommodation costs which is based on the assessment of their income and assets that they go through at entry to care. The way that different types of income and assets are assessed in the residential aged care means assessment will also not change. This includes the treatment of the family home. The value of the family home will continue to only be assessable if the home does not have a protected person like a spouse still living in it. Where there is not a protected person living in the home the value of the family home will continue to be capped. That cap value is currently $206,039 and that cap will continue on its current indexation arrangements. There will not be any kind of change to the value of the cap value of the family home.

Refundable accommodation deposits will continue to be an assessable asset for residential aged care means assessment but continue to not be an assessable asset for aged pension purposes. And the current hardship arrangements will remain in place so that residents who are genuinely having difficulty with affording their contributions will be supported and not prevented from accessing care.

The new Aged Care Act enables fair co-contributions from those who can afford to contribute to the cost of their residential aged care based on the recommendations of the Aged Care Taskforce. These changes ensure Government funding focuses on care with residents paying a greater contribution for everyday living expenses that they have met throughout their lives before entering residential care. The aim of these reforms is to ensure that the aged care system is financially sustainable into the future. The Aged Care Act and related rules will set out the individual fees and contributions that a resident may be asked to contribute towards and the means testing rules that will determine what an individual’s contribution will be.

On the following slides I’ll talk in some detail about the changes to resident contributions and means testing under these reforms.

There will be some changes to means testing under the Act. A resident’s means tested amount will continue to be determined by Services Australia based on their assessable income and assets as recorded in their means assessment. As I mentioned before what is considered an assessable asset or assessable income will not be changing under these reforms. So that means that whilst we’re changing the fee arrangements there is no change to what you would need to report to Services Australia to allow them to do those calculations. 

Under current arrangements the means tested amount is used to calculate the resident’s means tested care fee. This fee will as I mentioned before cease under the new Aged Care Act and the information provided to Services Australia about a person’s income and assets will instead be used to determine their contribution to what we call the hotelling supplement and the non‑clinical care contribution. I will talk about both of those in a bit more detail in a moment. A resident’s means tested amount will continue to be the sum of their income tested amount and their asset tested amount. However the income and asset taper rates are changing and additional income and asset thresholds will be introduced to match those new hotelling supplements and non‑clinical care contributions.

Under the new Act there will be four income thresholds and four asset thresholds in addition to the income free area and asset free area. This means that only people with sufficient means will contribute. And I know that sounds like a mouthful but we will get to what those thresholds are in a bit more detail in a moment.

So on the hotelling supplement there will continue to be a hotelling supplement that tops up the basic daily fee because there is a gap between the value of that basic daily fee and the full cost of providing everyday living services in residential care. Currently the Government funds the hotelling supplement in full for all residents regardless of their means. Starting from the 1st of July the hotelling supplement will become means tested for new residents. Residents with income and/or assets above the relevant threshold will pay some or all of their hotelling supplement. This will ensure that the Government funding here is targeted to residents with the greatest financial need and that residents who are able to make the contributions to their everyday living costs do so.

For the hotelling supplement residents who have more than $238,000 in assets, more than $95,400 in income or a combination of the two will make additional contributions towards their everyday living costs through paying part or all of the hotelling supplement. The contribution will be up to a limit of the value of the hotelling supplement which as of the 1st of January this year is $12.55 per day. For those who are asked to contribute part but not all of the hotelling supplement the Government will pay the rest of this amount. So for example a person who based on their means assessment is asked to pay $2 per day towards the hotelling supplement, at the current rate the Government will pay the remaining $10.55. This ensures the hotelling supplement that the provider receives is exactly the same for every resident. And for residents with income and assets below those thresholds I mentioned before the Government will continue to pay the full amount of the hotelling supplement. The value of the supplement and the thresholds at which residents will begin to be asked to contribute towards it will be indexed in March and September each year at the same time as the aged pension changes.

The other means tested fee that we’ll be introducing to residential aged care is the non‑clinical care contribution. The current means tested care fee will be abolished for new residents entering care after 1 July. Under the new system the Government will fully fund all clinical costs in residential aged care. So this includes things like nursing. And a new means tested non-clinical care contribution will be introduced to cover costs such as bathing, mobility assistance and provision of lifestyle activities. Individuals will not begin contributing to the cost of their non-clinical care until their income and assets are significantly higher than when the current means tested care fee commences. And no individual would be asked to pay a non-clinical care contribution unless they are already paying the full amount of the hotelling supplement.

So this covers the thresholds for the non-clinical care contribution. The new non-clinical care contribution means that people will contribute at the rate of 7.8% of their assets over a value of $502,981 or 50% of income over $131,279 or a combination of the two. Importantly I think we mentioned at the start the value of the house continues to be capped at that $206,000 level. So this is $502,981 of which no more than $206,000 can be the value of the family home.

The non-clinical care contribution is capped in three different ways to ensure that clinical care is fully funded by Government and to protect people who remain in care for a very long time. A daily cap of $101.16 will apply to the non-clinical care contribution. This will really ensure that for every single resident the contribution is limited only to the cost of non-clinical items. There will be two forms of lifetime caps. The first of these is a lifetime cap of $130,000 indexed twice a year. In addition a resident who remains in care for over four years will cease making contributions to their non-clinical care costs. This is a change from the current system where we only have dollar based caps. This means that a person who stays in care for a long time benefits from a lifetime cap even if their daily contribution is relatively small compared to the daily cap. So a person who is assessed as having a daily non-clinical care contribution of $5 per day will pay $5 per day for four years and then their contribution will end no matter how close or how far from that $130,000 mark they may be. And a person will stop paying any non-clinical care contribution at whichever they reach first of the four years or $130,000.

The $130,000 lifetime cap is also a combined cap across aged care services. So where a resident has spent time in the Support at Home program before entering residential aged care any contributions that they make in the Support at Home program before they enter residential aged care will count towards the $130,000 combined lifetime cap.

Moving on to mandatory reporting. Both providers and residents will have new mandatory reporting requirements under the new Act. These changes will help to ensure that residents’ means assessments that are with Services Australia and the level of fees that result from that means assessment are kept up to date and correct. Providers will regularly report individual refundable accommodation deposit balances to Services Australia and then if the refundable deposit information does not match what Services Australia has on a person’s means assessment Services Australia or for those who are receiving aged care through the Department of Veterans Affairs program, the relevant organisation will confirm the correct information with that resident and then update their means assessment if required. This will make it easier for care recipients to keep their financial information and means assessments up to date and to ensure that the fees they are paying are correct. 

Residents will also be required to report changes to their personal and financial circumstances to Services Australia or to the Department of Veterans Affairs. The common situations here are things like if a person has sold the home to pay a RAD that would be the sort of example of a change that we would expect to see reported here. This will bring the aged care reporting requirements into line with the treatment of reporting requirements for the aged pension and it will also mean that for our self-funded retirees who don’t otherwise report regularly to Services Australia we will have the same reporting for our aged pension and self-funded retirees across the whole of our aged care resident group.

Individuals are already able to and will continue to be able to opt out of disclosing their income and assets to Services Australia. A person who does this is what we call a means not disclosed resident. Under current legislation residents who are classified as means not disclosed are not eligible for Government support with their accommodation costs or for the means tested care fee. This will continue to be the case under the new legislation and new fee arrangements. A person who is a means not disclosed resident will pay the full amount of the hotelling supplement and the full value of the $101.16 per day of the non-clinical care contribution although they will have the same lifetime caps as any other resident.

Under the new Aged Care Act people can be made a means not disclosed resident either through formally advising that they have chosen to not disclose their means or if they don’t respond to a request to complete a means assessment to accurately determine what their fees should be. A resident can choose to be means not disclosed and then change their mind. If an individual later chooses to complete a means assessment the outcome of that assessment will not be backdated. So a person will be treated as means not disclosed until they decide to then disclose those means and then we will only look forward with that new fee arrangement including if that would result in a lower fee for that person.

I will now talk about the grandparenting arrangements for the new means testing reforms. Grandparenting for those who aren’t familiar with the term refers to how we preserve outcomes for people who are already receiving aged care when changes occur, in this case to the fee arrangements. When the new Aged Care Act commences grandparenting will apply for both residents who entered care between the 1st of July 2014 and the 1st of July 2015 and who are on the current fee arrangements as well as residents who entered care before 1 July 2014 and are already grandparented on older fee arrangements. Individuals in both groups will be able to choose to opt in to the new arrangements at any time if they consider that this would be in their best interests. However it is recommended that individuals seek advice before they choose to opt in to the new arrangements to ensure that they’ve really properly considered that it is in their best interests.

If an individual permanently leaves care after the 1st of July 2025 their consumer contribution and accommodation arrangements may change if they then re-enter care. So for example a person chooses to permanently leave residential aged care and then six months later chooses to re-enter whether they re-enter with the same provider or a different provider. This would not be the case for something like short term social leave. A person in that case still has an ongoing permanent place in residential aged care. It’s really that case where a person has indicated that they are leaving and do not intend to return and then later do so, that they would no longer be eligible for the grandparenting arrangements.

And while it’s not the focus of today’s webinar we know that a lot of you are very interested in the reforms to accommodation payments for residential aged care so I’ll give a really brief overview now. But just note that these accommodation reforms will be covered in more detail in webinars in the coming months and so we ask that we focus the Q&A today on the means testing changes, and please save any questions about accommodation costs for those webinars. The first of the three changes in accommodation is the introduction of retention on refundable accommodation deposits and refundable accommodation contributions. From the 1st of July this year providers will be required to keep a small portion of each new refundable accommodation deposit with the amount of retention capped at a five year period to protect residents who remain in care for a long time. The amount retained would be 2% of the balance of the refundable accommodation deposit per annum charged on a pro rata basis with the amount debited monthly. This will not apply to the refundable accommodation deposits of residents who enter residential care permanently before the 1st of July 2025. This applies even if that person does not pay the refundable accommodation deposit until after the new Act commences.

The second of the reforms is the indexation of daily accommodation payments. This payment is made by residents who choose to pay their accommodation on a daily dollar basis rather than in a lump sum model. Currently this payment is fixed in dollar terms at the time of entry and it means that over time the value of the accommodation payments these residents make to providers reduce in real terms while the costs of maintaining that accommodation continue to increase. To address this the Government will introduce rules that require that daily accommodation payments be indexed for all residents who enter permanent residential aged care after the 1st of July this year.

Providers will increase the daily accommodation payment they charge residents twice per year in line with the consumer price index. This will mean that daily accommodation payments increase in the same way as Government funded accommodation supplement for supported residents increases. It will not apply to daily accommodation contributions which is the equivalent of the daily accommodation payment for a person who is what we talked about before as a partially supported person where the Government pays some of their accommodation costs and they pay some of their accommodation costs. Those are already indexed through the treatment of the accommodation supplement and they will continue to be calculated by Services Australia based on a person’s means test. This change will also not apply to the daily accommodation payments of residents who’ve entered residential care permanently before the 1st of July 2025.

Finally on accommodation we have the maximum room price. So providers must seek the approval of the Independent Health and Aged Care Pricing Authority to charge above a certain price for a room which is known as the maximum room price. The Government accepted the Aged Care Taskforce’s recommendation to immediately increase this price and index it over time. So on the 1st of January this year the price before which a provider needs to seek that approval from the Independent Health and Aged Care Pricing Authority increased from $550,000 to $750,000. And that number will now be indexed on the 1st of July each year in line with CPI.

Importantly this change does not mean that room prices have changed from $550,000 to $750,000. The change reduces red tape for providers and gives them greater confidence in developing or updating high quality accommodation. It also makes it easier for providers considering building new facilities or by extending existing facilities giving them the confidence that they can charge a room price that makes those developments financially viable. This change does not impact existing residents who’ve already signed a contract with a room price and there are still a range of accommodation available at lower prices. Providers can still apply to charge a room price above that $750,000 mark but will require that IHACPA approval before they can charge any price above that level.

You should all be able to see a few QR codes on the screen now linking to some fact sheets and other products that contain more information about the means testing fee arrangements that we’ve talked through today as well as some of the accommodation and higher everyday living changes that will be the subjects of future webinars. The resources listed on this slide can also be found on the Department of Health and Aged Care’s website health.gov.au. We will also make sure that there are links to all of these information sheets provided when we publish the recording of today’s webinar.

We are moving onto the Q&A now. So we’re happy to take questions on residential care contributions and I can see that a number of you have already submitted some questions. You can submit the Slido on – hopefully you can see me pointing to where it is on the right hand side of the screen here, and we’ll attempt to get through as many questions as we possibly can in the time. Usually the way these webinars go is that we simply cannot get through every single question. We’ll try to get to as many of them that you submit today as well as some questions that were submitted during the registration process. If we can’t get through all of the questions today we will publish an FAQ document coming out of today’s webinar on the website so that you can come back and check for an answer to your question if we don’t get to it today.

And just a quick reminder that this session is being recorded and so if you’ve missed some of what we’ve talked through today or you’d like to check something that we’ve said we will publish this on the website shortly and you can refer back to it.

Nick Hartland:

I can’t see the Slido Susan.

Susan Trainor:

I am happy to ask questions Nick. You might take the first couple and people can have a break from my voice. So the first question here Nick is:

Q:        Can clients choose to pay fees such as the hotelling supplement and non-clinical care contribution from their RAD RAC balance and should the provider allow them to do so?

Nick Hartland:

Yes. If they wish to do that they can. That’s the current operation with the means tested care fee so for some people that will make perfectly good sense.

Susan Trainor:

Great. Our second question is:

Q:        Will the annual and lifetime caps for means tested care fees remain for those currently in residential aged care under the grandfathering rules?

Nick Hartland:

Yes. That’s right. If you’re in residential aged care before 1 July this year you’ll keep the same means testing arrangements as currently applied and that includes the annual and the lifetime contribution cap.

Susan Trainor:

Our next question here is:

Q:        How are couples treated under the means test? Would they still go through a combined and split 50/50 approach? It’s unclear from the explanatory materials.

Nick Hartland:

No. We haven’t changed that setting. So the current arrangement where we combine assets and then attribute them to each couple and means test them will remain.

And we’ll also keep the current illness separated couple settings that are particularly important for people in residential aged care.

Susan Trainor:

Great. The next question.

Q:        Overall the means tested fees look like they will be lower than under the current system where clinical care subsidies are also reduced by means tested care fees. Is it possible that current residents would be better off under the new fees?

I think the answer to this is some people may be better off under the new fees but a person would need to consider the fee impact of the full thing including the hotelling supplement level, the non-clinical care contribution and make a decision for themselves. I don’t think we have any Department resources that contemplate who may or may not end up paying more or less but there would be some groups of people who may end up better off. And as I think I mentioned earlier in the presentation individuals are allowed to opt in to the new system if they wish to do so but we do encourage people to really check and make sure they’re sure that they would prefer to opt in to the new system before they do so.

Nick I might pass the next one to you. It asks:

Q:        Why are full pensioners subject to further means testing?

And one that you may not be able to answer directly is:

Q:        How much revenue is expected to come from this measure?

Nick Hartland:

So full pensioners can have a means tested care fee currently in residential care. So as Susan said we’re not changing the way in which means are assessed. So if a full pensioner has a large RAD or even assets below the free area of the pension then they currently pay a means care tested care fee and that arrangement – I wouldn’t want to say that it’s accepted but it is a part of the current arrangements and people understand it. And so that continues under the current ones. 

We don’t have a detailed breakdown of the revenue that we can share but I think if you look at our website the Government’s published some figures about the overall impacts of the reforms that are readily available.

Susan Trainor:

Then the next question is about people who change providers.

Q:        If someone currently in care moves from one facility to another after the 1st of July 2025 will those individuals have a choice to stay under the current means tested care fee arrangements?

And the question here notes that that would be the same treatment as the pre-July 2014 residents for staying under the pre-2014 rules.

Nick Hartland:

Yeah. So if you don’t leave care, if you just move providers – and there were some circumstances Susan talked about, about leaving permanently. But if you don’t leave care then the grandfathering status whether it’s the pre-2014 or the pre 1 July 2025 arrangements, they’ll stay.

Susan Trainor:

Great. The next question is:

Q:        Will the Department publish detailed tables and formulas governing the means testing for hotelling and non-clinical care contributions?

I’m not sure about publishing tables directly. There are the formulas for calculating a person’s hotelling supplement and non-clinical care contribution will be contained within the rules for the new Aged Care Act. We need to have those defined so that the rules that apply to a person are clear. We are expecting that the My Aged Care website will – it’s unclear when exactly but certainly with plenty of time before the commencement of the new Act we’ll have a calculator that allows someone to put in what their personal circumstances look like in terms of their assessable assets and assessable income and that will give them an indication of what their personal hotelling supplement and non-clinical care contribution outcomes would look like.

I don’t know if there’s anything else you want to add to that question Nick.

Nick Hartland:

No. There are currently on our website though some cameos that describe the impact on a number of stylised residents and fact sheets that have in broad brush the macro of how the formulas work. So there’s a fair bit of information already available about how this will all work.

Susan Trainor:

The next question is asking how often providers would need to report individual accommodation deposit balances to the Department. I think the answer to this is that the main point of time at which this matters is the point at which a person has first paid it. Providers are currently required to report when an individual has paid a refundable accommodation deposit. What we’re looking at here is that information being shared with Services Australia to make sure that it’s also reported for a person’s means assessment. Currently it’s reported to us mostly for reporting on things through our financial reports into Australia’s aged care sector and other purposes to monitor what’s happening with RADs and DAPs in the system. This would extend the use of those refundable accommodation deposit pieces of information.

The next question. Nick I’ll ask it and see if you would like to have a go. We might need a little bit more information and ask the person to provide us a little bit more. 

Q:        Will hotelling paid in full then reduce the person’s means testing amount?

So I think this is a question about whether the hotelling supplement counts towards the means testing amount or towards the non-clinical care contribution. I think the answer to that would only be if a person is drawing down their assets to meet their aged care costs, so a person who’s got relatively low income but quite high assets, and so their contributions are higher than their income. If a person’s drawing down their assets to meet their aged care costs and they keep that information up to date with Services Australia then that new mandatory reporting that I talked about earlier will mean that over time their information in their means assessment would mean that their aged care means tested fees would decline slightly and gradually over time. There’s no sort of interaction between the hotelling supplement and the contribution that a person would make to non-clinical care. They don’t offset one another. Effectively a person starts to pay the hotelling supplement at $238,000 and that continues up until they’re paying the full amount of hotelling supplement and then separately above $502,000 a person starts to become liable for some of the non-clinical care contribution.

Nick did you have - - -

Nick Hartland:

I think I need to just restate what you said in a different way. If the question is driving at if I’m reducing my assets to pay my fees will that change my means test assessment, then the answer’s yes. But it’s an income and an asset test assessment so how that all ends up for an individual will be highly individual on their circumstances. And the other side of it is if I’m paying a full hotelling amount and I have to pay a non-clinical care how does that work together. And yes if you’re paying a full hotelling amount and then you go past the other thresholds and are liable for non-clinical care then you pay the full hotelling amount plus what you are required to pay for non‑clinical care which I think is just the glass half empty version of what Susan said or the glass half full version of what Susan just said. So I think those are the two things we think that question might be about but if whoever wrote it has something else in mind and we haven’t hit the mark please get in touch with us and we’ll have another crack at it.

Susan Trainor:

A reminder that you can still – we’ve got about 20 minutes left. You can still continue to add your questions if there are any that you haven’t added or if something that we’ve said already has given you another question in your mind. You are able to continue to submit some. The next one I think is something we’ve already answered. 

Q:        Will the Department be releasing a calculator that can be used to estimate fees under the new system?

Yes we will. That will be published on the My Aged Care website in the coming weeks. It will be published with plenty of time before the commencement of the new Act. That will allow people to also directly compare. We will still have the calculator for the current system available when the new one is published. That will allow people to look and directly compare in their circumstances what they pay under the current system and what they would pay under the new system.

The next question is:

Q:        Do respite residents from before the 1st of July 2025 count as existing residents?

The answer to that is no they don’t. A person has to have entered permanent residential aged care before the 1st of July 2025 to be eligible for the grandparenting treatment.

The next question is:

Q:        Confirming that it is only the non-clinical care contribution that contributes to the lifetime limit and the hotelling supplement does not.

That is correct. That $130,000 includes any fees paid in Support at Home before a person enters residential aged care and then the non-clinical care contribution only. The same is true for the four year cap. That applies for the non-clinical care contribution. If a person is assessed as needing to pay some or all of the hotelling supplement they will continue to pay that for however long they remain in residential aged care. The same as their accommodation costs other than a RAD retention, and the same as the basic daily fee.

Nick I think the next question is relating to Support at Home but if you’re happy to have a go I’ll pass it to you. It’s to recap the treatment cut off date of September 2024 which is the Support at Home grandparenting date. 

Nick Hartland:

Yep. So if you were receiving a home care package on the national priority system or assessed as eligible for a home care package on 12th of September then you will be grandfathered for your contributions under Support at Home. And that will work with special low contribution rates which ensure that you never pay more than what you would have been asked to pay under the income tested care fee. So if you’re eligible to pay an income tested care fee you’ll get special low rates and also if you’re not required to pay an income tested care fee under a home care package program and you’re in the system on the 12th of September you won’t be asked to pay a fee under Support at Home.

And that will apply – sorry. Just to add one more tranche. That applies irrespective of whether you change package levels or get reassessed under Support at Home. As long as you’re in the Support at Home system that applies.

Susan Trainor:

The next question here might be one that we would need to pass on to the Support at Home webinar that’s coming up I think late next month. The question is:

Q:        How is a provider going to know if a new resident – so I think this is a person who enters care after the 1st of July – gets the current means tested care fee arrangement or whether the new fee arrangement with the hotelling supplement and non-clinical care contribution applies, in terms of the grandparenting for a Support at Home participant who’s eligible for the current fees even if they enter care after the 1st of July this year? 

Nick I’m not sure if that’s something that you can talk to or if we need to refer that across.

Nick Hartland:

Well if you’re in the 12th of September group for Support at Home, so you’re effectively eligible for a home care package on the 12th of September, then you will keep the current means testing arrangement for residential care in relation to the means tested fees but your accommodation arrangements will be the post July arrangements.

Susan Trainor:

Great. The next question we have is I think – I’ll read it – maybe a repeat question but I’ll read it out and check with you Nick that it’s not asking something different to you.

Q:        Under the new Act will the income tested care fee paid during the home care package period be included in the four year cap or the lifetime cap once the resident transitions to residential aged care?

So this is I think Nick talking about a person who is paying an income tested care fee under a home care package currently. We’ve talked about the grandparenting and the treatment towards lifetime contributions for the $130,000 cap for a person who’s paying Support at Home contributions. The question here is I think about a person who has been paying an income tested care fee before the 1st of July and what will happen to any contributions through that program, whether they count towards the lifetime cap in residential aged care.

Nick Hartland:

This person’s currently receiving a home care package as at 12 September so they will keep the current home care means testing arrangements. They’ll have access to the current residential means tested care arrangements and they’ll keep the current lifetime cap of that $89,000/90,000.

I think that might answer the question.

Susan Trainor:

I think that answers most of the question. I think this question may be getting at a small group of people who were not approved for a home care package at the 12th of September who begin receiving a home care package before the 1st of July. So they pay an income tested care fee but they are not eligible for the grandparenting as a legacy home care package recipient based on the 12th of September 2024 outcome. That might be a case that we will need to take away and come back with some written advice on.

Nick Hartland:

Well their contributions would go to the 130 cap. In Support at Home they will pay Support at Home fees and in residential care they’ll pay the new contribution arrangements. But any contributions they paid between September and June in home care will count towards those caps.

Susan Trainor:

Great. The next question.

Q:        There was reference to the means tested fees lifetime cap being based on time spent in care or a dollar value. Is that still the case? 

That’s correct for the new system. That’s actually a change in the new system compared to the current system. The current system has two types of caps on means tested care fees. The first of these is a dollar based annual cap. It’s a bit over $30,000. And then the second one is a dollar based lifetime cap which is currently about $82,000. And both of those numbers are indexed. What we’ll be moving to is effectively a daily dollar based cap instead of an annual cap and then two forms of lifetime caps. So the first of these is a $130,000 lifetime cap which is the one that includes the Support at Home contributions and then a four year time based cap. So you enter residential care. You begin paying on day one. I don’t know off the top of my head how many days there are in four years. But four years plus one day that person has reached their lifetime cap regardless of how many dollars per day they have been paying for the non-clinical care contribution. And a person stops paying the non-clinical care contribution when they reach the first of four years and $130,000. I think off the top of my head for a person who’s not spent any time in Support at Home if they’re paying the daily maximum of $101.16 they’d reach the $130,000 lifetime cap about three and a half years or thereabouts. And so they would reach the $130,000 and stop paying before four years. A person who’s paying only a relatively small amount of non-clinical care contribution is much more likely to reach the four year cap before they reach the dollar based cap. But it’s whichever one you reach first, the non-clinical care contribution ceases.

So the next question I think we might need to explain how the non-clinical care contribution works with AN-ACC Nick.

Q:        How can providers identify those residents that the non-clinical care contribution may apply to in order to budget accordingly?

Nick Hartland:

Well you’ll know the means test outcome of your residents from Services Australia so you’ll know what deductions are made from your funding. So I think that’s part of the answer. The non‑clinical care contribution is set at a standard rate of a maximum of $101.16 per day and that was calculated off an estimate of the non-clinical care component of the lowest AN-ACC class in a standard MMM location. So that’s part of the context of it. So the non-clinical care doesn’t vary by provider if that’s what’s underlying that question. The maximum rate is the same for all providers in all circumstances and it’s been calculated in a way that a person will never have to pay for clinical care because that was the intent of the policy. So I think then the issue is that the standard means testing arrangements of understanding how much is going to be reduced from your payments for an individual and therefore what you get from the individual and what you get from the Government is the essence of what providers will need to be aware of. And that’s not a change. I mean it’s a different system but it’s in theory the same.

I think Susan that’s the question but you might be able to see an aspect of it that I didn’t catch. 

Susan Trainor:

No. I think I see it the same way Nick. I think probably the shorthand version for that is that the provider ultimately receives the same amount of money for the individual. It’s just a person who is assessed as needing to pay some or all of the non-clinical care contribution, it’s a difference between how much of that money comes from the resident compared to how much comes from the Government. So the actual amount of money that the provider should receive for each resident is the same regardless of the means assessment outcome for the individual.

The next question is:

Q:        Will the hotelling supplement and non-clinical care contribution outcome be provided by Services Australia once the income and assets assessment is completed by the family?

This will operate exactly the same way as it does currently with means tested care fees. A person will have their assessment. Services Australia will advise the resident or their authorised representative and the provider of what the outcome of that means assessment is. So it’s a different fee arrangement but it’s the same sort of notification process once an assessment’s been completed.

For our grandparented cohort the question here is:

Q:        Will the lifetime cap amount for existing residents remain similar?

It notes here indexed biannually. Yes that’s right. So if you are already in residential aged care and contributing towards what is I think currently about an $82,000 lifetime cap that will continue to be indexed the way it has been over the last ten years and existing residents will continue to contribute until they reach that lifetime dollar value cap.

The next question I might pass to you Nick.

Q:        Does the four year lifetime cap rule also apply across both home care and residential care if a person moves across both services?

Nick Hartland:

No. The four year rule is just in relation to residential care. So it doesn’t apply in relation to Support at Home.

Susan Trainor:

The next one is:

Q:        How will existing residents already in aged care be affected by the changes?

For a person already in residential aged care there will be no change. They will be eligible for grandparenting arrangements. Their existing accommodation agreement will remain in place. Their existing means tested care fee arrangements if they pay one will remain the same. Those things will be indexed in the ways that they have been over the last ten years in residential aged care. Unless an individual were to personally choose to opt in to the new arrangements they will stay under the system that’s in place today, or if they were in residential aged care before the 1st of July 2014 and are still under that old arrangement they will stay under that old arrangement unless they choose to move to the new system.

This question is quite technical I think Nick so I might pass it to you.

Q:        At the moment the schedule of fees and charges has income free thresholds for single and partnered recipients. All the thresholds quoted in explanatory materials are quoted for singles. Just confirming that partnered recipients will have their own unique income free thresholds separate to single care recipients?

Nick Hartland:

Yes. That right. Yes. We’ve tended to – because the arrangements are complex we’ve tended to just use single otherwise it gets very, very complex to understand it. But no. There will be single and couple rates.

Susan Trainor:

Great. The next question.

Q:        What happens with residents being charged the maximum means tested care fee under the current system? Can they opt for the new system and only be charged – I think this should be $101.16. I’m sorry. $113.71. I think someone has cleverly done the maths for me and added hotelling supplement and non-clinical care contribution together there – rather than the maximum means tested care fee of around $256?

The answer to that is yes. A person can choose to opt in to the new system. It would be important to give consideration to whether other things such as the different lifetime caps mean that it’s in that person’s best interests over time. So you can choose to opt in to the new system but I think we’ve touched on a couple of times the current system, the lifetime cap is $82,000 with no time based cap. Under the new system the lifetime cap is $130,000. So a person can choose to opt for the hotelling supplement and non-clinical care contribution but in choosing to do so must also opt to the new lifetime cap. You cannot change from one fee system to the other but keep the old lifetime cap value. So that is why we really encourage people to sort of seek advice and really carefully consider any decision to opt in to the new system.

A question here.

Q:        Do you think that the complexity of calculating aged care fees has been decreased or increased for both residents and providers?

Look I think we acknowledge that the Aged Care Taskforce did talk about simplicity being a good goal of the means tested fee system in residential aged care. It did also talk about the importance of fairness. And I think one of the things that became clear as we went through the process of understanding what the Aged Care Taskforce’s recommendations meant and as Government went through the process of trying to set new arrangements and thresholds and fee levels that sometimes that simplicity and that fairness came into conflict with one another, I think it’s probably fair to say that where they have come into conflict with one another fairness has probably taken priority. 

And we do know that there’s quite a lot to understand here in the new system. There are a range of resources available on our website to help with individuals trying to navigate and understand the system. We will also continue to have webinars and a range of other opportunities for people who are looking for more information about the changes to the system.

Nick Hartland:

So I think I’m a bit more glass half full on that. But I think the current system is pretty complex. It has a number of thresholds in it as well and different taper rates. One of the advantages of the proposed system is that for many people a change in their income and assets if they’re paying the maximum hotelling supplement, they’re not nearly at the thresholds, then some more changes won’t result in changes in their means test assessment. So in some respects there should be less iterative changes in the system and we’re also hoping that the idea of paying for two fees that relate to types of services is a bit easier to understand. But we do accept comments about the complexity of the means testing arrangements as well.

Susan Trainor:

Just noticing that I think we might have time for one more question. I think the one I will sort of pick up here is:

Q:        How will the fee changes for residential aged care fees affect people who need to go into care but still have a partner or family member living in the house?

There’s no change to those arrangements. So we have a thing that we call a protected person. And if a protected person is still living in the house – and that includes a spouse, that includes certain other cases such as a dependent child – if they’re still living in the house then they’re treated as a protected person and the value of the family home is treated as $0. It’s treated like the person doesn’t own a home for their aged care assessment purposes so it reduces the value of the person’s assessable assets for their residential aged care fees. That’s exactly what happens in the system today and there will be no change to that treatment, just as there’s no change to the value of the family home when there isn’t a protected person living in it.

Okay. We are just at time now and I know there’s quite a few questions there that we haven’t gotten to. As I mentioned at the start of the Q&A session we will work our way through the questions that we haven’t been able to get to and provide written responses to those on the Department of Health and Aged Care website as soon as we can. We’ll wrap it up there otherwise. When the webinar finishes a short survey will pop up in your browser. It takes about one minute to answer the three questions. We’d really appreciate it if you could take a moment to answer those, to help us improve our webinars. There’s a lot of them coming up over the coming months as we get closer to the start of the new Aged Care Act. I think we’ve mentioned more about Support at Home and about residential aged care accommodation and higher everyday living fee changes that are coming up in the next couple of months. Those will be advertised on the Department of Health and Aged Care’s website, same place as you registered for today. So please keep an eye on that for details of those webinars as they become available to register for.

Otherwise that concludes our presentation today. A recording of this webinar will be available in the coming days. We’d like to thank you all for your attendance today. 

[Closing visual of slide with text saying ‘agedcareengagement.health.gov.au’, ‘Phone 1800 200 422’, ‘(My Aged Care’s free call phone line)’]

[End of Transcript]

Webinar slides

Presenters

Chair – Nick Hartland - First Assistant Secretary, Systems, Engagement and Contributions Division, Department of Health and Aged Care

Presenter – Susan Trainor - Assistant Secretary, Contributions and Accommodation Reform, Department of Health and Aged Care

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