The budget and aged care

The Government has changed the recurrent funding system for  residential aged care with industry experts and providers trying to work out whether they will be better or worse off.

The changes relate to the increased pension funding, with the old recurrent funding formula being replaced through provider access to a share of the pension increase. 

The Aged Care Act will be amended to reduce the percentage amount of the pension to be paid to residential care providers to 84% rather than 85%.

Special transition arrangements will be put in place for a period of four years, for part pensioners and self funded retirees.

These residents will not face any fee increase while in care. New residents will initially pay the same fee as existing residents. 

The fees will gradually increase over the four years until they are paying 84% of the base pension. Aged care providers will be compensated by Government for any difference between the actual fee paid by new part pensioners and self funded retirees and the daily fee paid by maximum rate pensioners.

It was not clear on figures available on budget night as to whether this will have an overall positive or negative effect on aged care revenue. Either way, it has no effect on capital funding needs.

There were no other big changes for aged care on budget night. However there were some cost cutting measures, and others tidying up funding anomalies. These included:

• The new funding instrument, ACFI, being modified to correct ‘unintended consequences’, so that only residents needing a higher level of care will be appraised as such.
• Ending the 28‑day Income Test Exemption in Residential Aged Care, so that residents will pay income tested fees from the day of entry to care. This fee goes directly to the Government.

Other Budget changes affecting ageing and disability

Palliative Care – $14.4 million will be provided over four years to continue palliative care arrangements started under the Australian Health Care Agreements.

Continence Support Payment – A new arrangement will make direct financial payment to people with severe and permanent incontinence to enable them to shop around for best value and most appropriate products instead of current arrangements which provide access to subsidised products from only one provider.

Veterans Home Front, Rehabilitation Appliance Program and Veterans’ Home Care Assessments – Eligibility assessment processes will be streamlined through a new centralised Veterans’ Home Care (VHC) program assessment.

Disability – Taxation changes will encourage families wishing to make financial contributions to the care and accommodation needs of a family member with severe disability by taking up Special Disability Trusts.