Proposed Changes to Aged Care Fees & Funding in 2025 – Will You be Affected?
The proposed changes to aged care fees aired to the public on the 12th of September will bring quite radical change to the aged care system. This will deliver more funding from the Government to the aged care system (which is drastically needed by facilities).
However, it will also cost the residents more money as well. The bottom line is that if there is more money available then aged care facilities will be more able to pay the higher wages granted in the fair work commission to care workers, who currently get less money than their counterparts in the hospital system. The changes proposed should also see less aged care facilities close as well.
Residents who are currently in aged care will not be affected by the proposed changes as they will not come into effect until 1st July 2025 unless the resident decides to move to a new facility after the 1st of July 2025.
The amended Aged Care Act must go through both houses of Parliament before it becomes law, however as the Coalition have agreed to a bi-partisan approach, it is expected that it will be passed, but there may be some changes.
While the basic daily care fee will still exist, additional changes include:
- A new “Hotelling” Contribution (Fee) once “assessable” assets & income have surpassed certain thresholds will apply at a maximum of $11.24 per day, on top of the basic daily care fee.
- A new Retention amount will be re-introduced, which existed prior to the changes in 2014. That is, an aged care facility can retain 2% per annum, to a maximum of 10% of any lump sum that is for paid for the Accommodation (for example, RAD or RAC). There is intention to have RAD and RAC’s phased out by 2035, but there is no mention of what will replace them.
- The DAP interest, for those who have not paid a Lump sum for Accommodation in care, will see the DAP interest rate indexed twice a year (no change to the system for DAC’s). Currently the DAP Interest is fixed at the time of entry of the resident.
- The current Means Tested Fee (MTF) is to be abolished and replaced by a new fee, the NON-Clinical Care Contribution (NCCC). The NCCC will be calculated as 7.8% per annum of the excess over asset and income thresholds, up to maximum of $101.16 per day, with a lifetime limit of $130,000, up from the current limit of $79,900.
- The current Additional Service Fee (ASF) and Extra Service Fee (ESF) will be abolished and replaced with the Higher Everyday Living Fee (HELF). HELF covers things like choice of meals, glass of wine/beer, additional activities, additional entertainment options etc.
The government asserts that 7 out of 10 Full Pensioners will not pay more for their aged care, but by implication 3 out of 10 will pay more for their aged care. Furthermore, 1 out of 4 part-pensioners will not pay more, but therefore 3 out of 4 will pay more.
If you are concerned about the pending changes, the financial impact that it might have on someone who will enter care in July 2025 or if you are planning on moving an existing resident after July 2025, call us for more information.