After months of anticipation, the new Aged Care Act made a grand entrance on Thursday afternoon, leaving a lasting impact. Despite concerns raised by the Coalition party, the Act was successfully passed with bipartisan support after some last-minute adjustments were made.
This monumental legislation marks a significant milestone in the aged care sector in Australia, representing the most substantial change in over three decades. The implications of the new Aged Care Act will shape the future of aged care for older Australians, service providers, and aged care workers for years to come.
Curious about how this Act will impact you? Let’s delve into the winners and losers of this groundbreaking legislation. Join us as we explore the beneficiaries and those who may face challenges as a result of the new Aged Care Act.
Those who gain
Aged care providers
Although the new Act may not meet all the expectations of providers, it does offer a sense of certainty and assurance regarding future funding for the sector. Once the legislation is in place, providers will have their clinical costs fully covered by the Government. Additionally, there are opportunities to offset losses in accommodation and daily living expenses through increased user contributions, new fee structures, and higher accommodation prices. Providers will also be able to retain 2% of refundable accommodation deposits annually for five years.
Homeowners
Aged care residents are subject to various fees based on means assessments, and while there will be changes in some areas, homeowners can find some relief. The current home exemption cap limits the assessable value of any home to around $200,000, regardless of its actual value. This cap will remain unchanged under the new Aged Care Act, meaning individuals moving into residential aged care may avoid paying a new means-tested fee.
Retirement community operators
The trend towards providing more support in the home suggests that retirement communities could become a more appealing option for older Australians looking for a balance between independence and easy access to aged care services. Independent living or assisted living options offered by residential aged care providers on co-located sites may also become more prevalent.
Existing aged care participants
The implementation of a “No worse off” principle ensures that current residential aged care participants will not face increased co-contributions and will remain exempt from higher accommodation prices. This principle also extends to home care clients, including those receiving a Home Care Package, on the National Priority System, or assessed as eligible for a package. However, once these individuals transition into residential aged care, they will be required to pay higher co-contributions and accommodation fees.
Older Australians who want to age at home
Older Australians who wish to age in the comfort of their own homes will soon benefit from significant changes to the current Home Care Package system. The new Support at Home program, set to launch on July 1, 2025, promises to revolutionize home care services.
Under this program, the Government aims to support an additional 300,000 participants over the next decade, while also reducing average wait times to just three months by 2027. The highest Support at Home classification will provide up to $78,000 in funding per year directly to older Australians, rather than their service providers. This is a substantial increase from the current limit of $60,000 per year for the highest support classification. Additionally, there will be improved funding and access to home modifications, assistive technology, and equipment.
Palliative care recipients
For those in need of palliative care, the Support at Home program offers a unique opportunity to spend their final three months at home. The Government will provide up to $25,000 in additional funding to support individuals in their desire to pass away in the comfort of their own homes, rather than in a hospital or aged care facility. This initiative aims to make the process of dying at home more accessible and comfortable for those in need of palliative care.
Those who lose
Self-funded retirees
The implementation of the new Aged Care Act marks a significant step towards enhancing the quality of care, promoting human rights, and prioritizing person-centered care for all individuals accessing aged care services. This development is a major victory for the entire aged care community.
Nevertheless, it is important to acknowledge the reality that older Australians will face increased costs for their aged care needs in the future.
Under the new home care category structure, services are now categorized into clinical care, independence supports (such as showering, medication management, and personal care), and everyday living assistance (including cleaning, gardening, and meal preparation).
While all clinical care services will be funded by the Government, self-funded retirees will be responsible for covering 50% of their independence support costs and 80% of their everyday living expenses. Part pensioners or health card holders will also be required to contribute up to these amounts, depending on the level of support they require. In contrast, full pensioners will only be responsible for paying 5% of their independence support costs and 17.5% of their everyday living expenses.
These changes reflect a more equitable distribution of costs within the aged care system, ensuring that individuals receive the necessary support while also promoting financial sustainability for all stakeholders involved.
Future residential care recipients
Prospective residents of residential care facilities should be aware of the additional costs they may incur. One significant change is that rooms can now be priced up to $750,000, a substantial increase from the previous cap of $550,000.
In addition to the room fees, residents with assets exceeding $238,000, income over $95,400, or a combination of both will be required to pay a daily hotelling supplement of $12.55. This fee covers services such as catering, cleaning, and gardening. Furthermore, individuals with assets exceeding $500,000, income over $130,000, or a combination of both will also be subject to a non-clinical care fee of up to $101.16 per day for the first four years of care.
It is important for potential residents to carefully consider these financial obligations when planning for their future care needs.
Registered nurses
A significant victory achieved by the Coalition party was the elimination of criminal penalties for individuals considered responsible persons in aged care who are found guilty of any misconduct. Instead, these penalties have been reduced to civil penalties only.
Under the new definition, not only executives or directors but also individuals responsible for the “overall management of nursing services” or those who are registered nurses are included. This means that registered nurses who fail to fulfill their duties or meet the requirements of the Act may face penalty units, which carry a monetary value. As of July 2023, the Government’s penalty unit value was set at $313 per unit.
Not Clear
Older Australians in the regional area
Older Australians residing in regional Australia face unique challenges when it comes to accessing quality aged care services. Despite the government’s efforts to allocate additional funding to service providers in rural and remote areas, there remains a shortage of qualified staff and logistical obstacles that hinder the availability and variety of services.
A shift towards a home-based care system could greatly benefit older Australians in rural communities, allowing them to receive the support they need while remaining in the comfort of their own homes. However, the current state of thin markets and higher costs in these areas often result in limited access to essential aged care services.
Policymakers and stakeholders must address these disparities and work towards creating a more inclusive and accessible aged care system for older Australians in regional Australia. By investing in training programs, improving infrastructure, and implementing innovative solutions, we can ensure that all individuals, regardless of their location, have access to the care and support they deserve in their later years.
The economy
The government is investing $5.6 billion in aged care reform, with $4.3 billion allocated to Support at Home. They anticipate spending $930 million over the next four years and saving $12.6 billion over the next 11 years. It is premature to determine the accuracy of these projections at this time.
What follows next?
We eagerly await the progress of the new Aged Care Act as it moves through Parliament. The Act will undergo scrutiny in an upcoming Senate inquiry, the date of which is yet to be announced. During this inquiry, the Coalition party will express their concerns.
Aged care advocates, older Australians, and industry leaders are expected to provide their feedback to influence change before the Act is officially legislated. The Government aims to have the Act legislated and implemented by July 1, 2025.