Last year over 1.3 million Australians received aged care. Around 295,000 received residential aged care while over 1 million people received aged care in their own home.
Over the coming year, the number of Home Care Packages is expected to grow by almost 30,000, from around 72,000 to around 100,000.
Significant changes to Home Care Packages will take effect from the end of February 2017, giving consumers greater access to care and greater choice about who delivers that care to them.
Home Care Packages: eligibility and cost
Home Care Packages assist people who wish to continue living in their own home and community, whether it’s the family home, an apartment, a caravan park, a retirement community, a granny flat or other living arrangement.
Eligibility for a Home Care Package is based on an assessment of the person’s care needs. This assessment is performed by an Aged Care Assessment Team (ACAT) and normally takes place in the home where the care will be delivered to gain an understanding of any environmental factors. Referrals to the ACAT are often made by a medical professional, however people can make the request for an assessment themselves or on behalf of a loved one.
There are four levels of Home Care Packages:
- Home Care Level 1 – to support people with basic care needs.
- Home Care Level 2 – to support people with low level care needs.
- Home Care Level 3 – to support people with intermediate care needs.
- Home Care Level 4 – to support people with high care needs.
Home Care Packages are delivered on a consumer-directed care (CDC) basis, which gives the consumer the ability to choose the type of care and services they wish to receive and who provides those services.
The funding is based on a daily rate and paid directly to the care provider. Currently Level 1 funding is $22.04/day, Level 2 $40.09/day, Level 3 $88.14/day and Level 4 $133.99/day. Additional subsidies are payable for people who are returned servicemen or women, have dementia or require assistance with oxygen or feeding apparatus.
Currently the ownership of a Home Care Package is with the care provider. It is their role to assess applications for the packages they have available and then co-ordinate the delivery of the services. This system has led to accusations of providers charging excessive administration fees (in some cases more than 50% of the value of the package) or discriminating against people who couldn’t afford or didn’t want to purchase private services in addition to the package. It has also meant that people who move to another location need to relinquish their package and apply again in their new area.
Arrangements change from 27 February 2017
From 27 February 2017, funding for a Home Care Package will be allocated to the package recipient. The care recipient will be able to choose their preferred home care provider and can move providers at any time - the package will be transportable nationally. Providers will be able to charge an exit fee to consumers, which will need to be disclosed on the government’s My Aged Care website and in the Home Care Agreement.
The government’s My Aged Care will be responsible for prioritising and assigning packages. The level of the package assigned will be specified (1, 2, 3 or 4) and may be lower than the package that the consumer is eligible for based on their care needs. Any Home Care Packages that are held by providers but not in use as at 26 February 2017 will be reclaimed and form part of the national inventory.
Once the Package has been assigned, the consumer will have 56 days in which to find a home care provider and sign a Home Care agreement. An extension of up to 28 days is possible where the consumer is finding it difficult to identify a provider.
The means-testing arrangements for Home Care Packages remain unchanged. People who are full pensioners (or with the equivalent income) can be charged the Basic Daily Fee, which is currently $9.97 per day. Those with higher levels of income are levied an income-tested care fee in addition to the Basic Daily Fee. The income tested care fee is assessed by Centrelink based on their income test. The fee is calculated at 50c per dollar of income above the annual thresholds of:
$25,792 single
$20,025 couple (each)
$25,324 couple separated by illness (each)
The fee is capped at $5,208/year for part-pensioners and $10,416/year for self-funded retirees and cannot exceed the value of the package. There is also a lifetime cap of $62,499 which extends across home care and residential aged care.
Consider the example of Shirley
For example, Shirley is a part pensioner who is happy living at home. Shirley has been assessed as eligible to receive a level 2 package which provides $40.09 per day of funding. In addition to her home, Shirley has $250,000 in a combination of bank accounts and shares.
Shirley’s Home Care Package cost would be calculated as:
Income is: $7,387/year from investments (deemed) + $19,929/year pension entitlement (less supplements) = assessable income $27,316/year
Less the income threshold $25,792/year = $1,524 income above the threshold
At 50c/dollar Shirley’s income-tested care fee would be $2.09/day.
The cost to Shirley of receiving the Home Care Package is $9.97 basic daily fee + $2.09 income-tested care fee = $12.06/day or $4,402/year.
While the total value of the package is $50.06/day, or $18,272/year.
Watch the advice complexities
From an advice perspective, these means-testing arrangements are straight forward. The complexities come from the various legal and financial considerations involved with the client’s living arrangements, such as granny flats, retirement villages and land lease communities, which are part of their care solution.
The latest edition of ‘Aged Care, Who Cares?’ which I have co-authored with Noel Whittaker, helps people to understand all the options in accommodation (including granny flats, retirement communities and aged care facilities), the care services available, the legal tips and traps to be aware of and some strategies for making it more affordable.
With the overwhelming majority of people choosing to receive care at home, the million-dollar question is ‘Where is home?’
Rachel Lane is the Principal of Aged Care Gurus and oversees a national network of financial advisers specialising in aged care. This article is for general educational purposes and does not address anyone’s specific needs.