Great Lakes FM Community Radio with John Healy
E & OE
Subject: July 1 changes to aged care
HEALY:
We have on the line Senator Mitch Fifield, who of course is the Assistant Minister for Social Services with our Federal Government in Canberra. So thank you very much for taking the time to phone in and join us this morning.
FIFIELD:
Great to be with you John.
HEALY:
Thank you. I believe you’re actually joining us not from your office in Canberra but actually from somewhere over in sunny WA.
FIFIELD:
I was in WA, but I’m now in Sydney, far from home in Melbourne John. I’m always somewhere other than home. That’s showbiz.
HEALY:
Well Minister without much further ado what we might like to do is invite you to tell us about the changes to aged care that came into effect on July the 1st. A lot of our listeners are still quite unaware of what those changes entail so perhaps we might kick off by just getting you to give us an outline, what the changes were? And what the intention of those changes is?
FIFIELD:
Sure John. Well there were some important changes that came into effect on the 1st of July this year. I guess the first and most important point is that for those people who were already receiving care before the 1st of July, their circumstances and their arrangements remain unchanged. It’s only for people coming into the aged care system post 1 July. Essentially the aim of the changes was to provide more choice for consumers, more choice for providers and to ensure that those people who were in a position where they could make a contribution to the cost of their care and accommodation did so. But also that we maintained an appropriate safety net. And I guess, just going back a step, previously there was the situation in aged care where there were limited options for consumers as to how they paid. So for instance you could pay a bond or a lump sum for low care accommodation, but you didn’t have that option for high care accommodation. So what we’ve done is that we’ve removed the distinction between high care and low care so a consumer will have the option of paying a lump sum, or a daily fee, or a combination of the two. But the other important change that came in was a new means testing arrangement for aged care. In the past, for accommodation, there was only an assets test. And for care, there was only an income test. So you had a situation where you had people with high assets who mightn’t have been paying much for their care. And conversely, you could’ve had people with higher income who mightn’t have been paying much for their accommodation. So what we’ve done is brought about a combined assets and income test, so a combined means test, which we think will lead to fairer outcomes.
HEALY:
So a more level playing field?
FIFIELD:
That’s right. And recognising that aged care is a bit different to the other part of my portfolio in disability. In disability you’re often born with a disability. Which also can mean that you don’t have the capacity to earn income, which means that you don’t often have the ability to put money aside for your care and support needs. Whereas, aged care, we all hope to get older, we want to get older, and so there is a greater capacity for people to plan for their future and to make provision for their aged care. So in that circumstance it’s more appropriate that those people, who have the means to do so, make an appropriate contribution. But also it’s really important that we continue to have a safety net.
HEALY:
So the outcome of that is people who would otherwise struggle to be able to find that kind of care, now will get more access to support. But people who can afford to pay for their care will pay possibly a little more?
FIFIELD:
That’s right. And we’ve got a good new source of information for people called the My Aged Care website. There is also a telephone line that goes with that 1800 200 422. And this is a new way for people to get information about the aged care options. To get information about providers, but there is also an important tool there, called the fee estimator. Where people can plug in their income, they can plug in their assets and see what their likely to be up for when it comes to their care fees. What I might just do quickly John is just take you through firstly for residential situations what the circumstances will be for people.
HEALY:
Thank you.
FIFIELD:
For residential aged care, everyone will have to pay a basic fee which is set at 85 per cent of the aged pension. So that’s a basic care fee that everyone will be required to pay. I guess there are really three categories that we need to look at. Firstly, people who you might call low means. So that’s people with assets below about $45,000 a year and income below about $25,000 a year. For people in that circumstance all they will pay is the basic fee – 85 per cent of the aged pension. They won’t have to pay anything for their accommodation, the government will fully cover that. And they won’t have to pay any additional means tested care fees, just the basic fee for those people. For people on, I guess what you might call a medium financial circumstance – people with assets above $45,000 but below about $154,000, and whose income is above about $25,000 but below about $65,000 – for those people they’ll pay the basic care fee, that 85 per cent of the aged pension. They will also make a contribution to their accommodation costs, and the Australian Government will also meet some of that. But they won’t have to pay a means tested care fee. And for people of higher means, those with assets above about $154,000 and income above about $65,000. People in that situation will have to pay the basic care fee, they will also have to pay a means tested care fee, which people of lower and intermediate financial circumstances don’t have to. And they will also be liable to pay their full accommodation costs. So the circumstances of an individual and what they’re liable to pay will vary depending on whether they’re someone of low means, intermediate means or higher means. And the My Aged Care website is a great place to go to get a handle on the cost that you’ll be up for. But I should add that there are some important protections for consumers. In relation to that means tested care fee that I mentioned, there is an annual cap of $25,000 a year, but there is also a lifetime cap of $60,000 a year. So you can’t be expected to pay more than $60,000 over your lifetime in means tested care fees. And that lifetime cap of $60,000 also takes into account any income tested care fees that you might’ve paid in home care before you entered aged care.
HEALY:
Okay, I’m reluctant to obviously get into too much detail I think it’s fantastic that website is there and there is a tool there to help people get through that, I’m sure either they or their carers can use that. Just one quick question for you, a lot of elderly people I know end up being I suppose asset rich and income poor. You mentioned the combination there, if someone has no or little income, but has a considerable assets in their family home, does that affect it adversely?
FIFIELD:
Well, it just depends on the balance and the mix of assets and income that they have. As I’ve indicated, the new means testing arrangement takes into account both someone’s assets and someone’s income. So you’ve got those two axes if you like, and the fee estimator on the My Aged Care website, if people plug in their assets, plug in their income, they’ll see what their circumstance is likely to be. But I should point out that there’s also a particular treatment for the family home. If you move into aged care and you have what is called a protected person who is remaining in the family home, it might be a spouse or a dependent child, then the family home isn’t counted in that means test.
HEALY:
Ah ok.
FIFIELD:
[inaudible] on the assets side of the equation.
HEALY:
I’m sure that’s a concern for a lot of elderly people, yeah
FIFIELD:
And even if that’s not the case, if you don’t have a protected person there, there’s a cap on the value of the family home that can be included in the asset part of the means test and that’s capped at about $150,000. So that’s another important protection.
HEALY:
What I’d like to do, apart from the payment side is just let you know that joining me in the studio live at the moment and also listening very attentively to you is the head of ageing and disability services in our local council, Liz Green, you might as well say hello Liz
GREEN
Good morning.
FIFIELD:
Hi Liz, how are you?
HEALY:
And we already understand that you are part funders of the service that our local council provides, so we will be talking more about that in a moment but one of the things that I would like to just go to if I may in the few minutes that remain for us, is reading the website and the information that we’ve looked at so far it seems that one of the thrusts of the changes is to increase the support for people to be able to remain in their own homes as they age. Would you like touch on that a little.
FIFIELD:
Absolutely. When we think of aged care, we tend to think of residential aged care. But the truth is that it’s only a very small proportion of people who live in a residential aged care setting, it’s only about five per cent of Australians over 65 who live in residential aged care. The bulk of people who get aged care support do so in their home, and another important part of the aged care system are what are called home care packages. The changes that came in on 1 July also affect home care packages. So you can be, or you will be asked to pay a basic fee for home care which is set at 17.5% of the Age Pension. You can also be asked to pay an income tested care fee if you have income above about $25,000. But again, there are some important protections here. There are annual caps for part-pensioners an annual cap of $5,000, for self-funded retirees, an annual cap of $10,000 and again there’s a lifetime cap of $60,000 for home care as well. And there are four levels of home care, depending on the needs that individuals have. And it’s really important, a lot of people, understandably, an increasing number of people want to stay at home for as long as they can and so home care packages are an important way to give people choice. But ultimately, people have got to work out themselves and with their families, what’s the best setting for them, is it at home or is it in an aged care facility and given you’ve got Liz there from the Council, I should also mention that there is also the program known as Home and Community Care, which provides a less intense level of support than the Home Care Packages. So we’ve really got a continuum of support, we’ve got Home and Community Care Packages, which, in many places around Australia, local Government has an involvement in delivering, so we’ve got the Home and Community Care, we’ve got the Home Care and then we’ve got the Residential supports.
HEALY:
We can expand a little bit on that when Liz takes over after you leave us in a few moments Minister but before I do, just a couple of things on that, I mean I think those provisions are fantastic, but if I just want to qualify, my understanding from what you said then, the cap, what that does, it means as I age and maybe the level of support I might need to stay in my own home, that, obviously it’s going to increase, but the cap helps and protects me from those fees and charges becoming too expensive for me to remain in my own home, is that correct.
FIFIELD:
That’s right, there will always be the basic fee which everyone will have to pay, regardless of means. Which is 17.5 per cent of the aged pension. But for those people who are subject to income tested care fees there are those annual and lifetime caps. And importantly, that lifetime cap of $60,000 takes into account your means tested care fees for both home care and residential care.
HEALY:
Alright, Minister when I was speaking to your office obviously we were really appreciative that you’ve taken time out as you’ve mentioned at the outset there. Busy flying around from place to place and we are particularly grateful you’ve taken the time out to speak to us and take as long as we have this morning so we might let you go. But, before I do, perhaps we might just summarise from your perspective, the main thrusts of the changes we saw coming into play. And then I can pick up and discuss in a little bit more detail with Liz after you get on with your other demands of the day.
FIFIELD:
Sure. Well I guess the essence is more choice for consumers in terms of how they can pay for their accommodation and care. More information for consumers through the My Aged Care website and also the phone line – 1800 200 422 – and importantly you can talk to a real person. That’s an important part of the My Aged Care gateway. But also there are important protections in terms of lifetime and annual caps for means tested care fees. And for those people of low means in residential aged care, the only thing that they have to pay is the daily fee – 85 per cent of the aged pension. They don’t have to pay a means tested care fee. And the Australian Government covers the cost of their accommodation, So we still have important protections and safety nets, even in a system where we look to people who have the capacity to make a contribution.
HEALY:
Minister thank you very much indeed again, appreciate your time this morning. And I’ll let you get on and we’ll go to a short break here.
FIFIELD:
Thanks very much John