A group of aged care providers and advocacy services are proposing a radical new funding model for aged care that would see wealthier older Australians forced to pay more.
It’s no secret Australia’s aged care sector is woefully underfunded. Successive governments of both political stripes have failed to tackle the financial shortfall and it has been older citizens who have paid the price – financially and emotionally.
Now, a team of aged care providers and seniors’ advocacy groups are calling on the government to raise the means-test threshold to include the family home, in a bid to stabilise costs in the industry, The Australian reports.
Catholic Health Australia (CHA), the Council on the Ageing and the Aged and Community Care Providers Association, in conjunction with financial analysts Stewart Brown, say the proposal is needed to plug what the group says is a $48 billion funding shortfall.
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Under the current system, when an older Australian is means-tested for a place in an aged care facility, the government only considers the first $186,000 of their property’s value – irrespective of what the total value of the home is.
This means the owner of a modest property would be assessed as having the same means as someone with a multimillion-dollar home.
Taxpayers are subsidising around 75 per cent of the cost of a person’s aged care needs, and the group believes it would be fairer to ask wealthier patrons to pay more, rather than increasing the burden on the taxpayer.
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In a pre-budget submission, CHA notes that the aged care sector is under severe financial pressure, with as many as 70 per cent of facilities operating at a loss.
CHA is also asking that the government remove caps on how much providers can charge for services, which is now around $30,000 per year – or 85 per cent of a single person’s basic Age Pension payment.
CHA CEO Pat Garcia says funding reforms are urgently needed if we want to prevent the total collapse of the aged care sector.
“The sector needs huge investment and there are two places it could come from: government coffers or increased user contributions from those who can afford to pay,” he says.
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“Taxpayers already provide approximately 75 per cent of funding for residential aged care, and this contribution has grown at roughly double the pace of consumer contributions over the last decade.
“Given the median value of an Australian home today is about $1 million, the outdated means test cap of under $200,000 means the government is turning a blind eye to a staggering amount of money.
“If we are to continue to care for our older Australians, then it is fair that we have to dig deep into our accumulated wealth now and not sheet the bill home to future generations.”
Is it fair to make wealthier people pay more for aged care? Or is that just punishing them for their success? Let us know what you think in the comments section below.
Define wealthy? Work you butt off for years to get comfortable and then get taxed yet again!
How many people go into aged care and then leave it while still living? I suspect that the answer is almost no one.
In that context it makes sense that those who can afford to pay more should do so rather than receive a government handout so that they can save their money to be passed as an inheritance to children. I am a self funded retiree who gets zero age pension.
There probably are quite a few people not selling up Alan – the wealthy ones who want to pass on their wealth to their children. Not what the taxpayer money is intended for.
I agree with you completely, this is one area where means testing should get much tighter simply because it’s end of life and the means are not needed anymore.
So you raise the amount to be means tested, that does not just affect the wealthy. It hits everyone from a $400k to a $2m home. So you get more from the rich but also hit he poorer for more as well. Just another grab from the rich home operators. It would need to be fixed at a level for varying home prices to be fair.
I agree with Handyman 18 and Joadja…We have worked hard, paid tax, pay rates…cant afford to downsize because of Stamp Duty, etc, and have to budget to keep up maintenance on our home. We do our own maintenance, including all our gardening and having to climb up ladders and cut trees. We are told we shouldnt do this but (a. cant get tradies unless we are willing to wait months and months, or (b. just cant afford the costs…We have contacted Aged Care as my husband is over 80 and Im late 70’s, but they cant help, or point us in a direction for contractors who may offer a discount or are reliable..so..what do we do…and we certainly cant pay any more tax…We are not asking for handouts, just guidance to help us financially.
I also have problems getting in/out of bath and after waiting for some time for assistance I bought and paid for and had installed a handle/bar to help with this, unfortunately I still couldnt get out of the bath and quite frankly when I called Aged Care to ask for help to show me how I could overcome this, I was put to so many different areas and then told I needed to get an OT and pay for this…So..What do you do???? I now have a bath with a handle that I cant use, so back to the shower…and I had been told that a nice hot bath would help alleviate my knees?????
Just think about this for a moment. These aged care facilities are very good at pleading poverty but what exactly are they spending the money on? It is certainly not the aged care workers who are some of the lowest-paid workers in the country. It is certainly not on food given the numerous reports of totally inadequate meals (both quality and quantity). It is certainly not on accommodation since most are basic at best. So where exactly is the current funding and high fees being spent? These facilities whilst most are not charities, should not be making high profits and all monies received should be spent on the residents for whom it is intended.
Would this proposal not risk punishing the asset rich, but income poor, which is true for many ‘boomers’.
Hi Paul I am just before the boomers but you are right.
The uninformed and this includes the previous Govt minister say just spend your super .
However when you are already funding your wife from superannuation and your Superannuation returns cover the Aged care daily costs of $250,000.00 over 3 years) (including a means test tax payment of $50.00 a day)after you have spent $600.000.00 on your wife’s room accommodation you quickly realise that if you fall Il you can’t afford to join your wife in the same Agedcare home because you pay the accommodation cost from super you then don’t have enough money to pay the daily costs as your superannuation is so low.
(And it’s only 3 star)
However I guess some sort of pension would be applicable.
I am not complaining but surely when one gets terminally I’ll a bit of compassion would not go astray.
I spend 77 hours a week in the Agedcare home looking after my darling.
Cheers
I am furious at this attempt to hit what will be the self funded retirees yet again.
The means test is updated by stealth each year as the lifetime cap of the contribution is raised every year.
For instance it was approx $66,000 3 years ago ,now it’s well over $70,000.
This difference is eventually paid by those people who are unfortunately sick or their partners who live separately in a most frugal way.
My advice to the Aged care companies is take the opaqueness out of their spending and replace it with visibility .
The invisibility of their costs and expenditure should be replaced with visibility to those poor people who are sick.
The government funding to memory care wards consumers needs to be quarantined to the memory care wards ,not on glossy magazines and grand entrances to the homes.
Having spent 3 years looking after my darling wife who is terminally I’ll I can tell you that the hardest job in my life has been advocating on behalf of my wife.
The carers in the memory wards are just wonderful people and are the most lowly paid.
They also have the good ideas that in the end provide patient care and also cost savings.
John
No logic here if you consider the situation where the is a marked age difference between partners.
That could leave the partner not in care in a precarious financial situation especially as the aged care industry requires large monthly fees as well!
Just another stinking grab from those who scrimped and saved for the future unlike later generations who have to have the latest and greatest without any real thought about the future..