Cost of Aged Care to Skyrocket

Although many people are under the impression that the cost of aged care in Australia is already quite high, it has been suggested that if sufficient funds are not invested or injected into residential care within the next couple of years, these expenses could continue to surge even further. In fact, a recent landmark review of the current aged care system could pave the way for various reforms that would see these costs being increased.

Substantial Investment Needed

The above mentioned review went on to state that a staggering amount of around $33 billion would need to be invested in residential care within the next ten years because of the fact that the aged population will be increasing from the current 3.5 million to more than 9 million people by the year 2054.

Veteran public servant David Tune presented a blueprint to the federal government last month that could help provide a level of reform to the current $20 billion aged care sector. A key point of the plan would involve the uncapping of the current daily fee of $49.07 that is being paid by residents of nursing homes to cover the cost of items such as their cleaning, meals, laundry, cooling and heating expenses.

This would then enable aged care providers to set their own fees for these services (with exemptions for elderly persons of limited financial means). However, they would need to obtain approval from an independent regulator if they intend charging more than $100 per day for these services. Tune also went on to recommend an increase in the maximum accommodation payment for anyone moving into residential care from $500,000 to $750,000.

Additional Mandatory Contributions Suggested

Tune’s review also suggested that elderly people who were using in-home care facilities be required to pay mandatory contributions. He noted that numerous providers didn’t charge for lower-end services, which meant that people ended up being less willing to pay when additional help was required.

The review noted that the total investment required in residential care cover within the next ten years is equal to the industry’s total assets in 2015. Seniors peak body COTA Australia welcomed the review and mentioned that the government faces an ongoing challenge to obtain funds needed for aged care because the demand is increasing so rapidly. COTA chief Ian Yates stated, “If politicians on all sides are going to rule out greater user contributions … they must tell Australians how they will fund aged care into the future. Either government pays more for services or they will decline.”

Approximately 1.3 million Australians are currently relying heavily on government-assisted aged care services. This costs around $20 billion annually, 25% of which is paid for by those receiving assistance. The review was tabled by government in parliament last month with only two of the 38 recommendations being rejected. These included a proposal to change means-testing for anyone who is in residential care to include the full value of any homes that they own outright.

Navigating through the Aged Care process can be very complicated and confusing. If you find yourself having to do this you should contact us to be your guide and remove confusion and frustration.