Increased funding for aged home care in the Budget and an expansion of the Pension Loan Scheme will allow many people to remain independent for longer. It will also encourage more people to seek help with their aged care planning, according to an analysis of the Budget measures.
Louise Biti, a director of Aged Care Steps, says many people are afraid to ask for help because they think it will trigger a move into residential care. The Budget changes that.
Biti says demand for government-funded home care packages is increasing, with around 105,000 people currently waiting for a package to be allocated.
In December an additional 6000 packages were allocated and this Budget announced an additional 14,000 packages over four years.
Home care packages are approved at four levels of care, with varying levels of available budget. Level 1 starts with a government subsidy of $22.35 a day and a total annual budget (including client contributions) of $11,869.80 a year.
Level 4 provides a government subsidy of $135.87 a day and a total annual budget (including client contribution) of $53,304.60.
Clients pay a basic daily fee of $10.32, which may increase to $39.95 based on assessable income.
Biti says that on average, the Government pays around 90 per cent of the package budget. No changes were made to these arrangements in the Budget.
In addition to the home care initiative, the Budget proposed to introduce 13,500 new residential care places and 775 short-term restorative aged care services in 2018/19.
To achieve this, funds will be allocated towards capital investment in new aged car places, as well as funds for regional providers and services in remote indigenous communities.
Biti says the proposed changes to the Pension Loan Scheme may provide an option for clients to use equity in their home to provide a safe place to live by funding private home care to fill in the gap while waiting for a package to be allocated or top up an existing package with additional services.
The current scheme allows part-pensioners and some self-funded retirees to top up the amount of age pension they receive to the maximum available pension. For example, a single person who receives a part-age pension of $400 a fortnight could borrow $507.60 a fortnight ($13,197.60 a year) to bring their payments up to the maximum single age pension.
Retirees need to own a property to use the scheme. Self-funded retirees cannot have age pension entitlements reduced to nil under both the income and assets tests.
The scheme will be expanded to allow eligible retirees to borrow regular income payments up to 150 per cent of the maximum pension entitlement (less the pension amounts they receive). This opens the scheme up to full age pensioners.
Interest compounds at 5.25 per cent. Establishment fees are not charged but there may be legal fees. The amounts borrowed are not taxable income.