Last 1 July, 2014, the Living Better, Living Longer reforms became law. This has brought extensive changes to the aged care system in Adelaide and South Australia, and potentially has a huge impact on the finances of aged care residents and their families.
While the objective of these changes is to have a sustainable and more efficient aged care system in the long term, many Adelaide people fear that this will make accommodation costs rise. If that were the case, people will be living longer, but not living better. On the other hand, this new legislation addresses key challenges that the South Australian aged care system is facing now:
- Rapid increase in ageing population. In the next 20-30 years, a huge number of baby boomers will retire and many will need proper aged care services. This will be a major shock for the national aged care system since every year, 200,000 of these baby boomers are expected to crowd the nursing homes.
- Living longer. Aside from the increasing number of ageing population, people have increased longevity too. This means that seniors will stay longer in aged care facilities and will need more care.
- Limited aged care facility. With demand expected to rise, accommodation supply will get tighter. The limited number of aged care beds available may not be enough for the growing number of people needing aged care.
- Many will prefer home care. During this shift going on in the aged care system, many baby boomers are expected to demand home care for as long as they possibly can.
- A decline in tax revenues. Since government expenditure on aged care is already significant, an increase in population needing aged care will put a strain on already tight government funding. In addition, as the working population reduces, less people will contribute to government tax revenue.
If you or your family member need aged care in the coming months, the team at Adelaide Aged Care Financial Advisers have developed a list of how this new law might affect you:
- There is now an annual cap of $25,000 and a lifetime cap of $60,000 to means-tested care fee.
- The low care, high care, and extra services are now abolished. There is only one level of aged care service today.
- Residents are expected to pay more in most cases now that there is an increased means-testing. There is now what we call Means Tested Care Fee, which is payable based on the income and assets of the resident. This fee shall only cover expenses and care, and not accommodation.
- Entry-fees as a lump sump are now payable for all residential aged care. This is called Refundable Accommodation Deposit or RAD. This is the accommodation bond you pay the facility upon entry and refundable after you leave the nursing home. You can also pay it in the form of Daily Accommodation Payment or DAP.
- Each resident should pay a Basic Daily Fee of $46.50 at present.
Although these fees can be complex and confusing, a good aged care financial adviser can help you in planning your finances. Adelaide Aged Care Financial Advisers specialise in aged care and can help you make the most of your finances to successfully fund your aged care fees. Call us today for a FREE initial consultation on 1300 422 232.