The recent reforms to Australia’s aged care system, touted by the government as a move towards a more equitable system, are sparking concern for everyday Australians. While the reforms claim to target “wealthy” individuals and redistribute the cost burden, the reality, as financial expert Rachel Lane points out, paints a much different picture.
“This aged care reform is great for operators and the government, but it’s really not great for consumers,” Lane remarks, setting a sceptical tone on how these changes could affect the average Australian.
The most contentious point? The government has redefined what constitutes “wealthy.” Under the new asset threshold, individuals with more than $206,000 in assets are considered wealthy, a definition Lane calls out for unfairly targeting those without substantial financial flexibility.
“As clever as they have been in defining care, they’ve been just as clever in defining wealthy,” Lane adds. “Wealthy is really defined as someone with more than $206,000, which most people would not define as wealthy. This is the average person. People who don’t have substantial assets outside their home generally sell their home to fund aged care… whereas truly wealthy people, with assets outside their home and a valuable property, will benefit more.”
In this context, the government’s redefinition of wealth leads to an affordability gap. With the price of rooms in residential care facilities expected to soar to $750,000, average Australians who fall within this newly created category of “wealthy” may find themselves squeezed out.
Lane emphasises that those without significant assets outside their home may struggle, while the truly wealthy, who can afford top-tier care at home, will largely bypass the aged care system altogether.
A crucial element of these changes is how the government has also narrowly defined what constitutes “care”. Lane highlights that the government has been strategic in categorising clinical services, provided by nurses and therapists, as “care”, while essential services like showering, meal preparation, and medication assistance have been labelled as non-care.
“That’s the most cunning part of the plan,” Lane explains. “The government could potentially extend this to other services, like the NDIS, and force people to pay out of pocket for what they’ve reclassified as non-care.”
This strategic redefinition not only places an additional financial burden on consumers but could also encourage further cuts to critical support services. The government is set to increase means-tested contributions for home care as well, with full pensioners paying 5% of their support costs and self-funded retirees paying up to 80% of their everyday living costs.
The lifetime cap on non-clinical care costs will increase from $80,000 to $130,000 — a significant jump that Lane believes will shift costs from the government onto individuals, without solving the deeper structural issues in aged care.
The government’s claim that no one will be “worse off” under the reforms is met with scepticism by Lane. She points to the complexity and layers of contribution that will inevitably create a two- or even three-tiered system
“It’s going to add a layer of complexity,” Lane explains, “because there’s the current system, the January changes, and the July changes. It’s a complex landscape that will be difficult to navigate, and ultimately, people may find themselves worse off.”
Moreover, despite these increased financial burdens, the reforms fail to address one of the most pressing issues in the aged care sector: the workforce shortage. Lane is blunt on this point: “The biggest issue that needs to be solved is the workforce.
There’s no point talking about what people are going to pay for care if they can’t get care. That is kind of everything.” Without solving the chronic shortage of qualified workers, aged care recipients may still struggle to access the services they need, regardless of the financial changes.
While the government has hailed these reforms as a way to make aged care more sustainable, Lane’s insights reveal a different reality. The average Australian is likely to bear the brunt of these changes, while wealthier individuals—ironically the group the reforms claim to target—have the financial flexibility to utilise the system with minimal disruption to their lifestyle.
“It’s good for everyone except the average Australian,” Lane concludes, leaving the reader to wonder whether these reforms truly address the core issues in Australia’s aged care system, or simply shift the financial burden to those who can least afford it.
As a Home Care Provider I have several major concerns about the system as presented. First up – I agree that the squeeze for ordinary people to pay more for their service will disproportionately hurt low income Clients. I am particularly concerned for full Pensioners. The article points out that they will now pay 5% of costs for “non care” services such as showering and personal care but it fails to point out that they will also be forced to pay 17.5% of the costs of cleaning and gardening.
That 17.5% charge will be a severe burden for anyone trying to live with dignity (or live at all!) on a full Pension – and simply impossible for a full Pensioner who does not own a home and is trying to pay rent.
The result: many of those Clients will cancel their cleaning and gardening services. They will either live in increasing squalor with massive health risks, or some will attempt physical work they are no longer safe to perform, resulting in falls, injury, hospitalisations….
In both cases the end result will be increased mortality and more Pensioners forced into residential care they do not want, and at far higher cost to the Government – a truly perverse outcome for what we are told is a an Aged Care “reform.”\
And how will those Client payments be collected?
The Government has an easy answer to that. Once again the Home Care Providers will be forced to act as the Government’s Debt Collector. The Government will only pay us the Government subsidised portion of each individual service, and then we – the Home Care Providers – will have to calculate the Client’s payment for each individual service, then invoice the Client and try to collect what they owe to the Government – or else we lose the 17.5% and we go broke.
And what about Clients who can’t pay, or who are persistently late in paying and fall steadily into debt?
Well apparently that’s our problem too, and while one member of our team is calling on the Client to make sure that their services are proceeding to their satisfaction, and to see how else we can help, another member of our team will be trying to work out how to ask them to promptly pay up money they simply cannot spare.
This will seriously damage the relationship between Home Care Providers and our wonderful Clients. It will also impose enormous extra – and unfunded – administrative costs. This system will be very very complex for Providers to manage. Providers are being told that “Admin costs” are being factored into the capped service charge rates – but we won’t see those rates until February at earliest.
Care Management fees have also been reduced to a flat 10% maximum – which will be inadequate to cover the actual costs of care management for Clients with complex clinical care needs.
At the same time as all this, we will also be implementing a whole new set of Aged Care Quality Standards and responding to very important – but costly – increased accountability measures imposed by the Aged Care Quality and Safety Commission. None off that is funded either.
The regional Home Care Provider I established 10 years ago has always had lower fees than most “Not For Profit” Home Care Providers and we have always had excellent Client satisfaction with zero audit non-compliances, but under Support At Home as currently presented we think our service may not be financially viable. If a service like ours cannot make the funding work then most of the For Profit and many of the very large Not For Profit Home Care Providers will also pull out, leading to profound failure of the Home Care system.
You are spot-on David!!!
You have spelt out the situations perfectly.
There are just too many chiefs and not enough Indians, way too many ‘fat cats’ spouting opinions with little ‘grass roots’ knowledge or experience.
Thanks for taking the time to write your understanding of this “aged care reform”.
It truly will be a nightmare for providers and their clients.
I care for an elderly gentleman 7 days a week, approximately 2:10 minutes per support. Most of it is personal care and perhaps 20 minutes dedicated to simple meal prep and light cleaning. I would normally just submit one timesheet with shift notes saying what I did. I’m assuming that I’ll have to submit separate timesheets and shift notes for the different supports that the client received. How can the government thinks that these reforms are going to benefit anyone receiving or giving care. The aged care sector is already having difficulties finding staff to actually go and care for the elderly and now the support worker is going to also have more on their already busy day by doing extra notes. I don’t believe the people that came up with the reforms has an understanding of what’s it like to be elderly!
Will the extra money be spent on care or go straight into the providers pockets ?
Hi Jane. The extra money the Client will be forced to pay does not increase the size of the Home Care Package budget.
It will just allow the Government to pay less.
The Government will reduce what it pays. The Client will pay the gap.
Regards
Dave
Where I live there’s no transportation whatsoever. Closes shopping is 45 kilometres away. Doctors are scarce. Communication services are third rate. I’ve applied for more help around the home with no response they don’t have the services available. I’m 75 living on my own in an isolated area. And Albo talks about how he was brought up in public housing as an only child. How lucky was he to have a home to live in. Poor Albo hasn’t got a clue.
Hello! I’d like for you to reeeeeeeally nice and slow explain how cutting care management funding from the ~30% most operators charge currently to a maximum of 10% is benefitting them.
p.s. Lady on the left has six fingers. I don’t care if you switch to 90s-era WordArt, anything is better than using AI.
Lane has clearly spelt out the cracks in this new revised system. $206,00 is not wealthy, it is probably about the same price it costs to maintain your home over a 4-5 year period. It always confounds me that aged care facilities cry poor yet are registered on the stock exchange which means they are legitimate businesses, intent on making a profit.
This article defines that it’s not going to pay for the elderly who have managed to live long enough to require care.
Great speak for us Elders isn’t it.?
This type of modelling will only drive people who require residential aged care to stay in their homes and be at risk. While it will reduce the requirements of residential care, it will also increase the burden on community services that provide in-home aged care. No requirement for RN supervision does not mean better access or better service. I know of several community clients who have not received care because no service provider has the capacity.
The Albanese government is busy cutting social welfare like Aged Care and the NDIS in anticipation of war. We will shortly be following the USA into WW3. This will be plus or minus a global share market correction. The new Aged Care system is user pays pure and simple. If you can’t or won’t pay then someone will have to pick up the pieces and that will be families and Carers. Albanese will probably lose the next election but for working people it will make no difference. We are always the first in line to go to war but the last in line to get a fair share of GDP. I thought that Albanese would have learnt this lesson growing up in Housing Commission in a single parent household. Looks like he has forgotten.
I totally agree . People will be paying more but unless something is done to encourage more people to work in this industry as Carers , more nurses trained and wages for these workers to be attractive then it appears people will be paying more for less as time goes on . If you think of Aged Care as a product is it fair that a person who has worked hard all their life and saved to have to pay more for that product than someone who hasn’t . An example would be ‘ a car is a product ‘ why should a self funded retiree pay more for that car than a pensioner with no savings . That is not equitable . Also at present there are 4 levels one can be assessed at for home care . Care providers are only providing care for level 1 . There are not enough Carers to provide a service for any of the other levels . Where are those Carers going to materialise from for the new 8 levels !
Too much hessal we will pay to provider and goverment it become nuisness meal prepration is very important asgefperonwill needhelpeith cooking andhealthy meal prepration but i understand why they are removing thisjust to fill pocket ofbeurocateican make understand people will start theirown kithen and supy weekly food to person wetherthey like itor not
Again price will imflst and people with mefical conition looking after their diet plan will be not get it indirectly what they want is you sale your house or take loan on your house to pay exsasareted overpriced workers of thoes companies and disable australian not on ndis will be suffering and will die witout services what ever govetment has done is not right and if this bill will pssed only posible seneters has been bribed out by so calked beurocates other wise no person can openly btreak trust of people who voted tgem and bring such law as they didntstoped beurocateto rip of system but they stop us getting services i gad decjded i will give up my hcp thoigh they had given lots of painto go against them and speak out.