Aged Care Reforms

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Aged Care Reforms


With an ageing population in Australia, the Government is continuing with its reform measures to make the system “fairer” for its users.


The aged care system in Australia touches the lives of millions:

  • More than one million people receive aged care services, with over half a million people receiving support at home.
  • There are around 2.7 million carers, many of whom are family members.
  • The system employs around 350,000 aged care staff across approximately 2,100 aged care providers.



There were significant changes to the means testing measures which took effect from 1 July 2014, which may impact planning for the move to an aged care facility, specifically in relation to whether the family home is sold or retained.


There are presently four types of fees payable for aged care services:

  • A basic daily fee – this covers living costs such as meals and utilities;
  • A means-tested care fee – this is an additional contribution towards the costs of care, based on a means tested assessment of your income and assets;
  • An accommodation payment – this is for accommodation in the home;
  • Fees for extra services – additional fees may apply if a higher standard of accommodation or additional services, such as hairdressing or pay TV, are required.


The rule changes centre on how the cost of the accommodation will be funded, either by a daily fee or a refundable accommodation payment. The accommodation contribution can be paid as a lump sum (RAD), daily payments (DAP) or a combination of these methods. This is different to the previous system where the accommodation costs were fixed on initial assessment and could not vary.



Ongoing changes to your assets and income as measured for the means tested care fee will flow through to the accommodation contribution amount. Accordingly, you need to be aware of what could increase your assets and income as measured for the means tested care fee.  


Having the flexibility to pay the accommodation up front or as an ongoing payment will give some retirees flexibility in determining what they are going to do with their family home when they move into an aged care facility, as they will not necessarily need to sell the home to afford the accommodation bond. However, this may cause ongoing practical problems as the periodic costs may not be affordable to some retirees. Further, a change in circumstances (such as selling the home) in the future may affect the ongoing costs of aged care.


The aged care system is complex and in a constant state of change. If you would like to discuss your personal circumstances or that of a family member, please contact your relevant ESV Engagement Partner on 9283 1666.


Article by Geoff Tierney