Budget 2016 | Aged Care
No changes were announced that will directly impact the contributions individuals pay towards the cost of their aged care. However, changes were made to government funding for service providers and this may put pressure on costs.
Changes to Aged Care Funding Instrument and funding
The government subsidy paid to a residential care provider for each resident is based on an Aged Care Funding Instrument (ACFI) assessment. This uses a scoring matrix to assess the care needs of a resident against a funding schedule.
The result is the cost of care. This cost of care is then shared between the Federal Government (as a subsidy) and the resident (as a means-tested fee if applicable).
The government is concerned by what it sees as an unexpected “blow-out” in the ACFI subsidies and the pressure this is putting on government expenditure.
As a result, changes will be made to the scoring system which are expected to reduce subsidies by over $1.2 billion across the next four years.
What this means
This change may reduce the revenue generated by residential service providers and put more pressure on their operational costs. Some service providers are looking at ways of introducing new charges (such as administration fees, higher additional service fees, capital refurbishment fees) and with further cuts to ongoing revenue these practices may expand.
This could increase the overall costs of accessing care for residents.
It will also become more and more important for clients to plan ahead and to include funding for aged care in their retirement plans as early as possible.
Effective date – 1 July 2016
Increased funding for quality reviews
An additional $10.1 million will be provided to the Aged Care Quality Agency to increase its capacity to undertake unannounced compliance visits to residential care services.
What this means
This measure aims to improve the quality of care service standards and identify potential problems earlier.
Effective date – 1 July 2016
