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The Aged Care Reforms – What You Need To Know

Article By Adam Hurwood | | Financial Planning

The Aged Care Reforms – What You Need To Know

The Living Longer Living Better aged care reforms, which were announced in April 2012 and begin on 1 July 2014, are the previous Government’s response to the work of the Productivity Commission and the National Aged Care Alliance’s Blueprint to build a better, fairer and more nationally consistent aged care system.  It is hoped the reforms will encourage greater investment in the sector and improve the sustainability of the aged care system.  Regardless of the intent of the reforms, it is generally accepted that aged care will be a complex and expensive proposition for most prospective residents.

The reforms mean that instead of lump sum bonds we now have RADs (refundable accommodation deposits) and where bond amounts were paid by periodic payments we now have DAPs (daily accommodation payments).  The new system has removed the distinction between low care hostels and high care nursing homes, meaning all residents will be subject to the same fee structure. The new rules also combine the resident’s asset and income position and apply a broader means-tested amount to replace the income-tested fee. Another change is that the asset test exempt bond, now a RAD, will count as an asset, but only the first $144,500 of the residence will be taken into account.

Providers will also be required to disclose their accommodation prices on the My Aged Care website (www.myagedcare.gov.au) which will provide some visibility across all aged care facilities and allow prospective residents to more easily compare fees.

To whom will the new rules apply?

It is important to note that existing residents will be grandfathered under the current rules. The new rules will apply to individuals who enter residential aged care on or after 1 July 2014.
Existing residents will be subject to the new rules if they leave care and re-enter after 28 days, or if they change facilities and decide to re-enter under the new rules.

For more information on the aged care reforms and how they impact on your circumstances please contact your Altitude Adviser.

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