The aged care recommendations that will cost you more

Susan
March 23, 2024
There is an Elephant in the Aged Care Task Force Final Report. It would seem that not if, but when these recommendations come to pass, will those who require Aged Care expect that the conditions under which they exist are substantially improved? Note the lack of increased qualified staff to inmates, Nurses on site, 24/7, inadequate nutrition, neglect, abuse, verbal, physical and sexual, not to mention little or no care for mental, physical or social wellbeing that surfaced from the Aged Care Royal Commissions. So are we expected to pay more, substantially more for the same old level of care and service that the Royal Commissions exposed. Pay 6 Stars prices, get 2 star care.

Susan, and I know 2 occasions in 6mths of ambulance from 6* aged village with huge management fees where despite management having copy sent by solicitor of an enduring power of attorney for health and 2 listed next of kin for the person, not one phone call to advise person in hospital either occasion. Both occurred Mon-Fri when staff on duty, God forbid one is ill on a weekend as noone on duty to report even if ever acted in just a neighbourly way, let alone a professional way. No responsibility, it's laughable, cost for person to buy unit $1.4mill in 2016 & not in Sydney, I perceived what person is paying for was to be better than this. I consider it theft by stealth.

Great article. I am a self funded retired. I consider myself to be reasonably financial literate. I get very annoyed at articles telling potential retirees how much savings they will need to live a comfortable retirement. Most of these articles omit to mention that retirees will probably have run out of income from their non government income sources once they have passed their expected life expectancy.

The articles fail to mention how much savings are needed to pay for comfortable living in the last few years of life. This can easily be more than $100,000 per year and the government is now planning to greatly increase this cost. I agree that boomers should have to pay more for their age care costs for equity’s sake. I am tired of reading the family home should not be considered as part of a person’s wealth although allowing their partner to live there for the rest of their life seems reasonable.

What really irritates me is the government doesn’t have the guts to put out the facts about the aging population’s medium term effect on the economy and to canvas support for how to deal with it. A great start would be to propose a government backed insurance scheme for people who live beyond their predicted life expectancy. If such a scheme was in place retirees could spend their nest egg without age care worries,

Once again the family home distorts decision making. Clearly the new means tested fees will depend on the definition of wealth, and the crudest measure is age pension eligibility. We end up with 3 categories: full pensioner, part-pensioner and self-funded.
A couple with a $1 million family home and $2 million in super is wealthy because they are self-funded and therefore can expect to the pay the full amount in new aged care fees.
A couple with a $2 million family home and $1 million in super is not wealthy because they receive a part age pension, ($37.30 per fortnight) and that is because the family home is an exempt asset under the pension assets test. And when the family home is considered in the aged care means test, only $197,735 is counted as an asset.
With this incentive, the government should expect many self-funded retirees to up-size their family home or spend wildly to ensure they at least become eligible for a part-age pension to lower their age care costs.

"With this incentive, the government should expect many self-funded retirees to up-size their family home or spend wildly to ensure they at least become eligible for a part-age pension to lower their age care costs.":

The recalcitrant selfies could buy and own a mansion / compound suitable for accommodating swathes of family who would make beneficent filial gifts to the cash poor selfies straining to survive on the meagre Age Pension hand out.

I don't think it is unreasonable for taxes to cover the cost of dying. Everybody is going to die and everyone will will eventually benefit. Therefore it should not be seen as a burden on younger tax payers. It disturbs me that at the weakest point in your life you are forced to deal with bureaucracy (which can be frustrating at any time) to determine costs, sell assets to make payments, and then deal with the ATO is a form of torture. Further, expecting relatives to go through this difficult process in a short period of time is also unfair as they may be unaware of the finances of the dying person.. I think our departure from this world should be a simple and happy event which everybody should be entitled to..

Sorry Peter but I have the opposite view. Because we all will die, the practicalities are something that each individual and their family/support network should plan for and pay for. Not taxpayers. A funeral is a private good, not a public one.

I am talking about dying. Not a funeral.!!

There seems to be an inconsistency with the way we pay for health care (I include aged care as part of health care)

A heart attack (for example) will be treated in hospital under medicare, with little or no contribution from the patient. ie the nation pays, so the patient (and eventually his estate) contributes little

A dementia (for example) patient goes into aged care, and is expected to contribute to the costs. ie user pays (or at least contributes) more than their food, laundry, etc costs (which they won't have to pay because they are fed and have their laundry done). So the patient pays, and their estate will be less.

Conceivably, the cost of both hospital care (high cost of high dependency of heart patients) and the chronic ongoing cost of dementia care is the same.

Why should one family receive less inheritance than the other just because of the illness that the old person suffers. They shouldn't. Both should contribute to the cost of providing care for them. Inheritances should not be dependent upon "luck" of the disease that inflicts a person.

The medical management of Alzheimer’s is subsidized by the government. Aricept (medication) is covered by the PBS. It isn’t very effective but in principle the government pays.
The difference you describe relates the disability caused by the conditions and that is dealt with by the aged care system.
I don’t see why the individual shouldn’t fund their own living expenses. You make a case for funding disease specific interventions which is reasonable.

Taxpayers do fund the dying which is entirely fair.
What's not fair is the taxpayer funding elderlies living, especially those who have the means to fund it themselves.

Gail H

John's remark "The NDIS is insurance not welfare. Hence no means test" just shows how flawed the system is. If NDIS is insurance who is paying the premiums? I have never managed to buy insurance without annual premiums and where did the principle of 'user pays' go? I believe the NDIS could end up bankrupting the government with all the 'inflated' costs from some suppliers, lack of oversight and visibility, and rampant abuse where many 'beneficiaries' are not qualified.

1. Yes - Aged care will cost (some) relatively wealthy residents more and the govt (in taxes paid mainly by younger tax payers)
2. Many aged care residents (as well as NDIS & home care and other welfare recipients ) are asset/income rich and can afford to make a bigger contribution to their aged care provided mainly by NFPs and funded mainly by govt
3 Wrt to residential care - some of these wealthy residents will make a (small) contribution for 2-3 years - before passing and still leave a large bequest.
4. It costs to stay at home....and imagine the costs of 24/7 medical care in the home?

Ask your self - is this reasonable and fair - especially to younger and middle aged Australians? Yes - so how and how much? Seems to me - not asking a lot of the average wealthy older Australian to pay a bit more

"taxes paid mainly by younger voters". This should not be an issue as we are all going to die and therefore we would all benefit if dying is covered by taxpayers.

"wealthy resident" to pay. I don't think there are many ultra wealthy persons amongst us. This argument tries to create unnecessary tensions between people over relatively small amounts of money.

Dying is part of life and should not be made an issue. Let's all be given the chance to leave this earth in peace without the bitter attitude of some.

The obvious question, Jeff, is the definition of wealthy.
My elderly mother is a self-funded retiree; however, I don't see her as a HNWI. She might be able to afford a $100K in annual fees for dementia care (she currently lives at her own rural home with the support of assisted carers) but if such fees jump to $151K per annum (as mentioned in the above article), she simply could not afford that.
My mother's annual earnings - which are subject to investment earnings and can be extremely volatile - are slightly above the average wage but are certainly not at a level considered, say, in the top 25% of income earners. She is comfortable but not rich. So, hence, my original question, what is the definition of wealthy??

"So, hence, my original question, what is the definition of wealthy??"

Simple, from the government's perspective: whatever threshold they choose, above which you pay!

I think other cheaper options need to be developed. These types of fees will cause enormous financial and emotional strain on an ageing and frail married couples. The issue becomes more complex when they may be forced to sell long term held assets and incur significant capital gains tax as welI. I can foresee the finances of these families being smashed and suicide might be a serious option. A whole range of new options need to be provided including voluntary assisted dying.

Totally agree - voluntary assisted dying would alleviate pain and suffering all around! I have a lewy body dementia partner in a nursing home in Brisbane, and I am aware he wouldn't want to live like this, (because we discussed it prior to his disease) if he had a choice - for me, when I leave the facility each time I cry my eyes out and it is effecting my life, health and well-being. It is a living hell of mourning for me, and makes it sometimes unbearable to continue those visits. We put down our loved family dogs when they serve their purpose, including bad health or no value left in their lives, a hard decision, but for the best, yet we make our loved family ones go through their miserable life, when inevitably they are terminal and will only get worse, just existing and inflicting terrible hardship on the beautiful people who are carers who relentlessly bathe, change their nappies and feed them, and all this costs many dollars for the community and Australia. I have been hit with reduced cash flow for myself to pay and meet the costs of care; it is very expensive and the total I pay per month is over and above the cash flow we received from our investments; we had a sizable liveable SMSF for our retirement, which we worked hard for, and because we could could afford to pay the daily fee, we went into our Superannuation to pay for the bed and the remaining funds/investments pay the daily care, and accommodation costs. It has been a nightmare dealing with Services Australia in Canberra; I owe it to myself and other older citizens to meet with our local MP and go through the huge list of ingressions that I have had to ensure concerning the system. It is foremost in my mind, that if I was not a healthy person, computer literate, with the huge patience of a Saint, I am sure I would be on the brink of heart failure for the stress they have put me through. I continually think of my less fortunate fellow older citizens who may be frail and unwell having to go through this and how they can ever come out the other side without added bad health issues, anxiety and being trautimised. It is disgraceful that the senior citizens of Australia have to endure such painful and unacceptable service. They should listen to the receivers of this service for once and make the system easier to navigate.

Touche!

Can the Taskforce members please do a similar user pays / means-test review into the NDIS?

Absolutely, I have multiple clients (financial advisor) on NDIS with millions in super....it is ridiculous it is not means tested.

The NDIS is insurance not welfare. Hence no means test

It should have been means tested like the pension, aged care and home care! It is a growing financial monster that will become an unaffordable, entitlement ridden burden on the tax payer. The precedent is set in our society; those that have the means contribute accordingly!

Further it is discriminatory. The cut off for the NDIS is 65 yo. I can get "insurance" beyond that age.

If it's insurance, then surely those that are insured should pay the "premiums" as they are able to!?

Just because the Government labelled the NDIS as “insurance” doesn’t make it so. It is welfare. Whether it is good or bad welfare is arguable. What is inarguable is unless tighter restrictions are placed on access to the NDIS or fewer benefits are paid (or both) then it is unaffordable over the medium to long term.

Thanks Rachel. The usual good oil! Sadly, nowhere does the Report even consider that taking properly informed action to stay out of aged care for as long as possible should be an urgent community initiative. Although unlikely to make an immediate impact, this strategy is realistic but almost non-existent as far as governments are concerned.
Of course, it’s up to individuals to make the effort. Sadly, most people are poorly informed about the impact on their quality and length of life - from midlife - of their ongoing health and other lifestyle choices.
If we spent just a little of our time now on properly informed longevity planning to make the best of our time later, we also would frame our important money decisions much better. Raising longevity awareness through spending a fraction of that spent on financial literacy would yield a major longevity dividend, individually and for the community.
After all, time is the bottom line for all our financial decisions.

The Report points out that the increased funding of aged care packages in the past decade has led to more people staying at home and entering residential care desirably later; and consequently in poorer health status. Low care residential facilities have gradually closed as this ‘market’ is now living at home.
Entry into the aged care system requires a comprehensive assessment and determines where a person’s care be best met - at home with support or in residential care. What you are asking for is happening.

You need to know politicians code words

Tax Reform means increase in taxation masked as a reduction

Aged Care reform means increase in the amount that the user pays for aged care masked as a reduction