It isn’t just the rich who will pay more for aged care

I am not sure how much cross subsidy there is in the proposed new system, but if there is, I believe that will encourage well off oldies to get their whole home care by private means and leave the government right out of it. Not having to deal with government is the best thing about being well off.

For in home care the examples refer to one person. My question is if it is a couple do those costs double?

As usual there are always “ unintended consequences “ ( or intended) with these reforms and you will never please all.
However it does appear that the Part Pensioner is the disadvantaged one in all this.
The various self contribution gaps in the examples are not proportional to assets or income and PAP is really going to do it toughest.
No doubt the financial planners will already be looking at best ways to work the angles.
One can just hope that your health and mobility holds up long enough to remain in your home to the very end.

I wonder how many part pensioners can afford a financial planner.

You can have a paid off home, a new car, and a million dollars in savings (even more if one if you is under age 67) and still get a part pension. So plenty of part pensioners can afford a financial planner.

"plenty of part pensioners can afford a financial planner":

Whom might advise building gold stairs in home to have Commonwealth pay 7.8% unto death on money spent on said stairs. The gold stairs can be smelted by heirs to repeat pending their demise.

From 1July 2025, BMW drivers will pay 20% more for petrol than other drivers. They are buying exactly the same product as others but they should pay more because they can afford it. It applies to age care now and can apply to all areas where the government is involved. We should expect the same principle to apply to stamp duty and car registration for example. In most areas of life, if I pay more, I receive a better product or service. With age care, if I pay more I get the same service as the person in the next room.

That is a huge incentive to impoverish myself to become “one of the most vulnerable”. Note the family home remains largely exempt from the assets test assessment. That is the key to such impoverishment.

Medicare levy. You earn more you, pay more levy, but you get the same service under medicare. In certain areas we are a means tested, user pays more society. The principle is well established. There are limited resources and many essential services that need funding. Is there horrendous wastage and misuse of tax payer dollars? Yes! But trying to fix that is beyond our mediocre polity and an unforgiving electorate. People on the wrong side of the zero sum game equation get upset, just look at the outrage over the aged care issue for example.

The Medicare levy is a tax, paid by everyone (according to their income) whether they use the service or not - like defence or foreign affairs. The means tested age care fee is an additional user fee payable according to individual income and assets.
Moreover, the government specifically rejected a levy, or having different classes of service according to payment. This is a redistribution of wealth that punishes prudent savers.

"The means tested age care fee is an additional user fee payable according to individual income and assets."

Aged care has been means tested for some time! All that has happened is that the user pays upper limit has been extended to about $130k from about $76K and they can now garnish the RAD, at most 10%, over a 5 year period.

Means testing (income and assets) as a principle has been around for a long time. The pension is means tested, as is childcare and other welfare or benefit programs. How do you propose the taxpayer pays for the increased burden of aged care falling on a future smaller worker tax base as the population disproportionally ages then?

And we all use medicare and defence, foreign affairs etc are rightly things we can't opt out of. We all may well need aged car and in home care too!

Isn't this 10%RAD deduction over 5 years just a sneaky death tax?

No Rodney it's not.

First because it's payable even when the resident simply moves facility, so nothing to do with death.

Second because in the economics of providing aged care it actually works as a genuine capital charge to help cover repairs and maintenance on residences.

Third it's simply not a tax. It's collected by the aged care facility provider, not the government.

And BTW it's been around for years already.

No it hasn't. Up until the recently announced changes RADs were 100% refundable.

Marianne, I meant the concept of a portion of capital deposits being retained has been around for years. When my father passed away the estate only got back 80% of his outlay to live in his villa. He'd been there for a dozen years or so. The concept of part of a capital amount being retained by the provider has been around for years.

The money wasted by politicians of all persuasions on every stupid idea that is beyond their comprehension is gobsmacking. Every time they think there is a vote able issue they throw a bucket of taxpayers money at it regardless of value for money it is long overdue that politicians be relegated to legislation and outcome driven public servants work out the solutions regardless of politicians political preferences. This would save taxpayers billions and give ALL Australians better outcomes.

Or as the saying goes "take the keys away from the inmates".

Yes, I agree that many politicians think they "own" Treasury and its there for largesse and ego driven "nation building" projects. If they were applauded for the many small, less headline grabbing projects we would all be better off.
Notwithstanding, there is a large gap between what many voters complain about compared to what they are willing to vote for. They ignore the interests of the country and future generations when it comes to crunch time at the ballot box. Perhaps if we the voters we more responsible with our votes, politicians would be more responsible with our money. I know... "eye roll"... but until then, communities get the politicians they vote for.

Regarding who you vote for. It’s fine if a voter wants to give preferences but it shouldn’t be compulsory in my opinion.

Jull, my old mate passed way recently with a plastic card debt near $10K. His daughter sold or dumped all his possessions at fire sale prices which raised a sum of $1,500. She drove his very old and very unreliable motor car ( worth nil ) back to her interstate public housing home because his car was better than the one she owned. Cash at bank was just pennies. The tax payer paid for his burial. Outstanding bills remain outstanding. I understand old mate is one of many in a similiar situation, just ask the salvos and like organizations. How long do you think a labour government will allow a flat tax to remain without a review and is the death tax paid out before all other bills ?

I wonder how much of a rush there will be from elderly people either of their own volition or from their children to get into an Aged Care home before 1 July 2025? The difference in cost is not inconsiderable, particularly with up to 10% of the RAD being kept by the facility as well as the increased ongoing costs.

In any case it doesn't seem unreasonable to expect that those who are using Aged Care facilities should have to pay a higher proportion of the costs rather than leaving the bill to future generations.

The argument that higher means residents of Aged Care facilities should pay more because they can might be fair if the increased costs paid equated to commensurate levels of care. The problem is they don't, so more costs in the announced changes are tantamount to price gouging.

Government is just doing what it always does. If you have more, you pay more, and the excess the wealthier pay helps to reduce the taxpayer cost of providing for those that cannot pay much. It's just how it is! It's a long established precedent in a progressive taxation type society. Do you get better treatment under Medicare when you pay a lot more medicare levy as a wealthier tax payer (private health cover aside)? Complaining ain't going to change the principle!

So how do you feel about the means testing for the age pension then? Those who have a lot of retirement savings get no age pension and are expected to pay their own way, those who have less than 450k get the full pension, those in the middle get some age pension. It's exactly the same principle.

Its time we all understand the government's code

"Reform" means giving the impression of a reduction in cost, while in fact there is an increase

Everything the government does is to increase taxation, while trying not to lose votes (hence hiding the increase and telling us all there is a reduction)

The changed financial aspects will no doubt dominate the initial discussion and debate. However, we should not lose sight of the fact that increasing longevity is a major driver of necessary reforms (plus the demographic shift as the Boomers flood this space).
It's important too for everyone to understand they can make a significant difference to the financial outcomes if they commit to more informed management of their remaining longevity - regardless of whether they are pre or post 'retirement".
It's not only an individual opportunity. The government would reap a considerable longer term benefit from more productive and healthy elders, which would result from better informed people supported by adequate and inexpensive longevity planning. Financial advisers and super funds would also benefit and should be encouraged to become active supporters.. We need a National Longevity Strategy to properly co-ordinate, design and oversee these changes affecting the fast growing older community, not just doing it piecemeal as at present. See nationallongevitystrategy.au for some ideas.

There is something inequitable about the Aged Care fee model.

I have no problems with a "user pays" and "wealthy pay" model for the expenses that will be incurred by the Aged Care facility that will no longer be paid for by the old person. I am thinking of food, rent (or return on the old home), rates, electricity, etc.

But I have a huge problem with other expenses being paid for by the "old, so called wealthy person"

Consider two families.

Family one's old person has multiple hospitalisations, many of which end up with the old person in intensive care, costing many thousands of dollars, multiple times. Who pays for these expenses, maybe several hundreds of thousands of dollars in total? Answer, medicare (ie the tax system, not the patient)

Family two's old person suffers from dementia. A long term illness not requiring hospital care (which would be paid for by the taxpayer) but requiring constant care in an Aged Care facility. The patient makes a significant contribution to those costs

My concern, and my conclusion of "inequity" is that one family's estate is diminished while the other's isn't.

Surely, there must be an equitable way of making both family's estate (ultimately, though indirectly - the old person actually pays).

Inheritances should not come down to "luck" of what disease finally takes the old person

The government is not concerned with inheritances! As for luck, good and bad, well that's life! There is inequity everywhere and limited resources to go around. Is there heinous wastage elsewhere? Yes! But politics is a dirty game with dubious national motivation and a huge amount of self interest!

But why create inequity when the simple introduction of a formal death tax would fix the inequity.
A flat $5000 death tax paid when everyone dies could finance the aged care. Or perhaps a 0.25% of all assets past on death.
It would be like an insurance policy on death, paid after death instead of during your life time