The current advice landscape for aged care | Accurium

Technical article

Aged care demand is growing and it is important the current rules remain appropriate and sustainable. The recently released 2016-17 Report on the Operation of the Aged Care Act 1997 (the Act) highlights that the ageing population and increasing number of people with dementia are two key factors driving the demand. The report also explores the current state of the three main types of care that the Government provides to assist older Australians. In this month’s Challenger Tech article, we discuss the current state of each of these services to assist advisers navigating the aged care needs of their clients.

For the purposes of this article, references are from the 2016-17 Report on the Operation of the Aged Care Act 1997 unless otherwise noted.

Aged care demand

In the report, the Minister for Aged Care, the Hon Ken Wyatt AM MP states ‘Our aged population is growing at an unprecedented rate.’ As at 30 June 2017, there were 499,000 Australians aged 85 and over. In ten years’ time there are projected to be 672,000 aged 85 and over, an increase of 35%. The number of people aged 65 and over is also expected to increase from 3.8 million to 5.2 million by 2027. This projected growth in the ageing population suggests a substantial increase over the coming years to the 1.3 million current consumers of aged care services. In 2017, there were an estimated 365,100 Australians with dementia, nearly half of whom were aged 85 and over. The number of people with dementia is anticipated to grow to around 900,000 by 2050. This increase in dementia cases is also adding to the growing demand for aged care. At 30 June 2017, half of all residential aged care residents with an Aged Care Funding Instrument (ACFI) assessment had a diagnosis of dementia.

In financial year 2016-17 the Australian Government spent $17.1 billion on aged care, of which 70% of expenditure was for residential aged care. But whilst the traditional image of aged care is often associated with residential care, Wyatt said that ‘today the focus is on supporting people to stay in their own homes for as long as possible. Consumers have made it clear that this is what they want, and it also makes good economic sense’. The two main forms of Government subsidised home care are the Commonwealth Home Support Program (CHSP), and home care packages.

Commonwealth Home Support Program

Through financial year 2016-17, 722,838 people received services through the Commonwealth Home Support Program (CHSP), and an additional 74,475 through the Western Australian Home and Community Care (HACC) program. Given the considerable number of people receiving this service, clients and their loved ones could benefit from advice in this area including:

  • Providing information regarding what services are available under the CHSP
  • Guiding clients to access the CHSP
  • Advising clients with regards to the options available as their care needs change.

The CHSP is entry-level home support with a range of services to assist people aged 65 and over1 to live independently at home and in the community. The CHSP is not governed by the Act. The operational and administrative requirements for service providers are detailed in the CHSP Program Manual 2017 and the West Australian HACC is governed by the HACC Review Agreement 2007. Types of services which are funded through the CHSP include:

  • Meals and other food services
  • Transport
  • Personal care
  • Home maintenance and modifications
  • Nursing.

To access the CHSP clients must have an assessment by a Regional Assessment Service (RAS). Clients can contact My Aged Care on 1800 200 422 to organise an assessment. The My Aged Care staff will ask questions about the client’s current needs and circumstances to determine eligibility for the CHSP and organise an assessment if required.

For CHSP clients who need a great level of care but still want to stay in their home, then a home care package may be the next appropriate step. This form of care is governed by the Act, which sets out the requirements for providers and consumers, such as the approval process for care recipients and the fees and costs they may pay.

Home care packages

Home care packages are a more holistic form of care than the CHSP. They can be tailored to meet clients’ personal needs with the help of case management, known as Consumer Directed Care (CDC). Services which can be chosen by the client include personal care, support services and clinical services.

Access to a home care package is by approval from an Aged Care Assessment Team (ACAT), or Aged Care Assessment Service (ACAS) in Victoria, which like a RAS assessment can be organised by contacting My Aged Care. An ACAT/ACAS assessment can approve an individual for Level 1 (basic care needs) up to Level 4 (high-level care needs).

With the growth in aged care demand and the Government support for care at home, home care packages saw significant growth and change through 2016-17. The number of home care consumers as at 30 June 2017 was 71,423, an increase of 7,354 or 11.5% from 30 June 2016, with the average age of entry being 80.2 years (unchanged from 2015-16). Furthermore, the number of operational providers of home care grew during 2016-17 from 496 to 702, representing a 41.5% increase, of which the majority were not-for-profit organisations (81.5%).

Further to the 1 July 2014 aged care reforms, on 27 February 2017 the Australian Government introduced the Increasing Choice in Home Care reforms. This included key evolutions for home care advice such as the national prioritisation system and the portability of home care packages.

As at 30 September 2017 there were 101,5082 ACAT/ACAS approved persons waiting in the queue for either their first home care package or on an interim package. An interim package is the term used for recipients who are receiving a package on a lower level than they are approved for and therefore remain in the queue waiting for their approved level. 40.2%2 of those in the queue at 30 September 2017 were on an interim package. Whilst the statistics regarding the length of the queue are not available, Mr Wyatt commented in September 2017 that ‘across the nation it’s 12 months plus’3 . Clients can check their My Aged Care portal or call My Aged Care to check their individual expected wait time.

With the changes to the portability of home care packages, exit fees have become a consideration for home care recipients when they leave a home care package. Care recipients are entitled to have their portion of any unspent funds refunded minus exit fees. The average exit fee providers’ charge is $2792 . Each provider’s maximum exit fee is required to be available on the My Aged Care website and the fee must be stated in a client’s care agreement.

Additionally, after the recent changes the report confirms the current fees which a home care recipient may be required to pay:

  • Basic daily fee – the maximum is 17.5% of the single rate of the base Age Pension.
  • Income-tested care fee – paid by those assessed as having sufficient income to contribute to the cost of their care.

For more information regarding these fees please see the Challenger Aged Care Guide.

Strategies to reduce a client’s assessable income can help to reduce their income-tested care fee and improve cash flow, such as:

  • Investment in Challenger CarePlus
  • Investment bond held in a trust
  • Investing in exempt assets such as funeral bonds
  • Gifting within the allowable limits.

For more information regarding Challenger CarePlus please refer to the Challenger CarePlus Technical Guide.

Permanent residential aged care

The report states ‘as age increases, the likelihood of needing care increases’. For clients who are unable to receive the level of care they need from a home care package, the Government subsidises permanent residential aged care. This includes services such as personal-care services (help with daily activities such as dressing, eating and bathing), accommodation services and support services (cleaning, laundry and meals). Advisers can guide clients through their entry into permanent residential aged care by understanding the process and assisting with financial strategies to manage their cash flow.

Access to permanent residential aged care, like for home care packages, is through approval from an ACAT/ACAS assessment, which can be organised by contacting My Aged Care on 1800 200 422.

At 30 June 2017 there were 178,713 people receiving permanent residential aged care, an increase of 2,724 from 30 June 2016 (1.5%), which is a significantly lower increase than the 11.5% increase in home care package recipients. The make-up of providers included 55.9% of operational places in not-for-profit organisations, which differed significantly from home care (81.5%).

The average resident is 82 years for men and 84.6 years for women and the average length of stay in aged care is 2.9 years, which may be useful when determining a planning timeframe for aged care clients. However, this is an average and previous statistics have shown that about one in five residents stay in permanent residential care for five years or more4.

Additionally, the report confirms the Government’s current structure of fees which care recipients may be required to pay:

  • Basic daily fee – All residents can be asked to pay this fee which is used to cover costs such as cleaning, maintenance and laundry.
  • Means-tested care fee – Calculated based on an assessment of the resident’s income and assets.
  • Extra and additional service fees – an itemised account must be given to the client once the service has been provided: 
  • Extra – providers which have been approved to provide extra services can charge residents for higher than average services such as accommodation, food and recreational services.
  • Additional – fees charged for services which a resident has asked the provider to provide and must be agreed with the resident before services are delivered.
  • Accommodation payments – for the cost of accommodation which can be paid as a lump sum, a daily amount, or a combination of both.

For more information regarding these fees please see the Challenger Aged Care Guide.

On top of guiding clients through application and entry into permanent residential aged care, strategies to reduce a client’s assessable assets and assessable income can help to reduce their means-tested care fee, improve their cash flow and achieve estate planning outcomes.

On top of guiding clients through application and entry into permanent residential aged care, strategies to reduce a client’s assessable assets and assessable income can help to reduce their means-tested care fee, improve their cash flow and achieve estate planning outcomes.

The Challenger Aged Care Calculator can help advisers illustrate cashflow and estate planning outcomes for various aged care situations. For assistance with aged care case studies or using the Challenger Aged Care Calculator, please contact your Challenger Business Development Manager.

As highlighted in this article, the demand for aged services is growing. The two key drivers relate to the ageing population and the prevalence of dementia. With many advisers helping their clients with their retirement planning, the need to assist them or their parents with aged care services is a real possibility. Being able to articulate the appropriate services available and assisting clients with managing cash flow will help advisers effectively guide clients through their care journey.

1Also available for those aged 50 or over who are either Aboriginal and Torres Strait Islanders, or on a low income and who are homeless or at risk of homelessness as a result of experiencing housing stress or not having secure accommodation.

2Home Care Packages Program Data Report 1 July – 30 September 2017

3Interview on 5AA Adelaide, Mornings with Leon Byner – 15 September 2017

4Australian Institute of Health and Welfare, Residential Aged Care and Home Care 2014-15


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