Aged care reform: self-funded retirees and part-pensioners to pay more as government aims to shore up the system

Self-funded retirees and many part pensioners will pay more for their aged care under the government’s reform package, endorsed by the opposition and announced on Thursday.

The changes involve a $930 million extra spend over four years, and $12.6 billion savings over 11 years.

The package, which the government says is the biggest reform in 30 years, will shift the system further towards home care, so people can stay at home as long as possible.

A “no worse off” principle will protect those presently receiving aged care from the higher imposts. The treatment of the family home won’t change.

There will be a $4.3 billion investment for Support at Home, starting on July 1 next year.

Under the new arrangements, the government will pay 100% of clinical care services, with recipients contributing to services such as help with showering and taking medications, as well as to everyday living costs such as shopping and meal preparation.

How much a person contributes will be based on the age pension means test and their personal circumstances, including their level of need and their income and assets.

A lifetime contribution cap will apply across the aged care system. This will mean no one will contribute more than $130,000 to their non-clinical care costs, regardless of their means or the length of their care. This exceeds the current cap of about $78,000.

For every dollar full pensioners contribute, the government will contribute on average $12.90. For part pensioners the government will contribute on average $6.10 for every dollar.

For self-funded retirees the government will contribute $1.60 on average for those with a Commonwealth Seniors Health Card and $1.20 on average for those without the card.

There will be a higher maximum room price that will be indexed.

Providers will be able to retain a portion of the refundable accommodation deposit (2% a year for each of five years), rather than paying it all back when the resident dies or leaves.

Under the new consumer contributions, half of new residents won’t contribute more, including all “fully funded” residents. These are defined as full pensioners with limited assets.

Seven in ten full pensioners and one in ten part pensioners will not contribute more.

The government introduced legislation for the new scheme on Thursday.