The ‘just in case’ plan that’s costing self-funded retirees $1K a month
Those who signed up to home packages before they needed high levels of care are paying more in fees than the cost of the services they use.
Paying $1000 a month for a weekly house clean and someone to manage this service is turning out to be an expensive way to safeguard against future care needs for some.
It is the situation people can find themselves in if they pay the maximum income-tested care fee towards a government-subsidised home care package, but are yet to use the budget as planned.
Home care packages are part of the government’s answer to keeping ageing people in their own home. The funds provided range from $9180 a year for a level one package to $53,268 for level four, depending on one’s care needs.
The packages are income-tested, with part-pensioners paying no more than $6114 a year and self-funded retirees paying no more than $12,229 a year as an income tested fee.
There is a basic care fee attached to home care packages – ranging from $3828 to $4274 a year depending on the package – but very few providers collect this fee on behalf of the government.
An individual’s contribution may not look like much if they are getting a high-level package and are using the allocated funds to buy sufficient equipment and services to keep them at home. But anyone paying high fees and not using the package funds may be better off paying privately for one or two services.
Older Australians apply for a package through the government’s My Age Care aged care gateway before they are assessed by the Aged Care Assessment Team (ACAT) as being eligible for government-subsidised care.
For a while it was thought that the government was handing out free buckets of money to individuals to spend as they wish on their care needs as a way of keeping them living in their home as independently as possible.
It is still a shock to some that when a home care package is allocated or assigned to an individual, they are asked to declare their income so the government can determine an appropriate contribution.
Alison* was assigned a level three package 12 months ago following an assessment of care needs a year earlier. A debilitating illness means she will eventually need people to assist with dressing and showering. At the moment, her husband John* is managing almost everything. Pre-prepared meals are delivered, they visit a podiatrist every six weeks and have a fortnightly cleaner. The need for personal care is minimal.
As self-funded retirees they are contributing about $12,000 a year towards a package worth about $35,000 a year before admin and case management fees. Because they use so few services, they have accumulated about $11,000 in their package to use at some point in the future.
Their current services are costing about $2500 a year, which means they are paying more for an income-tested fee than for the help they need. Meanwhile, they have a growing unspent balance, but can’t foresee when they are going to use it.
Their rationale for seeking an ACAT at the time was they wanted to make sure they were in the system for when they did need help.
Alison and John are not the only ones with unspent package funds.
According to aged care consultant StewartBrown, unspent funds for home care package recipients have been continuously rising and now average $10,736 per client.
In aggregate across the sector, this represents more than $2.1 billion of funds that have not been utilised, says StewartBrown senior partner Grant Corderoy.
The growing pool of unused funds coincides with a dramatic drop in the national queue for home care packages and a continuing consultation process around the future of aged care funding and delivery at home.
There are about 220,000 home care packages on issue, with about 40,000 people either waiting to be assigned any package or the package level they were assessed for.
This is a big improvement from the national queue of more than 100,000 just a few years ago, reducing the fear that people will be forced into residential aged care before they receive any funding for help at home. There is also still the issue of too few workers to provide the help needed to keep someone at home.
Changes in system
The assessments for and delivery of services for home help are under review, with a new Support at Home program combining Commonwealth Home Support Program and home care package program funding now scheduled for July 2024.
Corderoy says that as well as changes to the funding for aged care services, improvements to the existing system will come from changes to the assessment process and the level of packages available.
One suggestion is for up to 12 levels of packages, more closely aligned with what an individual needs. The big jump between the existing package levels isn’t working, nor is the existing assessment process, he says.
A person on a level two package might need a bit more than the two hours a week of help currently covered, but then struggle to spend all the funds available under a level three package if they are reassessed as needing more funding. There is no mechanism to drop down a package level if the funding is no longer required or not being used.
Just as there are people unable to find services to spend their assigned packages on, there are plenty of people who need amounts much greater than the maximum level four package of $53,268 a year to keep them at home.
One notable disease that can require a substantial amount of support is dementia, which affects about one in 15 Australians aged above 65 and growing.
Government funding for the services required for everyone will always be welcome. Less so is the need to contribute towards costs, especially when they can’t spend the money allocated to them.
The good news for Alison and John will come if they decide to return the package (even though they lose the income-tested care fees already paid) and pay privately for the few services they currently need knowing the package will be quickly reactivated down the track when they need it.
*Not their real names.
This article was first published by Third Age Matters director Bina Brown.
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