2GB Radio Alan Jones Breakfast Show with Chris Smith

Program:

2GB Alan Jones Breakfast Show

Interviewer:

Chris Smith

E & OE

SMITH:

Mitch Fifield is the federal Assistant Minister for Social Services. He said recently, “we want more choice for consumers, we want more choice for providers, and people who can make an appropriate contribution to their care to do so. But there’s also got to be an appropriate safety net.” Now as I understand it, the changes in a nutshell cover the following areas: one, there’s a new government website and call centre designed to increase transparency in the sector. It includes a fee estimator to give people an idea of what they might have to pay. Two, there are new means testing arrangements for people entering aged care that are designed to ensure that people who have the capacity to contribute to the cost of their care can do so. Three, there are more flexible accommodation arrangements for residents of aged. Four, the distinction between high and low care has been removed. And five, there are more home care packages to help people stay in their homes for longer. Mitch Fifield is on the line right now. Assistant Minister, welcome to the program this morning.

FIFIELD:

Good morning Chris.

SMITH:

Thank you for your time. Can you give us a bit of background – how many Australians are actually in residential aged care?

FIFIELD:

Chris it’s in the hundreds of thousands. But I think something that surprises people is that only about five per cent of Australians over the age of 65 are actually in a residential aged care setting. Most Australians who receive aged care support do so in their homes. And I think that’s a trend that’s only going to increase, because Australians understandably want to stay at home for as long as they can. And that’s one of the reasons why, over the next ten years, we’re going to be increasing the number of home care packages by 80,000.

SMITH:

So on top of that you have some people receiving care in their own homes. How many people are taking that option up?

FIFIELD:

It’s about 25% of the population over the age of 65.

SMITH:

Am I right in saying that these changes are actually an initiative of the former Labor government, but they’re also changes that the Coalition broadly supports?

FIFIELD:

That’s right. These changes were legislated under the previous government in the middle of last year. And we support, in the broad, the direction of the changes because it’s important that people who do have the capacity, who do have the means, to make a contribution to their aged care do so. But as you mentioned in your introduction, it’s also very important that we have and maintain a social safety net, so that people of low means do get the care they need.

SMITH:

I can’t tell you how many calls I have had from people telling me they have no idea what’s about to hit them from today and are very confused about the changes. Now, just to put people’s minds at ease, those already in the system – before today – can continue with their current arrangements, right? No change?

FIFIELD:

Absolutely. For anyone who is already receiving aged care support, their arrangements will not change in any way, shape or form.

SMITH:

But you can transfer to the new system, and therefore have an option of being assessed under the new arrangements?

FIFIELD:

That’s right. If you’re currently receiving support in a residential care facility, if you leave that facility for 28 days, basically the clock restarts and you can enter under the new arrangements if you think that suits you better.

SMITH:

So this website that you’re encouraging people to go to, will be a lot more transparent for those who are thinking of entering the sector, especially for those whose sons and daughters and grandsons and granddaughters may have the responsibility of directing an elderly person into this care. They will be able to go to a website, at myagedcare.gov.au, and effectively see what the prices and the bonds and the packages that are available.

FIFIELD:

That’s right Chris. But also importantly, you can talk to a human being. It’s not just a web-based service.

SMITH:

Really?

FIFIELD:

That’s right. So you can call 1800 200 422.

SMITH:

They’re not in the Philippines or somewhere like that?

FIFIELD:

They’re in Box Hill, I visited them yesterday and they’re waiting for people’s calls. But you’re right, there is a fee estimator, where you can plug in your income, plug in your assets, and get a good idea of what you’ll be liable to pay.

SMITH:

So that’s the transparent change, that’s the easy bit. Let’s go to the hard part. Firstly, the means test for people entering residential aged care. What’s happened in the past on that front and what’s changing?

FIFIELD:

What’s happened in the past is that for aged care accommodation, previously only assets were considered. And for care, only income was considered. So you had a situation where you could have people with high assets, who mightn’t have been paying much for their care. And conversely, you could have people with high income who mightn’t have been paying much for their accommodation. So what this does is it brings together an assets test and an income test in a combined means test which should lead to fairer outcomes, fairer contributions, from people who have the means to do so.

SMITH:

So break that down for us, like a basic fee, for instance, is paid by all people who enter residential care. For some people this is the only fee they need to pay if they don’t have assets?

FIFIELD:

That’s right. So for people of low means, all they will have to pay is a basic daily fee which is set at 85% of the pension. They won’t have to pay the additional means tested care fee, which people on higher incomes need to do. And also people on low means won’t have to make a contribution to their accommodation. The Government will cover that.

SMITH:

And an accommodation payment – a payment for accommodation in an aged care facility – some people will have their accommodation costs paid in full, or in part?

FIFIELD:

That’s right – or in part. The next category of people are those of moderate means who will pay the basic daily fee. They won’t have to pay a means-tested care fee, but they will have to make some contribution to their accommodation costs. And then the next category of people, those on higher means, will pay the basic daily fee, they will pay a means-tested care fee, and they will have to cover all of the cost of their accommodation. So really people fall into three different categories – low means, medium means and high means.

SMITH:

Okay. So fees for extra or additional optional services – an extra payment residents can be asked to pay if a higher standard of accommodation is chosen or additional services such as hairdressing or pay TV in rooms are elected.

FIFIELD:

That’s right. So from today, those aged care homes with dedicated extra services – they’ll be required to publish those fees. People do have the option, if they want, to pay for those extras.

SMITH:

Let me analyse one aspect of it. I get the feeling that by saying to people that now we’re going to count how many assets you have and what’s out there in your name, that this could result in people staying in their homes longer.

FIFIELD:

Well the choice is there for people as to whether they want to stay in their home and receive home care, or if they want to go into a residential aged care setting. And importantly Chris we’re removing the distinction between high care and low care. Previously you could only pay a lump sum for low care. Now you’ll be able to pay a lump sum, a daily fee or a combination of the two for your residential accommodation. But I also think it’s really important that people know that the family home is exempt from the means test if its occupied by a spouse or what’s called a protected person. Someone who is dependent on you. And if it’s not occupied by a spouse or a protected person it will be included in the means test, but its value will be capped to about $154,000.

SMITH:

Can I just suggest that those three sentences you’ve just told us about are very important and they need to be sheeted home to people who don’t understand the changes. Can I ask you to say them again? Very important.

FIFIELD:

Absolutely. The family home is exempt from the means test if its occupied by what’s called a protected person and that means a spouse or a child who is dependent on you. And if it’s not occupied by a spouse or a protected person, it is included in the means test, but its value is capped at about $154,000.

SMITH:

Okay, fantastic. Now people in home care, they are going to be asked to pay one or both of a basic daily fee, and an income tested care fee. Explain that for us.

FIFIELD:

Sure, so with home care it’s a bit similar to residential care in that there is a basic daily fee which everyone will be expected to pay, but for home care that is set at 17.5 per cent of the age pension. But, in addition, you can be asked to pay an income tested care fee. So that’s a fee for people on higher means if your income is over about $24,000 a year. But at this point I should make clear that there is a cap on what you can be required to pay. So for part pensioners its $5,000 per year, and for self-funded retirees its $10,000 a year. And for both home care and residential care there is a lifetime cap of $60,000 a year. And, in fact, in residential care there is also an annual cap of $25,000 a year. So there are those important protections as well.

SMITH:

Okay. Having said all of that and hopefully we’ve explained most of what is changed from today for our listeners. But, I’ve got to say, I went through all of this in my 40’s. And I’m glad I did, because if I was in the boat right now where I had to make decisions about where to put Mum, where to put Dad etcetera, I’d be so confused I’d have to call in the accountant. You have to admit they are confusing. 

FIFIELD:

It is a complex system. There’s no doubt about that. And you’re right, anyone who has had to navigate the system for a family member or for themselves, it can be very daunting. I think it’s important for what is a big life decision for individuals and for families that they do get independent financial advice. Particularly to work out if they’re going into residential care, what’s the best way for them to pay? Is it a lump sum? Is it a daily fee? Or is it a combination of the two? Hopefully, the My Aged Care website and the call centre that we have, will make navigating the process a little bit easier. But it’s important for families to start to have a conversation about aged care before you get to that critical point where it becomes urgent. It’s much easier to have those discussions earlier than when the whole family, understandably, is in a period of stress.

SMITH:

I know people are reluctant to do that but you’re right. They need to have it earlier. The website www.myagedcare.gov.au and the number where you’re going to get a person, and the person is going to be Australian, they're actually going to be in the country, which is a great relief for people who don’t expect that - 1800 200 422. Mitch Fifield thank you very much for your time this morning.

FIFIELD:

Thanks Chris, good to talk.