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  • The Aged Care (Living Longer Living Better) Act 2013 (Cth) introduced major reforms to residential aged care
  • Residents who entered residential care before 1 July 2014 continue to fall under the old regime, modified by some new principles

Major reforms to residential aged care began on 1 July 2014 under the Aged Care (Living Longer Living Better) Act 2013 (Cth) (No.76 of 2013), and associated regulations (or “principles”), notably the Fees and Payments Principles 2014 (No.2). This new regime applies to all residents entering into permanent residential aged care on or after 1 July 2014. For all residents who moved into care before then, the old regime under the Aged Care Act 1997 (Cth) continues to apply, modified by some of the new principles. This article will outline the changes brought by the new regime by distinguishing between accommodation costs and care costs to residents.

Admission to a nursing home (or residential care, as it is now called), requires an assessment by the Aged Care Assessment Team (ACAT) that a person needs 24/7 care. There is a detailed score sheet assessing various conditions and behaviours called an Aged Care Funding Instrument (ACFI). This determines the care provider’s entitlement to, among other things, a basic subsidy amount (BSA) and to any primary supplement amounts for special conditions in respect of the resident.

The new regime, in some superficial ways, simplifies – but for the most part complicates – matters for a resident moving into permanent residential aged care on or after 1 July 2014. On the other hand, in adding an assets test, it is arguably more equitable to taxpayers in much the same way as income tax came to be supplemented by capital gains tax. For similar reasons, it is likely that, over time, the exemption for the value of the family home will diminish.

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