Overhaul of Aged Care

There now are five working Australians for every person aged over 65. By 2050 that number is set to fall to 2.7 workers, with an estimated 3.5 million people depending on aged care services. The cost of aged care is forecast to rise from about $13 billion to $50 billion a year by 2050

Prime Minister Julia Gillard announced a $3.7b overhaul of aged care aimed at avoiding the fire sale of the family homes. From July 1, 2014 home care will be means-tested but will not take into account the value of the family home and under the plan, some wealthier Australians will have to contribute more for the care they receive. Ms Gillard said:

"For the first time in aged care, fairness will also get a look-in. For too long, pensioners have had to subsidise those who are much better off than themselves,under these changes - which I emphasise will only apply to new people entering care from 1st July 2014 - ability to pay will be taken into account.

"Now, this recognises a simple reality that those who can support themselves and contribute a bit more should, and that we must look after the needs of those who can't."

"To make it easier for older Australians to stay in their home and receive the care they need, we will double home care packages from $59,876 to almost $100,000," she said.

"We will provide new tailored care packages to people receiving home care, and new funding for dementia care, and we will cap costs so that full pensioners pay no more than a basic fee, and others have caps as well, depending on their ability to pay."

"Instead of a bond up to $2.6 million and bearing no resemblance to the actual cost of accommodation, you will be able to pay, through a lump sum or a periodic payment or a combination of both, whatever you choose," she said.

"People will also have long to make that choice, with a cooling-off period introduced so that they can take up their aged care place and then think about the best way to pay.

"There will also be a cap on care costs with no-one paying more than $25,000 a year, and no-one paying more than $60,000 over a lifetime."

The way residential care is means tested will not change in that the family home will not be included if a spouse is still living there.