Aged Care Amendment (Residential Care) Bill 2006
THE INQUIRY
1.1
The Aged Care Amendment (Residential Care) Bill 2006 (the Bill) was
introduced into the Senate on 13 September 2006. On 14 September 2006, the Senate, on the recommendation of the Selection of Bills Committee (Report No.10 of
2006), referred the Bill to the Community Affairs Committee (the committee) for
report.
1.2
The committee received four submissions relating to the Bill and these
are listed at Appendix 1.The committee considered the Bill at a public hearing in
Canberra on 4 October 2006. Details of the public hearing are
referred to in Appendix 2. The submissions and Hansard transcript of evidence
may be accessed through the committee’s website at https://www.aph.gov.au/senate_ca
THE BILL
1.3
The purpose of the Bill is to amend the Aged Care Act 1997 (the
Act) to harmonise aged care and pension assets tests in relation to income
streams and asset disposals (gifts).[1]
1.4
The Bill also amends the Act to allow the Secretary of the Department of
Health and Ageing (the secretary) to delegate to specific members of Aged Care
Assessment Teams (ACATs) the powers under the Residential Care Subsidy
Principles 1997, to increase the maximum number of days allowed for a care
recipient to receive residential respite care. The purpose of this change is to
remove any uncertainty about the role of ACATs in this process.
1.5
Details of the financial impact of each of these amendments can be found
at Appendix 3.
BACKGROUND
Harmonising aged care and pension
assets tests
1.6
The aged care assets assessment is undertaken to determine whether a
person is eligible for subsidised aged care accommodation costs. The assessment
also helps people to work out the maximum amount of an accommodation bond, or
the maximum daily accrual amount of an accommodation charge, that they may be
charged for entry to a residential care service. The Department of Health and
Ageing (the department) explains the process as follows:
Aged care assets assessments are conducted by Centrelink (or in
the case of Veterans, the Department of Veterans’ Affairs) and [are] only
necessary upon entry to care or when moving to another aged care home. To
assist applicants, forms are provided to the prospective resident by Aged Care
Assessment Teams when they are assessed as eligible for admission to a
Australian Government funded residential aged care service. Around 90% of aged
care residents are pensioners and therefore most people will already have had
their assets assessed for pension purposes before they undergo an aged care
assets assessment.
The assets assessment for entry to residential care is not
compulsory unless a person is seeking government assistance with their
accommodation costs.
People who qualify for government assistance with their
residential aged care accommodation costs (Concessional Residents) must
receive an Australian Government means-tested pension, must either have not
owned a home in the past two years or have a home that is protected and have
less than (currently) $32 000 in assets.
Additionally, a small number of people can be assisted as
Assisted Residents. In this case the resident must receive an Australian
Government means-tested pension have not owned a home in the past two years or
have a home that is protected and have (currently) at least $32 001 but not
more than $51 500 in assets.[2]
1.7
The Review of Pricing Arrangements in Residential Aged Care (the Hogan
Report) was released in April 2004. Option 3 of the Hogan Report proposed that:
In the longer term, the aged care means testing arrangements
should be brought into line with those that obtain for the age pension.
Moreover, in determining an individual's income and assets the
same gifting and deeming rules as obtain for the age pension should apply.[3]
1.8
Schedule 1 to the Bill aims to implement Option 3 of the Hogan Report by
enabling gifts and income streams to be treated for the purposes of the Act in
the same way as they are treated for the pension assets test under the Social
Security Act 1991 and the Veterans’ Entitlements Act 1986.
1.9
This initiative was announced in the 2006-07
Budget on 9 May 2006, and is expected to lead to net savings of $71.7
million over five years.[4]
These savings are largely attributable to savings of costs administered by the
Department of Health and Ageing. The department explained the benefits of the
new arrangements in a fact sheet issued soon after the Budget announcement:
Entry to aged care homes for prospective residents will be made
less complex by making assets testing arrangements for the pension and aged
care the same. Older Australians who can afford it will make a fairer
contribution to the cost of residential aged care services they receive.[5]
Gifts
1.10
Under current arrangements, the total value of gifts (assets that have
been given away) is excluded when calculating the value of assets under the
aged care assets assessment.
1.11
With the proposed amendments, people who enter residential aged care or
move to another aged care home from 1 January 2007 and who seek an assets
assessment through Centrelink or the Department of Veterans’ Affairs will have
any gifts they have made from 10 May 2006 (the day after Budget
night) that exceed the allowable amounts included in that assessment. The
allowable amounts are those that currently apply for the pension asset test as
well as for pension and aged care income assessment purposes – $10 000 in any
financial year or $30 000 over five years.[6]
1.12
The department notes that:
The effect of this measure will be that a person will not be able
to give away assets to qualify for government assistance with their aged care
accommodation costs. These changes do not prevent people from giving away their
assets.[7]
1.13
The intent of nominating 10 May 2006 as the commencement date for the
proposed new arrangements in relation to gifts is to prevent divestment of
assets following the Budget announcement.[8]
Income streams
1.14
Income streams can be purchased through an investment of capital. Currently,
the money used to buy the income stream is exempted from the aged care assets
assessment.[9]
1.15
Changes to pension arrangements announced by the Government in
February 2004 mean that market linked income streams purchased from
20 September 2004 that satisfy certain conditions are granted
‘complying income stream’ status, qualifying them for exemption from the
pension assets test. At the same time, the then 100% assets test exemption for
purchased complying income streams was reduced to 50% for products purchased on
or after 20 September 2004. Complying income streams purchased before
that date continue to be fully exempt from the assets test.[10]
1.16
With the proposed amendments, from 1 January 2007 the exemption that applies to complying income streams for the pension assets test
will also apply to the aged care assets test. That
is, a 50% assets test exemption will apply for complying products purchased on
or after 20 September 2004, and a 100% exemption will apply for complying
products purchased prior to that date.
Delegation to ACATs
1.17
The role of ACATs is to assess frail older Australians with complex care
needs and assist them to access the most appropriate care services available.
The Secretary currently delegates to designated ACAT members the power to
approve a person to receive aged care services.
1.18
ACAT members also currently assess the merits of applications for
respite care extensions, but they do not have the delegated power to formally
approve an extension. Currently, residential respite care is limited to 63 days
per financial year for a care recipient. However the secretary may increase the
maximum number of days allowed by periods of 21 days where there is a need to
do so, such as carer stress or absence, or because of the severity of the care
recipient’s condition. The proposed amendment to the Act will give ACAT delegates
the power to formally approve respite care extensions in addition to assessing
applications for extension.[11]
1.19
Age related growth indexation for the Aged Care Assessment Programme was
first introduced in the 1998-99 Budget in recognition of the ageing of the
population and associated increasing demand for assessment services. The
Government announced in the 2006-07 Budget that $20.1 million over four years will
be provided to continue the age related growth funding for Aged Care Assessment
Teams.[12]
ISSUES
Harmonising aged care and pension
assets tests
1.20
All submissions supported the proposed alignment of the aged care assets
assessment with the current pension assets assessments in relation to income
streams and asset disposals (gifts).
1.21
Catholic Health Australia (CHA) noted that: ‘CHA has previously
advocated for this to occur and is pleased to support the Bill accordingly.’[13]
1.22
The Committee sought clarification on whether gifts made to a disability
trust (of up to $500,000 in total from an individual or individuals, per trust)
would be taken into consideration in aged care assets assessments. Under the
current pension assets assessment provisions, certain transfers of assets to
special disability trusts can be taken not to be disposals of the assets.
1.23
The department responded that such transfers are exempt as long as they
satisfy the provisions of section 1209Z of the Social Security Act 1991. An
asset that has been disposed of, and which is not included as an asset under
the pension assets test, will not be included as an asset under the aged care
assets test.[14]
Access to residential respite care
1.24
All submissions supported the proposed delegation of power to ACATs to allow
them to formally approve respite care extensions. The department submitted that
flexibility to increase the maximum number of residential respite care days is:
‘...necessary to ensure that carers are supported in their caring role to the
best extent possible’.[15]
They further noted that: ‘the proposed amendment to the
Act...will make the process for people needing extra respite care simpler and
quicker and will reduce red tape’.[16]
1.25
The National Seniors Association (National Seniors) stated that:
Given the intent is to improve the capacity of the Aged Care
Assessment Teams to assess the care needs of frail older people and extend the
maximum number of days of respite care for those families who are in need,
National Seniors supports this legislative change.[17]
1.26
The Australian Medical Association (AMA) expressed support for:
...any changes that improve the flexibility with which Aged Care
Assessment Teams operate. Delegating ACATs with the power to formally approve
respite extensions in addition to assessing applications for extensions
achieves that.[18]
However, the AMA cautioned that ‘...the availability of residential
aged care beds for respite may be a limiting factor and needs to be considered’.[19]
Recommendation
1.27
The Committee reports to the Senate that it has considered the
Aged Care Amendment (Residential Care) Bill 2006 and recommends that the Bill
be passed without amendment.
Senator Gary Humphries
Chairman
October 2006
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