NEWS + VIEWS – 29/11/2024
MARKETS
Share markets have been generally resilient since the US election. The tariffs on China, Canada and Mexico announced by President-elect Trump gave pause for investor thought. Time will tell whether this is an opening bid intended to extract concessions from each of these countries with subsequent negotiations resulting in less severe actions. A muted reaction from share and bond markets (apart from US car and beer makers with Mexican operations) suggests that investors are taking this view of the announcement.
Domestically, most pundits have abandoned the hope of an interest rate cut before May next year. The main cause is rampant government spending at both Federal and State levels putting upward pressure on inflation. From an investment perspective, interest bearing securities have regained some of their attractiveness as a result.
GOVERNMENT SUPPORT AT HOME PROGRAM CHANGES
In a recent edition of the News and Views, we discussed the changes to Residential Aged Care. As part of the overall changes to Aged Care government assistance, a new ‘Support at Home’ approach will take effect from 1 July 2025.
The thrust of the changes is to encourage the ageing population to stay at home or defer entry into residential aged care. An ageing population means that those with the means will be asked to pay more. The costs of providing service ‘at home’ are probably less than those where a residence and full-time care is required. Finally, the government claims that the changes will allow waiting times to be reduced.
The key features of the Support at Home changes are:
Recipients of supplied services will pay a set percentage of overall costs depending on the type of service (clinical, independence and everyday living) and their means tested status. Those with more assets or income will pay more although there will be a $130,000 lifetime cap.A ‘no-worse off’ rule will be applied to existing recipients.
Annual budgets will be determined by eight classifications for ongoing care and two classifications for restorative or end of life care.
A one-off Technology and Home Modification Scheme will be introduced.
Shortened waiting time to three months from 1 July 2027 from the current 12 months for the high care 3 and 4 level packages.
Some key challenges to increasing support at home is whether there are sufficient knowledge and skills in the community. That is not just a volume challenge but also the types of conditions or ailments needing to be supported will change. The rapidly increasing NDIS system is competing for many of these same skills.
Fees
There will be a move from the current basic daily care fee plus a means tested fee to paying a percentage of the cost of the service category:
Clinical care such as nursing and occupational therapy will be fully covered by the government.
Depending on their financial situation, recipients will be expected to contribute to the cost of the two categories: Independence, which includes personal care and transport, along with Everyday living that includes services such as cleaning, meal delivery, home maintenance.
The contribution to services has not been fully detailed but will be determined by Age Pension status. That is, full Age Pension recipients will pay the least, part pensioners will pay somewhat more and self-funded retirees the most. Like the Age Pension, both an assets and income test will be applied (previously only an income test was applied to Home Care Packages).
Self-funded retirees eligible for the Commonwealth Seniors Health Care Card (CSHC) will pay less than those not eligible.
Source: Colonial First State
Funding classification system
Annual budgets will be determined under eight classification levels reflecting a recipient’s care needs. The annual budget for the classifications will range from $11,000 p.a. to $78,000 p.a. The highest care classification funding is higher as the current four levels have annual funding from $10,588 to $61,440.
Quarterly budgets
Recipients will receive a quarterly budget where unspent amounts up to 10% or $1,000 can be carried over to the next quarter.
Lifetime cap on fees
There will be a lifetime cap of $130,000 on fees paid. Fees paid under the Home Care Package can be ‘carried over’ to the Residential Aged Care cap if the person subsequently moves to Residential Aged Care.
No worse off
Existing Home Care Package recipients and those on the National Priority waiting list will transition to the new arrangement from 1 July 2025. The ‘cut off’ date is 12 September 2024 and those assessed as eligible for a Home Care Package on that date will also be subject to the ‘no worse off’ principle.
Other short-term support
An Assistive Technology and Home Modification Scheme will be additional to the main Support at Home Package. Home modifications up to $15,000 will be available.
Up to 12 weeks of restorative care to regain function, strength and capability will be available.
An End of Life care payment of up to $25,000 over a 16 week period will assist those with three months or less to live to remain at home.
Gerard O’Shaughnessy
P 0423 771 330
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