An agreement has been reached between the federal government and the Coalition to reform aged care, introducing new requirements for many elderly individuals to contribute more towards their care.

Under these reforms, new entrants will be required to make larger means-tested contributions. However, a “no worse off” principle ensures that the contributions of those already in the aged care system will remain unchanged.

For residential aged care, new entrants will pay a supplement if their assets exceed $238,000 or their annual income surpasses $95,400, or a combination of both. The treatment of the family home will remain unchanged.

The cost of rooms in residential facilities will increase, allowing providers to charge up to $750,000 for a room without special approval, an increase of $200,000 from the current limit. This price will also be indexed over time.

Additionally, residential aged care providers will be permitted to retain 2% of accommodation deposits from residents per year for five years, addressing the issue of nearly half of providers currently incurring losses from accommodation.

A new Support at Home program will commence in July next year, aiming to benefit hundreds of thousands more Australians over the next decade. This program will offer support for nursing care, occupational therapy, assistance with daily activities like showering and taking medications, and help with everyday tasks such as cleaning and gardening. The goal is to enable more people to remain in their homes for longer.

These packages will also be subject to greater means testing, varying based on individual circumstances. Full pensioners will contribute 5% of the cost of their supports and 17.5% of their everyday living costs. Self-funded retirees will pay 80% of their everyday living costs and half of the costs that support their independence. All residents will have their clinical care costs fully covered.

The government also plans to increase the lifetime cap on non-clinical care costs from approximately $80,000 to $130,000 across home and residential care.

Aged Care Minister Anika Wells stated that the new scheme would support 300,000 more Australians to receive care at home and reduce wait times for entry into the scheme. The reforms have already garnered support from the Coalition, following months of negotiations.

The federal government anticipates saving $12.6 billion over 11 years from these reforms, which include a “no worse off principle” ensuring no current aged care resident will have to make greater contributions. The government will remain the primary funder of aged care, contributing $3.30 for every $1 from residential care recipients and $7.80 for every $1 from home care recipients.

Overall, the reforms will reduce the government’s share of residential care costs by 3% to 73% and home care costs by 6% to 89%. Despite the savings, the reforms will require an additional $930 million in spending over the next four years to implement new laws protecting the rights of older Australians, including stronger investigative powers, a new complaints commissioner, and greater accountability for providers and leadership.

Prime Minister Anthony Albanese described the reforms as the “greatest improvement to aged care in 30 years,” emphasizing the importance of caring for the generation that cared for us. Shadow Minister for Aged Care Anne Ruston welcomed the bill but expressed disappointment over the lack of transparency during the negotiation process.

The royal commission into aged care had recommended an Aged Care Act over three years ago, and the federal government has already acted on several other recommendations, including requiring all facilities to have a registered nurse on duty at all times and improving provider regulations.

The reforms aim to slow the rising cost of aged care from 5.7% annually to 5.2%. The Older Persons Advocacy Network welcomed the reform deal, highlighting its potential to enhance quality standards, increase protections for older people, and create a financially sustainable aged care system for future generations.