Australia: federal government subsidises long term care by up to £22,000 a year

The federal government is largely responsible for funding residential care for old people in Australia, helped by a combination of flat user fees and income tested fees.

The government pays a subsidy to service providers—which include the charitable, religious, and private sectors—for each day a bed is occupied.

Care homes for elderly people (known as “aged care homes”) can receive up to $A66 000 (£25 300; $38 000; €39 000) a year to look after a high care resident, with the government paying a subsidy of up to $A57 500 and the elderly person making up the difference, in what are known as “basic daily care fees.”

Residents thus contribute about 13% of the cost of their accommodation and care from their private income, savings, and pension. Residents with greater needs attract a greater subsidy.

Those who do not have the full means tested pension may also have to pay an income tested fee, and high care residents with enough assets could also have to pay an accommodation charge.

Hence high care patients with sufficient assets and income can be asked to pay A$10 000 a year in basic daily care fees, $A4500 a year in accommodation charges, and an average of $A2000 a year in income tested fees.

This means that better off residents are expected to contribute a quarter of the cost of their accommodation and care. Hardship provisions exists to protect those who might experience financial difficulties in paying the fees.

Residents entering a home at a low level of care may be asked to pay an accommodation bond, with service providers able to draw down up to $A2600 a year from the amount for a maximum of five years.

If incoming residents leave a spouse, close family member, or long term carer in the family home, then the home is exempt from consideration as an asset.

User charges have also been introduced for community care services. Wherever possible, people are helped to stay in their homes under two main programmes funded by the federal government to provide a community alternative to frail elderly people whose needs would qualify them for entry to an aged care home.

“Community aged care packages” are funded by the government on a flat amount per person per day of about $A30. Clients are charged according to their means, and those on a full pension pay no more than 17.5% of their income.

The federal government's spending on care services (in homes and in the community) for elderly people—administered by the Department of Health and Ageing—is about $A5.4bn, which is about 0.7% of the gross domestic product.

The federal government will spend $A4.2bn on residential care for elderly people in 2001-2, an increase of $A1.7bn in the past five years.