Fairer means testing arrangements for residential aged care

In order to ensure the sustainability of the aged care system so that all Australians get the care that they need, the Government will strengthen the means testing arrangements for people entering residential care from 1 July 2014. It will combine the current income and asset tests to ensure a consistent fees policy. This will address the issue of asset-rich, income-poor residents paying for all of their accommodation and nothing for care, and the income-rich, asset-poor residents paying for their care but not for accommodation.

The treatment of the family home will not change. It will continue to be exempt from the aged care assets test if occupied by a spouse or other protected person. An annual cap of $25 000 will apply to a resident's mean tested contribution to their care costs, together with a lifetime cap of $60 000. These amounts will be indexed.

The changes will improve the fairness and sustainability of the aged care financing arrangements, with strong safeguards to ensure access to care for those who cannot afford to contribute to the cost of their care and accommodation. The new means testing arrangements for residential care will ensure greater fairness and consistency in how older Australians access the services they need.