Rich to 'pay more' for aged care

Older Australians could be forced to remortgage or even sell their family home to pay for aged care under proposals to make people take on greater financial responsibility in their retirement.

A Productivity Commission draft report into the aged-care sector has recommended an overhaul of the industry, including a shake-up of the means test, expanding the use of accommodation bonds, making the rich pay more for care, abolishing caps on fees and bed numbers and pay rises to attract more nurses.

A single gateway agency would also be set up, replacing a myriad of overlapping government agencies and assessment processes that families confront as their loved ones enter and progress through the different levels of aged care.

The commission says the changes would give people greater choice of nursing home providers in their old age. "Older Australians generally want to remain independent and in control of how and where they live their lives," the commission's deputy chairman, Mike Woods, said. In one of the biggest changes flagged in the 500-page report, released today, seniors would be subjected to a revamped means test to determine their capacity to pay for care, with those able to afford it required to pay a higher co-contribution.

Safety nets would be put in place to ensure pensioners unable to meet care costs would be fully subsidised by taxpayers. The revised means test would continue to include the family home.

This could see asset-rich but cash poor people forced to sell their home to pay for their care, however, the commission recommends setting up a "pensioners' bond" scheme to quarantine the money from the sale to exempt it from the age pension means test.

For people who did not want to sell their home, the commission wants to establish a government-backed reverse mortgage-style scheme to allow them to tap into the equity in their house, so when the person dies, the loan would be repaid from the estate.

Ageing Minister Mark Butler said the Government was not ruling anything in or out.

The Aged Care Association of WA said it was not unreasonable to expect people who could afford to pay more for aged care to do so, as long as there was a strong safety net providing aged care for the poor.

ACA chief executive Anne-Marie Archer said that the Government needed to act urgently to improve the financial viability of the sector.

"They can't afford to shelve this," she said.

Catholic Health Australia chief executive Martin Laverty said the equity release scheme would do away with the need to sell the family home.