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A home care package provides funding that can be used by the recipient on services that support them in their home. But what do home care packages really cost the consumer? Justin Cilmi explains.

There are four levels of home care packages available that are based on a person’s care needs. The greater the level of care a person needs, the higher the package level and amount of funding available. Eligibility for a home care package is determined by the national Aged Care Assessment Team (ACAT) assessment.

Once a home care package has been assigned to an aged care recipient and a home care agreement has been entered into with a service provider, the provider will receive and administer the funds on the individual’s behalf.

It is important to note that is can take as long as 9 months (or in some case, longer) for a home care package to be assigned.

Home care package recipients may be asked to contribute a basic daily fee and, depending on their means, an income tested care fee towards their package.

Who can access home care packages?

Home care packages are available to people living on their own as well as those residing in retirement villages or communities. Home care packages will cease if the recipient enters permanent, residential care.

Home Care package fees

Basic daily fee

The basic daily fee is $10.32/day as at 1 July 2018 and equates to 17.5% of the maximum basic rate of age pension for a single person. Members of a couple who are both receiving a home care package can each be asked to pay this fee.

Importantly, amounts paid as a basic daily fee are added to the home care package funds which recipients can use on services.

The table below summarises the annual home care package values and recipient contributions:

Package
Government subsidy
Recipient contribution
(Basic Daily Fee, $10.32/day)
Total home care package funds*
Level 1
$8,270 $3,767 $12,037
Level 2
$15,045 $3,767 $18,812
Level 3
$33,076 $3,767 $36,843
Level 4
$50,286 $3,767 $54,053

 

*Package based on the assigned level provided by your ACAT assessment. The Total Home Care Package value will be reduced by the costs levied by the service provider, including administration and case management fees. These can range significantly from 10% up to 30%.

Income tested home care fees

Unlike the basic fee, the income tested fee is based on the person’s assessable income for aged care purposes. The higher a person’s assessable income, the higher their income tested fee.

Income tested fees do not affect the total funds available under the package, unlike the case with the basic daily fee. This ensures those on the same package have access to the same amount of funds.

Calculating the income tested fee

The income tested fee is determined by Centrelink/DVA and is payable by a home care package recipient if their assessable income exceeds the income free area.

Income Tested Fee (p.a.) = (assessable income – income free area x 50%)

At lower levels of financial assets, a home care recipient’s assessable income comprises mostly of their age pension. As the income free area is higher than the maximum age pension rate, full pensioners will not incur an income tested fee.

Income tested fee annual cap

A home care package recipient’s income tested fee is subject to one of two annual caps. The annual cap that applies depends on whether the recipient’s assessable income exceeds the applicable income threshold:

Annual cap if assessable income < income threshold = $5,392.91

Annual cap if assessable income ≥ income threshold = $10,785.85

 

The income free area and income thresholds as at 1 July 2018 are:

Family Situation
Income Free area p.a.
Income threshold p.a.
Single
$26,764.40 $51,667.20
Couple (each)
$20,755.80 $39,525.20
Illness Separated Couple (each)
$26,244.40 $51,147.20

Commonwealth Home Support Program costs

Those who have basic care needs and require support and services that cost less than the home care package program’s basic fee of $3,767 p.a. or $7,534 p.a. for couples who both require care, can consider accessing the entry-level Commonwealth Home Support Program (CHSP) instead.

Unlike home care packages and permanent residential aged care, there is no Centrelink/DVA means test. Instead, the Government has established guidelines within the Client Contribution Framework to assist service providers with determining suitable amounts to charge, as well as how these amounts are collected, based on their business and the services provided.

Individuals will, therefore, need to discuss and agree to any fees with the service provider before they start receiving these services. The service provider’s client contribution policy will also need to include arrangements for those who are unable to afford fees due to financial hardship.

Where to find out more about home care package costs

Wading through the fees associated with home care packages can be complex, so you should seek guidance from Centrelink, via their Financial Information Service or from a qualified financial adviser. Also, some home care service providers may be able to assist you with this.

Importantly, depending on the home care package level you qualify for and your personal financial position, the costs associated to engage home care help (i.e. paying a Basic Daily Fee and Income Tested fee) may outweigh the home care benefits obtained.

Important Note: The information provided about is in intended as a guide only. It is important to seek professional, accredited financial advice when considering whether the information is suitable to your personal circumstances.

Related post: What does aged care cost in Queensland?

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Justin Cilmi
Justin joined the financial planning industry in 2001 and is committed to providing practical and effective solutions for his clients. As a financial adviser, Justin has provided advice to clients across a wide range of areas, including wealth creation, wealth protection and personal insurance, redundancy, retirement and Centrelink and Aged Care planning. Justin’s qualifications include a  Bachelor of Commerce (Majoring in Finance and Economics), a Graduate Certificate in Applied Finance, an Advanced Diploma of Financial Planning and holds a specialist accreditation in Self Managed Superannuation Funds. Justin is also a member of the Financial Planning Association of Australia, holding a Financial Planner AFP® accreditation.