Affinity Aged Care Financial Services is now known as Alteris Financial Group.

2018 Federal Budget – impacts for aged care and retirees 

Federal Budget-How will it affect your finances_v2

The recent Federal Budget announcement outlined a number of proposals focused on aged care and retirees. While these are outlined below.

It is important to note that before any of the announcements can be implemented, they will require the passage of legislation and may be subject to change. 


Aged care

This budget focused on increasing access to care and assisting those with additional income to fund income needs, including access to care. This budget has not proposed any changes to consumer contributions.


Home care packages

The Government has acknowledged the cost burden and difficulty of funding aged care solutions in the home, with demand for government-funded home care packages increasing. The Budget announced an additional 14,000 packages over four years from 1 July 2018.

These are approved at four levels of care, and available budgets vary. The package budget includes contributions paid by clients as well as subsidies paid by government.

aged care changes


On average, the government pays about 90 per cent of the package budget with client contributions accounting for around ten per cent. Clients pay a basic fee of $10.32 towards the home care package and this may increase up to $39.95 per day based on assessable income. These contributions are included in the table above.


home care package


Residential care

The government has proposed additional funding to introduce 13,500 new residential care places and 775 short-term restorative aged care services in 2018/19.

The budget also allocated $60million towards capital investment to encourage providers to build new aged care services. An additional $40 million will be allocated to providers in regional, rural and remote areas for construction and improvement, and $105 million for aged care services in remote indigenous communities.

There is also funding allocated for palliative care services in residential care. Home care packages are allocated to the consumers rather than the providers, but residential care packages are still allocated to the provider. Analysis will be undertaken on the impact of allocating residential care packages to the consumer.

The government guarantee of refundable accommodation deposits (RADs) and refundable accommodation contributions (RACS) will continue with a levy to apply to care providers to recover costs.


Supervision of aged care

A new Aged Care Quality and Safety Commission will be established to combine the Australian Aged Care Quality Agency, the Aged Care Complaints Commissioner and the regulatory functions of the Department of Health. Customers will have a single point to make complaints about poor care. (Proposed to commence 1 January 2019.)

Funding will be allocated to improve the quality of residential aged care and enhance regulation of aged care provider quality to identify and act on risks quickly.


Simplifying the application process

Proposals were announced to further improve MyAgedCare and simplify application forms.

A trial project of navigator services to assist people with choosing appropriate care services will receive funding of $7.4 million over two years from 1 July 2018.

The Government proposes to combine the residential care and home care programs from 1 July 2018 to allow greater flexibility in funding various packages according to client demands.


Protecting against elder abuse

Concern around elder abuse (both physical and financial) has been recognised in the budget. With the majority of financial abuse cases arising from actions by children, including those acting under an Enduring Power of Attorney, this abuse is sometimes deliberate and malicious but is often a misunderstanding of the purpose of an Enduring Power of Attorney and can arise from “inheritance impatience.”

The government announced the following protections for older Australians:

  • Funding trials of specialist elder abuse support services
  • An elder abuse knowledge hub
  • A national plan to address elder abuse and working with the states and territories to develop a nationally consistent legal framework, and
  • Establish a National Register of Enduring Powers of Attorney.



Stop Elder Abuse Sign


Support for carers

With around 2.8 million people acting as carers, many are in need of greater support. The Government has proposed to provide $113.3 million of funding over five years for a new Integrated Carer Support Services model to provide early intervention and preventative services for carers to support the well-being of carers.

This model will combine several existing services into one national model with the Carer Gateway as the entry point for accessing services from October 2018.

Carers may currently receive a non-means tested Carer Allowance to help with the costs of caring for someone. This is proposed to be subject to a $250,000 family income test threshold. If family income exceeds this threshold, the carer would no longer qualify for the Allowance. This is not expected to impact most carers.


Impacts for Retirees & Centrelink

The proposed changes to Social Security and Veterans’ Affairs rules are mostly good news and aim to help retirees use their available resources to access higher levels of income.


Pension Loan Scheme

With a rise in house values, many retirees find themselves asset-rich and income-poor. The budget included proposals to expand the Government’s Pension Loan Scheme (administered by the Department of Human Services) to help retirees to convert equity in their home into a regular income stream to meet living expenses or pay for services such as private home care.

The current scheme allows part-pensioners and some self-funded retirees to top-up the amount of age pension they receive to the maximum available pension. For example, a single person who receives a part-age pension of $400 per fortnight could borrow up to $507.60 per fortnight ($13,197.60 per year) to bring their payments up to the maximum single age pension.

Eligibility criteria for the scheme includes:

  • Clients need to own a property to use the scheme as the government will take a mortgage on the property
  • Self-funded retirees cannot have age pension entitlements reduced to nil under both the income and assets tests
  • Normal pension residency requirements must be met.

The scheme is proposed to be expanded to allow eligible retirees to borrow regular income payments up to 150% of the maximum pension entitlement (less the pension amounts they receive). This opens the scheme to full age pensioners.

Amounts borrowed are paid as fortnightly income and interest compounds on the amount owing at 5.25%. Establishment fees are not charged, but the client may pay legal fees. The amounts borrowed are neither assessable nor taxable income.

Age-based limits apply to the amounts that can be borrowed so clients will not owe more to the government than their house is worth.


Pension Work Bonus

For those at age pension age, the first $250 per fortnight of employment income is excluded under the income test. This is proposed to increase to $300 per fortnight to allow

pensioners an opportunity to increase overall income. It is also proposed to be extended to include age pensioners who are self-employed.

Any unused threshold in a fortnight can be rolled over to offset against higher amounts in future fortnights. This “income bank” is limited to $6,500.


Pooled lifetime income streams

The pension means test rules will be amended to encourage the development and take-up of pooled lifetime retirement income streams. These have sometimes been referred to as deferred or longevity income streams.

It is proposed to assess 60% of all pooled lifetime income stream payments as assessable income and 60% of the purchase price as an assessable asset until the individual reaches age 84, or for a minimum of five years. The assessable ratios will then be reduced to 30% for the remainder of their life.

These changes may encourage new product development and only apply to pooled income streams purchased from the commencement date. Any existing products will retain their current assessment.