Although the Department of Health and Aged Care has published two discussion papers so far, neither talked about personal contributions under the new In-Home Support Program (IHAC).
IHAC starts on 1 July 2024. There simply isn’t enough time for the Department to put together a new personal contributions system. CPSA thinks it’s therefore a fair assumption that the way personal contributions are calculated under the current HCP program will be the way they are calculated under IHAC.
How CHSP raises personal contributions
If you are one of the more than 800,000 clients of the Commonwealth Home Support Program, you may be aware that the CHSP works with a principles-based Client Contribution Framework.
This is a roundabout way of saying that it is left to your CHSP provider to decide how much you pay in personal contributions, if anything. Effectively, your provider applies an ability-to-pay test to you and charges accordingly. As a result, CHSP clients tend to pay a lot less than HCP clients.
How HCPP raises personal contributions
The Home Care Package (HCP) program is a different kettle of fish.
The HCP program can charge every client a Basic Daily Care Fee. This Basic Daily Care Fee (currently $10.18 for HCP level 1 and $12.14 for HCP level 4) is payable every day of the week. Even if you receive a service on one day of the week, you would be charged seven lots of Basic Daily Care Fees a week.
It is not certain that this most unreasonable fee will be carried over into the new In-Home Aged Care program. However, there’s no indication that it won’t be.
Also, a lot of HCP providers waive the Basic Daily Care Fee, although there’s a suspicion they were making up for it by charging excessive admin and management fees. These latter fees have been capped from 1 January this year. It’s too early to tell whether charging of the Basic Daily Care Fee has increased since then.
In addition to the hefty Basic Daily Care Fee, the HCP program features an income-tested care fee system. Whereas the CHSP Client Contribution Framework raises a proportion of the actual cost of services provided, the HCP program’s income-tested care fee system does no such thing.
It works out how much a client is able to contribute to the overall cost of the care they receive. For example, if income-testing determines a client can contribute $2,000 a year, it doesn’t matter how many units of service are provided: the client will pay $2,000, unless the overall cost is less than $2,000, in which case the client will pay the full overall cost.
This is an important difference with the CHSP Client Contribution Framework.
Full rate pensioners do not pay an income-tested care fee, but part pensioners and self-funded retirees do if their income (including any Age Pension) exceeds $32,504 a year (for singles).
In the case where this income is, $32,505, they could be up for an annual income-tested care fee of $6,341 (annual cap) on top of the annual minimum basic daily care fee amount of $3,971. That’s a total of $10,312 a year for a person with an income just short of around $22,000 after paying for home care.
The HCP program’s income-tested care fee is also subject to a lifetime cap of $76,097, which means that pensioners paying the annual income-tested fee cap of $6,341, will be paying that for roughly twelve years.
What you need to think about
If you receive home care, you first of all need to find out whether you receive it under the CHSP or the HCP program. Things will change on 1 July 2024 if you are under the CHSP.
Your CHSP provider has not yet been informed of how personal contributions will work under the new IHAC program. Some may not even have realised that your personal contributions are most likely to go up significantly.
But they should be able to give you an indication of what charges you would be paying if you were under the HCP program now.
That’s your best guide as to what might happen from 1 July 2024.
If you are concerned about your personal contributions going up, you should contact your local federal Member of Parliament to express your concern. Tell them you want to know what’s going to happen from 1 July 2024 with your personal contributions.