EXPLANATORY STATEMENT
Issued by the authority of the Minister for Ageing
Aged Care Act 1997
Residential Care Subsidy Principles Amendment 2005 (No. 3)
User Rights Principles Amendment 2005 (No. 1)
From 1 July 2005, Centrelink and the Department of Veterans’ Affairs (in the case of veterans) officers as subdelegates for the Secretary of the Department of Health and Ageing will commence assets testing of residents and proposed residents of permanent residential aged care. Assets assessments will be undertaken prior to a person’s entry to care, wherever possible. Assets assessments are currently undertaken by approved aged care providers at the time a person enters care.
Amending legislation to the Aged Care Act 1997 (the Act) to enable the changed assets testing arrangements, the Aged Care Amendment (Transition Care and Assets Testing) Act 2005 received Royal Assent on 21 March 2005. A Regulation Impact Statement was completed for the amendment of the Act to enable Centrelink and Department of Veterans’ Affairs to undertake assets assessments for new aged care residents.
The amendments enable the Secretary of the Department of Health and Ageing to make determinations as to a person’s value of assets (under section 44-8AB) and their eligibility to be a concessional or assisted resident (under section 44-8AA). These determinations will take effect from the date of the determination or the date that a person enters care, whichever is earlier.
The Secretary’s powers under sections 44-8AB and 44-8AA have been delegated by the Secretary to the Chief Executive Officer of Centrelink and the Secretary of the Department of Veterans’ Affairs.
Subsection 96-1 of the Act provides, in part, that the Minister for Health and Ageing may make Principles, not inconsistent with the Act, prescribing all matters which are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Residential Care Subsidy Principles Amendment 2004 (No. 3)
The Residential Care Subsidy Principles specify how the value of a person’s assets is to be worked out, in order to establish whether or not that person will qualify as an assisted resident, a charge exempt resident, or a concessional resident under section
44-10 of the Act. Subsection 21.14(2) of the Principles sets out some sections of the Act which require the value of a person’s assets to be worked out.
The amendment to section 21.14(2)(a) of the Residential Care Subsidy Principles takes account of amended section 57-12 of the Act (Maximum amount of accommodation bond) in relation to determining the value of a person’s assets under the new section 44-8AB (in accordance with section 44-10 of the Act). The value of a person’s assets is used to work out the maximum amount of an accommodation bond in accordance with the new subsection
57-12(5), in addition to subsection 57-12(4). A reference to the new subsection 57-12(5) of the Act, is included in paragraph 21.14(2)(a) of the Principles.
The amendment to section 21.14(2)(b) of the Residential Care Subsidy Principles 1997 takes account of amended section 57A-6 of the Act (Maximum daily accrual amount of accommodation charge) in relation to determining the value of a person’s assets under the new section 44-8AB (in accordance with section 44-10 of the Act). The value of a person’s assets is used to work out the maximum daily accrual amount of accommodation charge in accordance with the new subsection 57A-6(4), in addition to subsection 57A-9(3). A reference to the new subsection 57A-6(4) of the Act is to be included in paragraph 21.14(2)(b) of the Principles.
Details of the amendments to the Residential Care Subsidy Amendment Principles 2005
(No. 3) are set out in Attachment A and are described below. Details of the amendments to the User Rights Amendment Principles 2005 (No. 1) are at Attachment B and are described below.
User Rights Principles Amendments 2005 (No. 1)
One part of the work done by the User Rights Principles is to specify the circumstances that constitute financial hardship in relation to making financial hardship determinations.
Under the new assets testing arrangements to commence on 1 July 2005, the Secretary has the power (under section 44-8AB) to make determinations as described in section 44-10 as to the value of a person’s assets, and the power (under section 44-8AA) to make determinations described in sections 44-7 and 44-8 as to whether the person is eligible to be a concessional or assisted resident. Determinations will be made based on the person’s circumstances as at the time the determinations are made. The date the determinations come into force will be the date of the determinations or the date of the person’s entry to care, whichever is earlier. This is variable because, in most instances, assets assessments will be undertaken prior to entry.
Paragraph 23.56(3) of the Principles refers to circumstances to be considered, as at the “applicable time”, in working out if a person is eligible to be a concessional resident because payment of an accommodation bond would cause a person financial hardship. Paragraph 23.56(4) gives the meaning of “applicable time” as that specified by subsection 44-7(2) of the Act.
Paragraph 23.81U(3)(b) of the Principles refers to circumstances to be considered, at the “applicable time”, in working out if a person is eligible to be a concessional resident because payment of an accommodation charge would cause a person financial hardship. Paragraph 23.81U(4) gives the meaning of “applicable time” as that specified by subsection 44-7(2) of the Act.
Due to amendments to subsection 44-7(2) of the Act, this subsection will be relevant for those cases where a person enters care on or after 1 July 2005, only if:
- the person had, within 28 days prior to entry to the residential care service, been provided with residential care through another residential care service; and
- the person paid an accommodation bond for entry to that other service; and
- the earlier entry was before 1 July 2005.
Under the new subsection 44-7(1A) of the Act, which will apply from 1 July 2005, a person may also be a concessional resident if:
- that person receives residential care (other than respite care) through a residential care service on or after 1 July 2005, and
- the Secretary has made a determination about the person’s resident status which is covered by subsection 44-7(1B) or 44-7(1C), and
- this determination is currently in force.
Subsection 44-7(1B) applies to a resident status determination made under section 44-8AA before the person enters care, so long as the person would have met the eligibility criteria for being a concessional resident, as set out in paragraphs 44-7(1)(a), (b) and (c) of the Act, at the time the determination was made.
Subsection 44-7(1C) applies to a resident status determination made under section 44-8AA at the time of or after the person entered into residential care, so long as the person met the eligibility criteria for being a concessional resident, as set out in paragraphs 44-7(1)(a), (b) and (c) of the Act, at the applicable time set out under subsection 44-7(2).
The amendment to subsection 23.56(4) of the User Rights Principles specifies that “applicable time”, for the purpose of working out if the person is a concessional resident because payment of an accommodation bond would cause them financial hardship, may also have the meaning given by subsection 44-7(1A).
The amendment to subsection 23-81U(4) of the User Rights Principles specifies that “applicable time”, for the purpose of working out if the person is a concessional resident because payment of an accommodation charge would cause them financial hardship, may also have the meaning given by subsection 44-7(1A).
Attachment A
DETAILS OF THE PROPOSED RESIDENTIAL CARE SUBSIDY AMENDMENT PRINCIPLES 2005 (No. 3)
Section 1 names the Principles as the Residential Care Subsidy Amendment Principles 2005 (No. 3).
Section 2 provides for the regulations to commence on 1 July 2005.
Section 3 provides that Schedule 1 amends the Residential Care Subsidy Principles 1997.
Schedule 1 – Amendments
Item [1]
This Item omits the words “(see subsection 57-12(4) of the Act)” from paragraph 21.14(2)(a) and replaces these words with “(see subsections 57-12(4) and (5) of the Act)”. The addition of a reference to subsection 57-12(5) is required in relation to determining the value of a person’s assets under section 44-8AB (in accordance with section 44-10 of the Act). Subsection 57-12(5) specifies whether the valuation time is to be a date prior to the entry time, or the time of the person’s entry to care.
Item [2]
This Item omits the words “(see subsection 57A-6(3) of the Act)” from paragraph 21.14(2)(b) and replaces these words with “(see subsections 57A-6(3) and (4) of the Act)”. The addition of a reference to subsection 57A-6(4) is required in relation to determining the value of a person’s assets under section 44-8AB (in accordance with section 44-10 of the Act). Subsection 57A-6(4) specifies whether the valuation time is to be a date prior to the entry time, or the time of the person’s entry to care.
Attachment B
DETAILS OF THE PROPOSED USER RIGHTS AMENDMENT PRINCIPLES 2005 (No. 1)
Section 1 names the Principles as the User Rights Amendment Principles 2005 (No. 1).
Section 2 provides for the regulations to commence on 1 July 2005.
Section 3 provides that Schedule 1 amends the User Rights Principles 1997.
Schedule 1 – Amendment
Item [1]
This Item omits the words “subsection 44-7(2) of the Act” from subsection 23.56(4) and replaces these words with “subsections 44-7(1A) and (2) of the Act”. The addition of a reference to subsection 44-7(1A) is required in order to specify that “applicable time”, for the purpose of working out if the person is a concessional resident because payment of an accommodation bond would cause them financial hardship, can also have the meaning given by subsection 44-7(1A).
Item [2]
This Item omits the words “subsection 44-7(2) of the Act” from subsection 23.81U(4) and replaces these words with “subsections 44-7(1A) and (2) of the Act”. The addition of a reference to subsection 44-7(1A) is required in order to specify that “applicable time”, for the purpose of working out if the person is a concessional resident because payment of an accommodation charge would cause them financial hardship, can also have the meaning given by subsection 44-7(1A).