Background
Russell Kennedy is aware that there is still some uncertainty among providers as well as residents and their financial advisers about the “no worse off” principle, and how this applies to residents who had a home care approval as of 12 September 2024. It’s important providers know how these apply so they know which agreements to use for these residents.
One misconception is how the grandfathering rules apply to those were approved for home care on or prior to 12 September 2024 (the date the Act was introduced to Parliament). As these older people are covered by the “no worse off principle”, it is often assumed they are fully grandfathered. Another area of confusion is what it means if a resident was admitted to respite care prior to 1 November.
In simple terms, the rules are as follows:
1. Residents who were admitted to permanent residential care prior to 1 November are fully grandfathered for the purposes of both their accommodation fees and resident contributions, meaning that they will pay means tested cares fee (if eligible) subject to the old lifetime cap. In addition, these residents’ accommodation fees are not subject to the retention and indexation provisions in the new Act.
2. If an older person was approved for home care on or prior to 12 September 2024 but enter permanent residential care after 1 November, only their resident contributions are grandfathered. This means that their accommodation payments are subject to the retention and indexation requirements that apply to all new admissions post 1 November.
3. An admission for respite care is irrelevant to an older person’s grandfathered status. This means that those who have a pre-12 September 2024 approval are partially grandfathered (see point 2) but otherwise, they are not grandfathered at all.
Another aspect of the grandfathering rules that is causing confusion is the rules about which residents can choose to opt into the system. Again, the rules on this are confusing.
1. Existing residents who wish to, can opt into the new rules for resident contributions. However they cannot opt into the new accommodation payment arrangements if they stay at their current home.
2. If a resident moves homes and wishes to opt into the new regime, they must opt into all the new arrangements, both resident contributions and accommodation payments. It’s “all or nothing” for these residents.
How we can help
Russell Kennedy’s agreements address each of the grandfathering scenarios set out above. Further, under the new Aged Care Amendments (Transitional Provisions) Rules 2025, providers must vary their agreements with existing residents prior to 1 November 2026. Russell Kennedy has a variation letter for providers to use for this purpose.
Where residents are considering opting into the new arrangements, providers have an obligation to provide the resident with information about what this means. RK has a series of template letters to address this requirement.
Please reach out if you need any assistance to Anita Courtney (acourtney@rk.com.au), Solomon Miller (smiller@rk.com.au), Victor Harcourt (vharcourt@rk.com.au), Johanna Heaven (jheaven@rk.com.au) or a member from Russell Kennedy's Aged Care Team.
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