aged care seminar
TRANSCRIPT
Aged Care Update
Sabine Phillips, Principal
Anita Courtney, Senior Associate
8 July 2015
Sabine Phillips
Principal
> History
> 3rd Party RADs
> Additional Services
> 3rd Party Guarantees
> Caveats
> 28 Day Rule
> Questions
Objectives
3
> Introduction
> June 2011 - Government response to
the recommendations by the
Productivity Commission.
> 20 April 2012 – the then Federal
Minister for Health and Ageing, Mark
Butler, announced the “Living Longer
Living Better” aged care reform
package.
Summary of relevant reforms
4
> Reforms across the spectrum of aged
care services, from home care
packages, assistance to carers,
reforms to residential aged care
subsidies, accommodation payments,
the aged care workforce and quality
assurance regulation.
Summary of relevant reforms
5
> Home care
> Integration of home and community
care programs
> Implementation of consumer-directed
care
> Means testing for home care package
clients
Summary of relevant reforms
6
> Lifetime cap on care fees across home
care and residential care of $60,000
> $25,000(ish) per annum residential care
> $10,000(ish) per annum home care
> Australian Aged Care Quality Agency
> Monitor quality assurance for providers
of residential aged care and home care
Summary of relevant reforms
7
> Removal of the payroll tax supplement
for many providers
> Elimination of the dementia
supplement
> Proposed changes to the Complaints
Scheme
Summary of relevant reforms
8
9
Source: Living Longer, Living Better Department of Health & Ageing
Third Party RADs
> Pre reforms
> Basic rules about accommodation
bonds
> Section 57(1)(f)
> Another person must not be required to
pay the accommodation bond as a
condition of the CR entering the service
or flexible care service.
Accommodation bonds
11
> Aged Care Act 1997 (Cth)
> 52G Rules about Accommodation
Payments and Contributions.
> A person must not be charged an
accommodation payment unless
RAD/RAC
12
> (i) the person’s means tested amount at
the date of entry is equal to or greater
than the maximum accommodation
supplement for that day; or
> the person has not provided sufficient
information to allow the person’s means
tested amount to be worked out;
RAD/RAC
13
> Molly has $600K available to pay the
RAD of $500K.
> The money is tied up in the family
home which the family are reluctant to
sell.
> Molly’s son lends Molly the $500K to
pay the RAD.
Scenario 1
14
> Loan is not automatically a liability for
Molly
> The loan should be secured – or -
> It may have an affect on Molly’s
pension and her assets
Scenario 1
15
> Molly had the $500K to pay the RAD
and again the family do not want to sell
the home.
> The son pays the $500K without
making it a loan to Molly.
> Molly effectively has an additional
$500K worth of assets in the form of
the RAD.
Scenario 2
16
> Will affect Molly’s assets and her
pension amount.
> Issues with repayment if it is a RAD
paid in accordance with Molly’s
Agreement –
> To whom is it refunded?
> Who is entitled to the money when
Molly dies?
Scenario 2
17
> Molly is a full pensioner who has been
living with her family for some time.
> Her son wants her to go to a facility
nearby his home in a leafy exclusive
suburb.
> The facility does not have any places
available to fully supported residents.
> The son offers to pay the RAD for
Molly.
Scenario 3
18
> NO - DON’T DO IT
> Department has identified that where a
person is receiving a supplement for
being a low means resident, the
provider cannot benefit from ‘another’
RAD/DAP
> Deemed to be a $320K RAD by DAP
Scenario 3
19
> Molly is a full pensioner and the son
wants her to be in a specific facility that
requires the $500K RAD/DAP.
> The facility will not accept the $500K
from the son as it is unclear of the
effect of 3rd party RADs.
> As a result they do not disclose Molly’s
income or assets.
Scenario 4
20
> Threshold $60K(ish) – lifetime.
> Threshold $25K(ish) – per annum.
> If no disclosure it would take
approximately 98 days to reach annual
threshold for a HHH resident and 2.4
years for the lifetime threshold.
Scenario 4
21
> Don’t provide financial advice.
> Ensure the prospective resident and
their representatives have access to
advice.
> Document all your discussion.
> Ensure you have a sound third party
agreement.
Risk Management Summary
22
23
Additional Services
> “Other additional care and services
and associated fees are not regulated,
and are agreed between you and your
aged care provider. These vary from
home to home. Your aged care
provider can give you details of these
services, such as hairdressing and
Foxtel, and the fees that apply.” myagedcare website July 2015
Additional services
25
> Quality of Care Principles 2014 –
Schedule of Care and Services.
> Additional services have not been
identified elsewhere.
Risk management
26
> Agreement between the provider and
the resident or their representative.
> Consumer law regarding unfair terms
in consumer contracts.
> Resident agreements may be classed
as consumer contracts.
Risk management
27
A term of a consumer contract is an ‘unfair
term’ if:
- it would ‘cause significant imbalance in the
parties’ rights and obligations under the
contract’;
- ‘it is not reasonably necessary in order to
protect the legitimate interests of the party who
would be advantaged by the term’; and
- ‘it would cause detriment ... to a party if it were
to be applied or relied on’ (s 24 Consumer Law
Act).
Unfair terms: consumer law
28
> Many models.
> Know what you have relied upon for:
> RAD level – myagedcare.
> Resident handbooks.
> Advertising materials.
> Extra services status.
Additional services
29
> “Additional services are optional……”
> “…..you must be given an itemised
account.”
> “…..you cannot be required to enter
into an additional services agreement.”
> “….any such agreement is a
commercial arrangement between you
and the provider….”
Additional services
30
> “…….is not regulated by Government.”
> “Additional services can be offered on
an ad-hoc, opt-in/opt-out basis…..”
> “Any agreement for the provision of
additional care and services on an
ongoing or opt-in/opt-out basis is a
commercial contractual arrangement
between the resident and the provider”
Additional services
31
32
> Be clear about what you are offering.
> Make it known to the prospective CR
or their representatives before they
enter.
> Document these discussions.
> Have strategies in place in the event of
a dispute.
Risk management
33
Anita Courtney
Securities in aged care
> Increased exposure to bad debts
> Security of tenure
Why have securities?
36
> Pre 1997
> Pension and subsidy
> 85% pension
> Subsidy consisted of:
> SAM same amount per resident per day
> CAM dependent on 8 scale RCI/RCS
> Exposure
> Limited to 85% of pension
The way we were: pre 1997
37
> 1997
> Pension and income tested fee and
subsidy
> 85% of pension
> Daily income tested fee (DITF) based
only on income (not assets)
> Exposure
> Increased by the amount of the DITF
> AB/periodic payments and AC
The way we were: 1997
38
> 2014
> Equivalent pension amount
> Means tested amount
> Additional services
> Choice to pay DAP/DAC
> Exposure
> Increased by the additional amounts
and the use of assets to determine
means tested amount
They way we are: 2014
39
Breakdown of payment
source
40
> Based on a 30 day month for one
month.
> Based on $30 = 85% of pension.
> Based on $120K assets and $21K
income:
> Pre 1997: $900
> 1997: $1450.20
> 2014: $2431.80
Possible exposure: example
41
> Greater proportion of user pays with no
guarantee of having the cash
> Greater choice in method of payment
> 25k annual limit
> Consumer expectations with user pays
system
Other risk factors for debts
42
> Why have guarantees?
> Rarely (ever (?) used)
> Leverage against the person
responsible for the debt
> Deterrence?
Third party guarantees
43
> We are seeing some claims that third
party guarantees are unenforceable
> Doctrine of ‘unconscionability’
> 1980s and 1990s High Court cases
> Commercial Bank of Australia v
Amadio (1983)
> Garcia v NAB (1998)
Criticisms of guarantees
44
> The law does not require that third
party guarantors get independent
advice in every case.
Our view
45
> Different relationships
> Lower risk
> Not for business ventures
> Resident can only be asked to pay
what they can afford
> The person giving the guarantee has
control of the $
Our view
46
> Don’t stop asking for guarantees
> Provide opportunity to seek
independent advice
> Get the guarantee from the person
managing the money
> Seek advice before you sue a
guarantor
Risk management
47
> Criticism of use of caveats
Caveats in home care
agreements
48
> Not prohibited by the Aged Care Act
> Not unlawful
> Only intended for use where there is
an issue with fees
Caveats: our view
49
28 Day Rule
- Payment method
- Minimum permissible asset value
> “The approved provider must not
require the person to choose how to
pay an accommodation payment or
accommodation contribution before the
person enters the service”. (s 52F-4)
What is the 28 day rule?
51
> “An accommodation agreement must
state that:
> within 28 days after the date of entry,
the person must choose to pay the
accommodation or accommodation
contribution (if payable) by: (i) daily
payments; or (ii) a refundable deposit;
or (iii) a combination of refundable
deposit and daily payments.” (s 52F-3)
What is the 28 day rule?
52
> “Aged care providers will not be able to
distinguish between care recipients on the
basis of how they elect to pay for their
accommodation because care recipients will
have a 28 day period after entering the aged
care service to decide how to pay their
accommodation costs.”
> Questions and Answers Regarding
Legislative Changes
Purpose
53
> Q: Is a new resident allowed to agree to a
payment option on admission or before
admission, or MUST they wait 28 days?
> A: Residents cannot elect their payment
method before admission. Residents
have up to 28 days to decide on a
payment option and can make a decision
at any time during this period – they do
not have to wait the entire 28 days.
DSS view
54
> DSS view is not what the Act says.
> Section 52F-4 prevents a provider from
requiring the person to choose how to
pay an accommodation payment
before entering the service.
> No mention of not allowing a resident
to choose.
Our view
55
> The Act does not say that a person
cannot choose how they will pay the
accommodation payment prior to entry.
> Difference between requiring and
inviting a prospective resident to make
a choice.
Our view
56
> “An AP must not accept payment of an
amount of refundable deposit if
…
> The person pays, or commits to paying,
the amount within 28 days
> Payment of the amount would leave the
person’s remaining assets at less than
the minimum permissible asset value”
(section 52J-5)
Minimum assets requirement
57
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QUESTIONS
The information contained in this
presentation is intended as general
commentary and should not be regarded as
legal advice. Should you require specific
advice on the topics or areas discussed
please contact the presenter directly.
Disclaimer
59
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