The Aged Care Financing Authority (ACFA) says providers should pay towards the costs of any guarantee scheme for Refundable Accommodation Deposits (RADS) if the benefit outweighs the costs, as reported by Australian Ageing Agenda.
ACFA has also recommended against providers being able to opt-out from a scheme and offer their own guarantees.
The recommendations were made in a report released last week detailing alternatives for protecting RADs. It puts forward three options:
- Keep the existing Scheme;
- Retain the current Scheme, but with an automatic retrospective levy on providers;
- Create a guarantee fund pool through a prospective levy on all providers.
On June 30 2016, the sector held over $21B in bonds from residents, with the Guarantee Scheme acting as a “safety net” if a provider goes bankrupt.
Since it began in 2006, it has paid out 10 times for 11 aged care facilities, all Not For Profit, and refunded a total of $43M – and the Government has footed the bill.
Providers have been keen to maintain the current system, a move backed by ACSA CEO Pat Sparrow.
“The cost to Government has been about $30 million over nine years which is low considering the benefit of the aged care industry to those frail older Australians who require care,” she said.
But while ACFA found continuing the existing Scheme was a viable option, it recommends greater certainty be given to providers. This would be done by quarantining defaults from future levies and formalising the processes that tell the sector of default event costs and the Minister’s decision about whether a levy will be applied.
ACFA considered the automatic levy option more effective for residents, but found it raised similar issues of uncertainty and inequity for providers.
The report also suggested that the Govt look at buying a layer of insurance to help manage risk and ensure consumer confidence in the Scheme.
You can read the full report here.
