Self-funded retirees face soaring costs under aged care change from July as Michael Horin lays out 'complex' industry
An expert has laid out the 'complex' aged care industry as a change will come into effect from July where self-funded retirees could see fees increase upwards of $50,000.
Labor's Aged Care Act, which was passed in November, received bipartisan support in parliament and will change how different types of retirees in aged care are billed.
The major change is the lifetime cap will rise from about $82,000 to about $130,000.
Michael Horin, a principal at Clarity Aged Care Advisors, said this will shift towards a means-tested approach for the aged care system.
'The system is designed in a way so that everyone can afford a bed in aged care,' Mr Horin told Sky News' Business Now.
'It's essentially asking those who can afford it to pay more and (for) those that can't afford it - the government's chipping in a bit more.'
He said it would be 'predominantly self-funded retirees' who will pay more under the new system; however, some part-pensioners and full pensioners also will.
Australia's aged care sector is not currently a profitable industry, but the changes in billing could lead to further investment into the growing sector as the ageing population grows.
'We've got about 200,000 beds across the country at the moment and in the next 25 years - around 2050 - that's going to have to grow to about 800,000,' Mr Horin said.
'Aged care facilities are not very profitable. About 50 per cent of them are run at a loss so they need to become profitable to incentivise more beds and more facilities to be built.'
The government continues to fund anywhere from about 70 per cent to 100 per cent of an aged care bed, Mr Horin noted.
'Those that can afford it are being asked to pay more, but the government is also paying more too, to really pump more money into the sector to get those extra beds,' he said.
Sky News' Business Editor Ross Greenwood pressed Mr Horin on the complexity of the aged care industry as there are many choices presented for funding a retiree in aged care.
'It's a really complex industry,' the Clarity Aged Care Advisors principal said.
'It's necessary to get advice before entering the industry because there's so many moving parts.
'There (are) so many pros and cons to the different choices that you have ... so there (are) a variety of different choices and with each of those choices and options that you have, there (are) different implications of that.'
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