Report on the importance of the Bond Guarantee Scheme July 2016

Transcription

1 Report on the importance of the Bond Guarantee Scheme July 2016

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3 REPORT ON THE IMPORTANCE OF THE BOND GUARANTEE SCHEME TO CONSUMERS CONSIDERING ENTERING RESIDENTIAL AGED CARE Purpose of the project: To test and report on consumer views, so as to explore the value and importance of the Bond Guarantee Scheme, its influence on consumers decision making and reactions to its possible loss. Background Under the current Federal funding model for accommodation in aged care facilities, two payment options are available to consumers: 1. A Refundable Accommodation Deposit (RAD), i.e. an accommodation bond. An accommodation bond is a lump sum amount payable upon entry to an aged care facility. The aged care facility uses the bond to contribute to general maintenance and improvement costs and to finance the development of new facilities. The initial bond amount is fully refunded when care is no longer required. 2. Daily Accommodation Payment (DAP). A payment amount determined by the aged care facility as a per day fee to cover the accommodation costs of a resident. The consumer may, as a third option, choose a combination of options one and two, i.e. a combination of a RAD and a DAP, as agreed between the aged care provider and the person entering care. A Refundable Accommodation Deposit is, at present, guaranteed by the Federal Government, via the Aged Care (Accommodation Payment Security) Act 2006, i.e. the Bond Guarantee Scheme (the Scheme). The Federal Minister for Aged Care, the Hon Sussan Ley MP has requested that the Aged Care Financing Authority undertake a study to examine alternative arrangements for the Scheme. The expectation is that the review will likely shape the government s position with respect to retention, or otherwise, of the Scheme in the future. The Aged Care Guild is supportive of the Scheme in its present form and has engaged National Seniors to canvas its members views on the value and importance of the Scheme. Specifically, the Aged Care Guild sought to ascertain: How well known is the existing scheme to consumers? Is a government guaranteed Refundable Accommodation Deposit important to consumers? Does the existence of the Scheme influence how consumers fund their accommodation? How would consumers likely respond to possible changes to or loss of the Scheme?

4 Methodology National Seniors Australia (NSA) was commissioned to carry out the research on behalf of the Aged Care Guild. NSA s purpose is to advance the interests of the over 50s by striving to build a nation that embraces every generation of Australians. With 200,000 members, National Seniors Australia is the largest independent not-forprofit organisation that gives voice to issues that affect Australians aged 50 and over. To do this effectively, it conducts nationwide research to listen to and understand the issues that are important to its members, including employment, education, superannuation, retirement planning, lifestyle, health and aged care. The National Seniors Productive Ageing Centre (NSPAC), located in Melbourne, is the research arm of National Seniors Australia and conducts research with leading experts to improve the quality of life for people aged 50 and over by advancing knowledge and understanding of all aspects of productive ageing. A mixed methods approach was employed, with a quantitative on-line survey of NSA members supplemented by telephone interviews. NSPAC invited 5350 randomly selected NSA members to complete an online survey asking a range of questions about their understanding of, and views about, the available funding options for aged care accommodation, and about the government guarantee covering the Refundable Accommodation Deposit. The random selection was divided into two cohorts: 2350 members in age range members in age range 70 The random selection was representative of male and female National Seniors members as well as of each state and territory. The survey was divided into three categories according to answers to question 1: Are you aware of the ways in which one can pay for aged care accommodation? 1. Members who were unaware of the available funding options: were directed to an explanation of the available options and asked to nominate a preferred option and reasons for the choice. 2. Members who were aware of the available options but who had not been involved in a decision about care for another person: were asked to nominate a preferred option and the reasons for the choice. 3. Members who had been involved in a decision about care for another person: were asked what they chose and the reasons for the choice.

5 Members who were either unaware of the available options or who were aware but had not been involved in a decision concerning payment for aged care accommodation were directed to questions about their likely payment preferences (No.1 and No. 2 above). Members who had been involved in a decision about care payment options were directed to questions about their actual choices (No.3 above) Each group was then asked an identical question about their views of the government guarantee covering accommodation deposits. The online survey was completed by 662 members, representing a response rate of 12.4 per cent. Respondents were aged between 50 and 94 with a relatively normal distribution of respondents between these age extremes. The average age of the sample was 71 years. The gender balance of the sample was biased towards female respondents, who accounted for 59 per cent of responses. The average household income of respondents was between $40,000 to $59,999 and the distribution of household incomes was weakly positively skewed. Out of the total respondents 246, or a little over a third, indicated that they were aware of the payment options for aged care accommodation. These respondents were further divided into streams: those who were aware of the payment options but had not been involved in a decision concerning payment options for aged care accommodation those who were aware and had also been involved in a decision concerning payment options for aged care accommodation (either for themselves, a family member or a friend) A little less than a third of the total respondents had been involved in a decision concerning payment options for themselves, a relative or another person. Respondents who had been involved in a decision concerning payment options for aged care accommodation were asked to indicate whether they would be interested in a follow up telephone interview to further explore the reasons for their choice. Telephone interviews were completed with 25 respondents. Findings Preferred payment options for aged care accommodation Respondents who had been involved in a decision concerning payment options for aged care were asked which option they chose and the factors that influenced their choice (group A).

6 Respondents who had no prior knowledge of available options (group B) and respondents who were aware of the options but had not been involved in a decision concerning care (group C) were directed via the online tool to an identical series of questions to canvas their views on how they would proceed if, at a time in the future, they were required to make a decision about payment for aged care accommodation. They were also asked to indicate the factors that would influence their choice. Respondents who had been involved in a decision concerning care (group A) were more likely to choose a combination arrangement (i.e. RAD plus a daily fee) with a little over a third choosing this option (Figure 1). The next most frequent choice, by a quarter of group A, was a daily fee. The option chosen least often was the RAD alone with a little less than a quarter choosing this option. The remaining two groups, those that had no prior knowledge of the available options and those that had not been involved in a decision about care (groups B and C) together indicated that they would choose either a combination payment method or the RAD as their preferred payment arrangement, with three quarters in total choosing one or other of these options. The least preferred option, a daily accommodation fee alone was chosen by only one tenth of the total (Figure 1). The proportion of respondents who would elect to choose an RAD was approximately 15% higher among the prospective aged care accommodation consumers. Missing Combination payment 100% Daily Accommodation Payment 15% 13% Refundable Accommodation Deposit 80% 60% 36% 40% 40% 26% 10% 20% 0% 23% Chosen payment option (group A) 37% Prospective payment option (groups B and C) Figure 1: Payment options for aged care accommodation

7 Motivation for choice of payment method All respondents were asked to indicate the factors that either had or would influence their decision concerning payment options for aged care accommodation. A range of choices were listed and respondents had the opportunity to select one or more options. 1. Respondents who had been involved in a decision concerning payment options (group A): The four highest scoring factors that influenced respondent choices were related to a perception that the cost was more manageable or more easily accounted for (Figure 2). More manageable, less hassle, easier planning, better monitoring all scored highly as motivators of choice and suggest that the complexity of the funding models is a significant challenge for families. A third of respondents were motivated in their choice by the existence of the government guarantee covering the RAD (32%). Notably, nearly a third of respondents were guided by recommendations from the aged care provider. While some of these respondents may also have obtained advice from family and friends or a financial advisor, it is evident that a proportion relied only on advice from the aged care provider. The least preferred motivation factor was an offer of a more flexible payment arrangement by the aged care provider. The choice appeared to be a more manageable The choice involved less hassle The choice made planning for the cost easier The choice enabled me to monitor the expense The choice included a government guarantee The choice appeared to be less costly The choice was based on advice from the aged 43% 39% 39% 35% 32% 31% 30% The choice was based on advice from a friends Other The choice was based on advice from a I was offered a more flexible payment 18% 14% 13% 13% Figure 2: Determinants of choices concerning payment methods for group A (n = 201) 0% 20% 40% 60%

8 2. Respondents who had not been involved in a decision concerning payment options (groups B and C): The factors that would influence the choice for these two groups of respondents were similar to the choices made by those who had previously been involved in a decision concerning payment options, i.e. less hassle, availability of the government guarantee, manageability of costs, greater ability to monitor costs and ease of planning. In the minds of those who had not been involved in the arrangement of care, the availability of the government guarantee featured highest together with the less hassle factor. The option that would involve less hassle 68% The option that included the government guarantee 68% The option that would appear to be a more manageable way of covering the cost 66% The option that would enable me to monitor the expense more carefully 66% The option that would make planning for the cost easier 58% Other 3% 0% 10% 20% 30% 40% 50% 60% 70% 80% Figure 3: Determinants of choice concerning payment methods by groups B and C (n = 426) Government guarantee of Refundable Accommodation Deposit The majority of respondents, i.e. those who had been involved in making a decision as well as those who had not, were of the view that the government should continue to guarantee RADs, with approximately three quarters of each group supporting its continuation (Figure 4). A small percentage of both groups were unsure. Respondents from groups B and C were more unsure about whether the guarantee should remain than those who had experience of the system.

9 100% 90% 80% 70% 60% 50% 15% 13% 6% 0.5% 14% 0% Missing Unsure No Yes 40% 30% 20% 10% 0% 78% Those involved in the decision about aged care payment methods (group A) 73% Prospective aged care consumers (group B) Figure 4: Proportions of current and prospective aged care service consumers who were in favour or otherwise of the government continuing to guarantee accommodation bonds. Of those respondents who had chosen to pay for aged care accommodation either in part or in full via the RAD, nearly half indicated that they would change their payment method if the guarantee scheme was withdrawn (Figure 5). If the bond guarantee scheme was replaced by an industry funded scheme, a third indicated that they would change their payment method. Only a very small number indicated that they would not change their payment method in the same two scenarios (withdrawal of the government guarantee or replacement by an industry funded scheme).

10 100% 90% 80% 70% 48% 53% Unsure No Yes 60% 50% 9% 40% 13% 30% 20% 44% 35% 10% 0% If Government guarantee was withdrawn If Government guarantee was replaced by an industry guarantee scheme Figure 5: Proportions of the 119 respondents who had chosen to pay for accommodation in an aged care facility with an accommodation bond (either in part or entirely) and their expected change in preferred payment options if the government guarantee was withdrawn or changed Participant interviews Interviews were conducted with 25 survey respondents, 15 females and 10 males. Their ages ranged from 55 to 86 years. The purpose of these interviews was to obtain more detailed information concerning decision-making regarding paying for aged care provision In response to the question about which option had been chosen, two interviewees were unsure what choice they had made concerning aged care accommodation funding, five had paid a Refundable Accommodation Deposit, nine had paid a daily fee and nine had paid via a combination arrangement. Where a daily fee or a combination fee had been the choice, this was primarily driven by the need to make an urgent decision about an available aged care facility bed and/or by a shortfall in the required deposit required by the aged care facility. It was apparent that family members would have preferred the RAD but the time required to sell (for instance) a family home or to raise a deposit in other ways was not available to them. A number of families paid a partial deposit and interest on the balance until assets were converted to cash. By far, the most influential factor in making a decision about funding of aged care accommodation was time. Many families were left in a situation where an urgent decision needed to be made as a consequence of a crisis that resulted in an aged relative being unable to either remain in, or return to, their usual home. It was

11 apparent from the interviews that little discussion had occurred with aged relatives proactively. This was because their aged relatives expressed a desire to remain in their own homes until they died and resisted efforts to canvas options. The possibility of an event occurring that might disrupt this desire was not actively considered by aged relatives of the interviewees in order that options for care might be considered in advance of actual need. This issue was a significant challenge for many families who related stories of trying to canvas options with their aged relative, but without success, thus leaving them (the family members) with having to react in a crisis situation. The key driver related to decision making about the selected payment option was linked to statements such as not an option/only option/no other option/not a choice. This form of words was used by almost every interviewee. Interviewees were asked if they had obtained help or advice during the course of making their decision. Again, the most frequent response spoke to the urgency with which a decision needed to be made which prevented any realistic opportunity to obtain advice from others. Most advice was obtained from whichever care provider had the available bed. A few people indicated that they had received advice from individuals such as an accountant, a financial planner, even Centrelink (who provided names of financial advisors) but the key message remained the same the urgency of needing to do something virtually- immediately resulted in no option being available apart from what was being offered in the moment. Despite the urgency driving decision making, a number of interviewees indicated that clear written information would have been helpful to fully understand the options, or even a clear explanation from the facility representative, rather than being told, as stated by two interviewees, just sign here. There was a clear sense from a number of interviews that professional financial advice would have been valued even if the outcome i.e. only option scenario remained the same. Attitudes towards the Government Guarantee Scheme Many of the interviewees indicated that the availability of the guarantee did not influence their choice of payment option. As stated above, decisions were primarily driven by urgency and the availability of funds at the time a decision needed to be made rather than by the reassurance of a government guarantee on the RAD. However, in discussion with interviewees about the value of the guarantee in the future 20 out of 25 were of the view that in principle it should be retained even though three of these interviewees had not been aware of its existence and a small number of response were somewhat guarded. A number of the interviewees were strongly of the view that the government guarantee should remain and gave reasons in support that: the bond value is substantial acts as an incentive to maintain a transparent and honest system provides reassurance to families the guarantee works as a trade off for needing to sell the family home it removed any risk.

12 Two interviewees did not appear to understand either the payment options or the government guarantee and two people provided qualified answers: as long as the country can afford it not a fan of government involvement but need assurance that the money will come back One interviewee supported the retention of the guarantee but said it should not be funded by taxpayers and an alternative scheme would be okay. Conclusion The online survey (including the free text comments) and selected telephone interviews have provided a revealing insight into the way in which prevailing circumstances drive the decision making when the need for aged care accommodation is determined. The level of understanding that existed among the representative sample of NSA members prior to a precipitating event was poor or non-existent, even though many of these respondents were aware of a looming need to make a decision either for themselves or for a family member. The poor level of understanding appeared to be the case even for respondents and interviewees who have been involved in a decision concerning payment options for aged care. The comments from the online respondents are insightful and revealing about the challenges faced by many respondents as they negotiated their way through the process of arranging care for a family member. The dual stresses of putting a family member into care and working through the paperwork related to payment arrangements left many families bewildered and often dissatisfied with the outcome. How well known is the existing scheme to consumers? It was not possible to ascertain whether respondents who had not been involved in a decision about care were aware of the Scheme apart from the few comments that made reference to the Scheme in the online survey. The following two comments from online survey respondents provide some insight into the level of understanding of the Scheme: I cannot say for sure that the answers I have given would be the same if I was more knowledgeable on the subject. For instance: what party does the government do the guaranteeing for, and about what? I presume that the government refund guarantee is in case you don't live long enough to use up the guaranteed amount? The telephone interviews provided the only opportunity for direct feedback about awareness of the scheme. For those respondents who had been through the experience of arranging aged care accommodation and who had been interviewed, there appeared to be limited awareness of the Scheme except peripherally.

13 Is a government guaranteed Refundable Accommodation Deposit important to consumers? The high positive response to the question of whether the government should continue to guarantee the deposit suggests that it is important to respondents. The following comments from the online survey also support this view: So many couples struggle to find the resources to pay the bond. If this was not guaranteed it could compromise the situation of the partner when their time came to fund a place if the bond was lost. As indicated, I had no previous knowledge about this topic. The government guarantee does appear to provide some security and assurance. Does the existence of the Scheme influence how consumers fund their accommodation? The existence of the Scheme was not mentioned in any of the comments in response to the question seeking the reasons for a particular choice and it is reasonable to assume that its existence had not especially influenced decisions irrespective of which option was chosen. It was apparent that the existence of, and reassurance provided by the Scheme was of little interest when the decision making (driven by the circumstances on the day ) was overlaid by the stress of placing a family member into care. When this question was specifically raised in the interviews, respondents expressed a view that other factors drove decision making and the existence of the Scheme was not one of them. It is probably fair to say however, that its existence provided some reassurance in those situations where substantial deposits were paid for accommodation. How would consumers likely respond to possible changes to or loss of the Scheme? This question provided the strongest affirmation of ongoing government involvement in the Scheme, with the majority of respondents expressing the view that the government should continue to provide the Scheme.

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