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A new program is being developed to enable elderly home owners to take up loans or use home equity to make modifications so they can continue to live at home independently.
Elderly home owners loath to leave their homes and enter a retirement village or nursing home may soon be able to access loans or use their property’s equity to fund modifications and improvements that would enable them to stay in independent living for longer, the federal government has revealed.
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The Department of Health and Aged Care is currently working on delivering a reformed in-home aged care program in response to the Royal Commission into Aged Care Quality and Safety.
The proposed program includes a range of reforms that aim to provide older Australians with choice and control over services that meet their assessed needs.
As part of this, the department is considering how best to deliver an assistive technologies (AT) and home modifications (HM) scheme for older Australians.
According to a newly released paper, Assistive Technologies and Home Modifications Scheme for in-home aged care, one way to do this would be to help more home owners modify their homes so that they can live in them for longer.
This could include both minor home improvements (such as installing handrails) to major works (such as bathroom modifications and platform steps) that would help extend the time a home owner can live in their primary residence by at least 18 months.
A new loan scheme
The paper highlights that consultation with stakeholders “supported a loan scheme and outright purchases being offered through the new scheme” given that financial barriers often reduce uptake of AT and HM.
Stakeholders have therefore recommended that the new AT-HM scheme should include “a well-designed funding model that provides purchase and loan options”.
The paper read: “Loan and refurbishment programs for AT could reduce waste and support greater access to AT. This could also offer solutions for people whose needs rapidly change. The loan scheme would offer the same wrap around supports available to people who purchase AT.”
The AT-HM loan scheme could have an expert committee to oversee and update the AT included in the loan scheme, which would monitor the AT market and “observe changes in technology and advancement in product development”.
“This committee could review these changes and provide recommendations indicating whether certain new items should be included and purchased by providers,” the paper read.
The department also outlined that there could also be a centralised IT system specifically for the loan scheme.
“This would record information about the AT to maintain safety and quality of each item. This could include the warranty details and the maintenance and repair schedule. It would also facilitate effective management of the AT- HM scheme by sharing the availability and locations of each item. This could be facilitated by a labelling system, with each piece of AT available to loan being labelled with a barcode or QR code, which would be scanned at each contact point. Multiple stakeholder groups emphasised the need for greater transparency of visibility of the availability of items in the scheme,” the paper read.
“This platform should integrate with the online accounts so that stakeholders could see the availability of certain items. Should the loan scheme be delivered through existing state and territory schemes, these provisions would already be in place, and would need to be adjusted to accommodate expansion for the aged care cohort.”
The ethical dilemma of using government funds to grow private wealth
The paper also flagged that stakeholders believed it would be helpful to provide information to older Australians about options to “access equity against the value of their home to fund modifications.”
These options include reverse mortgages, with funds made available through a loan against their home, it suggested.
The loan and any interest could be repaid once the asset is sold or passed onto family, meaning regular repayments are not needed while the person remains living in their home, the government confirmed.
However, it also explained that home modifications can increase the value of a home, presenting an ethical dilemma of government-funded home modifications growing private wealth.
“This challenge will be considered in the design of the new program,” it stated.
According to the department of health, another option for elderly home owners is the Home Equity Access Scheme (previously known as the Pensions Loan Scheme), which is available to older Australians to supplement their retirement income by accessing home equity through a government loan.
If applications meet the age pension, residency requirements, and own a property in Australia, a loan can be accessed as a fortnightly amount, as a lump sum in advance, or as a combination of both, with property used as security for the loan, it explained.
“The loan accrues as a debt with interest, which is generally repaid once the asset is sold or passed on to family,” the department outlined.
Further consultation with stakeholders on the proposals will be conducted in “early 2023” on the propositions put forward in the department’s latest paper, which will be used “to articulate a final model for Government consideration” to be implemented from 1 July 2024.
Such stakeholders include First Nations elders and older Australians from CALD backgrounds to improve the cultural safety of the new AT-HM scheme.
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