PM to unveil user-pays changes to aged care

While the government will not force older people to sell their homes, it is believed that it intends to expand the aged-care means test.

It is believed the government's response to a Productivity Commission's report into the aged-care sector also has a focus on improving care at home and in retirement villages to reduce reliance on nursing homes.

This reflects taxpayer-funded research released by the Council of the Ageing just before Easter showing widespread concern about residential care and a strong preference for living independently at home, albeit with occasional help with domestic chores.

Some of the money for in-home care will come from reducing subsidies for nursing homes. Expanding means-testing for aged care will be the most controversial of the issues to be unveiled tomorrow by Prime Minister Julia Gillard and Health and Ageing Minister Mark Butler. Ms Gillard postponed a $5500-a-head fund-raiser dinner scheduled for tonight at Woodside Energy's Perth headquarters so she could rush back to Canberra for the announcement.

In its Caring for Older Australians report, released in August last year, the Productivity Commission recommended aged care shift from a rationed system to one that is both means and needs-tested.

It said those going into aged care could pay by using equity in their home, either through a reverse mortgage or through a home credit scheme.

Effectively like a loan, it would be repaid when the home was sold after the person died, unless their spouse or a disabled child was still living there.

The commission's proposed means test including the family home would determine how much people could afford for care and accommodation.