NDIS Explained

With the National Disability Insurance Scheme (NDIS) the headline item of last night’s Federal Budget, we’ve taken the opportunity to look at the program in more detail.

What is the NDIS?

The NDIS, or DisabilityCare Australia program, is aimed at providing long term, high quality support for people who have a permanent disability that significantly affects their communication, mobility, self-care or self-management.

Rather than funding based on historical budget allocations, a funding pool will be based on actuarial assessment of need. Participants will be in control of the care and support they receive, based on their need.

The program will adopt an insurance-based approach, informed by actuarial analysis, to the provision and funding of supports for people with disability.

How will it work?

A person will make a request to become a participant in the NDIS. In order to be accepted, they must meet the access criteria, which include:

• The person has an intellectual, cognitive, neurological, sensory, physical or psychiatric impairment
• The impairment is, or is likely to be permanent
• The impairment substantially reduces the person’s functional capacity to undertake one or more of the following activities:
  • Communication
  • Social interaction
  • Learning
  • Mobility
  • Self-care
  • Self-management
• The impairment affects the person’s capacity to participate in social and economic activities
• The person is likely to require lifetime support
• Age requirements
• Residence requirements

The NDIS will also adopt a focus on intensive early intervention, particularly for people where there is good evidence that it will substantially improve functioning or delay or lessen a decline in functioning.

Background and timeline

In 2010, the Government asked the Productivity Commission to undertake a public inquiry into a long-term disability care and support scheme. The Commission handed down its report on 31 July 2011, recommending the creation of a new national scheme (the NDIS) to provide insurance cover for all Australians in the event of significant disability.

The Commission’s report said the main function of the NDIS should be to fund long-term, high quality care and support (but not income replacement) for people with significant disabilities. Increased funding, choice and certainty are the key features of the recommended scheme.

The Commission also recommended a separate scheme for people requiring lifetime care and support for catastrophic injuries, such as major brain or spinal cord injuries. This National Injury Insurance Scheme (NIIS) would provide fully-funded care and support for all cases of catastrophic injury. Unlike the NDIS, the Commission recommended the development of the NIIS be driven by the state governments.

Legislation to enact the NDIS was introduced in 2012, and following a review by the Senate Standing Committee on Community Affairs, was passed on 28 March 2013. The legislation establishes the framework for the national scheme, including eligibility criteria, age requirements, and what constitutes reasonable and necessary support. The scheme will be known as DisabilityCare Australia.

In February 2013, a consultation paper on the NDIS Rules, which will explain in detail how the scheme will operate, was issued. Consultation has now closed, however the Rules are still under development.

The rollout of the NDIS will occur in stages, with approximately 26,000 people with significant and permanent disabilities, their families and carers, benefiting from the first stage. As part of the 2012-13 Budget, the Government provided $1 billion to fund the launch of the first stage from 1 July this year.

To date, South Australia, New South Wales, ACT, Northern Territory, and Queensland have signed-up to the full NDIS, agreeing to ensure full implementation of the NDIS by 2018-19.

What it means for advisers

Advisers will likely need to become familiar with the rules around qualifying for DisabilityCare, to support clients who experience a claimable event leaving them permanently disabled.

It is also not clear whether insurers would consider the scheme subject to the definition of an ‘offset payment’ and how this may impact claims benefits.

There is some speculation that the introduction of the scheme will lead to a reduction in the take-up of personal insurance, as consumers perceive they are fully protected and supported by DisabilityCare if the worst should happen.

Interestingly, despite widespread news coverage of the NDIS, a recent survey by TAL found that only 3% of consumers who did not have life insurance said they expected the Government to support their dependents if something should happen to them.

For more information, click here to visit the Government’s information site.