Changes to the NDIS Act have led to new rules for how participants can spend their NDIS funding. These measures are designed to ensure that the rules are more transparent, and to prevent unnecessary “top-ups” of plans because the participant has run out of funds - an occurrence referred to as intra-plan inflation.
In this latest article in our NDIS Act Explained series, we are going to look at the changes relating to how participants can spend their funding. To help participants and providers avoid making mistakes and risking compliance action.
Does the legislation change how participants can use their funding?
For participants to spend their funding on a service or item it must be classified as an ‘NDIS Support’— as defined in the transitional rules of the new Act. A support must be generally on the 'in' list of NDIS Supports and not on the 'out' list.
The table detailing the ‘in’ list contains three columns. The first column names the support group generally. The second column has a description of what’s included in the support - which can be useful extra detail for participants about what exactly they can purchase. And the third column outlines whether the support must be stated within a person’s plan, or whether it is available to all current and prospective participants.
How has the legislation changed how funding is being released?
In the Act, Section 33 outlines the broad criteria of how funding is released, by implementing three new processes: total funding amounts, funding components, and funding periods. A total funding amount is the total budget for the entire plan. A funding component is similar to the funding categories within the plan, which states how supports shall be grouped together.
The determination of funding components are based on the following:
- The nature of the participant’s supports.
- The cost of those supports.
- How complicated it is to administer the supports.
- The practical skills that are required when providing the supports.
- How the participant chooses to manage their funding.
Funding periods represent how often funding will be released. This currently can’t exceed 12 months.
Funding periods are decided by considering things such as:
- Whether the person is likely going to spend on NDIS supports and in accordance with the plan.
- How the participant has spent their money in their previous plans.
- Whether the participant is at risk of being subjected exploitation or to illegal activity, such as fraud.
- Whether the participant has a plan nominee or a plan manager.
- If there is a risk of the funding being exhausted before the plan period ends.
- How often the participant has requested a plan variation, or a plan reassessment in the past, without meeting the criteria in the legislation.
The Department of Social Services are currently consulting on a new rule. It is about how the NDIA will identify risks and put in place safeguards where the NDIA thinks a person will not spend in accordance with a person’s plan. Read more about Rule 44(5) on DSS’s website.
However, a person can appeal the NDIA’s decision to specify a shorter funding period than 12 months. They can do this by submitting an internal review within 3 months of receiving the plan.
What does this mean for providers?
Providers should ensure that the supports they deliver correspond with the descriptions and conditions defined in the table of allowable NDIS supports and the person’s plan.
The NDIA website has clarified that spending in accordance with the plan means:
- spend the way the NDIA describe (including stated supports); and
- Make sure your funding will last for the whole length of your plan; and
- If your plan has component amounts and funding periods, make sure your funding will last for the length of each period.
Providers will also need to be in constant discussions with the participant about how their funding is being distributed appropriately across the length of their plan. At the commencement of the plan, the provider and the participant will need to work together to identify how the funding will be spent across the life of the plan, highlighting how and when the funding will be used, setting aside funds so that the provider can assist with any reporting requirements, and ensuring that there is enough funding to cover contingency plans should emergencies arise.
Participants may be reluctant to share specific details of their plan with providers due to privacy. Providers will need to have a conversation with participants about what kind of information the participant is willing to share regarding the specifics of their plan. Whether the participant shares this information is ultimately a choice for them.
What happens if a participant spends their funding on non-NDIS supports or not in accordance with their plan?
If a participant spends their funding on an item that is not an NDIS support, or in accordance with their plan, several measures can be implemented. As Chris pointed out in his recent article ‘NDIS Act Explained: Debts’, the NDIA can:
- Change how a participant’s funding is managed (ie. Moving from Self-Managed to either Agency- or Plan- Managed); and
- Change a participant’s funding period; and
- Raise a debt.
The Agency has implemented a transition period for participants, where they will not raise a debt for the first twelve months if the support the participant purchased was under $1500 and they have not received two warnings. For providers, their transition period ended on November 2, 2024, 30 days after the legislation came into effect.
What if a non-NDIS support is cheaper and will achieve better outcomes?
The NDIA has also introduced a replacement support process, where a participant can apply to have something that’s not considered an NDIS support funded. But it has strict criteria, and needs NDIA approval.
And replacement supports can only be accessed in two categories, “standard commercially available household item”, or specific kinds of assistive technology.
Learn more
Further information on how participants can spend money on their plans can be found here.
To learn more about changes to the NDIS Act, check out our previous articles:
- NDIS Act Explained: Impairment Notices
- NDIS Act Explained: Debts
- NDIS Act Explained: Replacement Supports
- NDIS Act Explained: Eligibility Reassessments
- New NDIS Act: Timeline of changes
- NDIS support lists released- finally!
Also, check out our upcoming workshops:
- New NDIS Law: Changes to Debt and Spending Compliance Powers
- The New NDIS Law: What Providers Need to Know
- Replacement Supports: How, When and Why?
- NDIS Eligibility Reassessments
- Program Billing Under the New NDIS Law
Please note: I’m not a lawyer and this is not legal advice. Please seek advice relevant to your circumstances.