Hi everyone…My widowed father will have been in residential aged care for two years on Oct 21, 2018. So he entered aged care on 21/10/2016. He has paid a partial RAD of $350K of a $530K room… His former residence is valued at $500K and he as $30K in assets. He is currently not renting out his home. I was hoping that you can confirm the below for me or advise otherwise … As I understand it, after 21/10/2018, his full value of his former home will be means tested in the aged care calculation (currently capped at $165K). If we choose to rent it out after 21/10/18, any rent received will also be means tested. However, for aged pension purposes, if we choose to rent his home after 21/10/18, his home AND the rent received are exempt as he entered aged care prior to Jan 2017 (when the rules may have changed). If we don?t rent his home out, the two year rule kicks in and his house becomes an assessable asset for aged pension purposes and he will probably end up with a significantly reduced pension. Thanks in advance… Ian
We are not able to give definitive financial advice at aged care 101 but Robert Craven at Affinity Aged Care Financial Services has come back with this response: Based purely on the information that you have provided he has assumed that your mother was assessed as a fully supported (low means) resident because the family home was considered an exempt asset because your father was a “protected person” and their other assets were less than $49,000 each ($98,000 for both).On this basis just the Basic Daily Care Fee would be payable which is currently $51.21 per day. When your father passed away the home should have become assessable at the capped rate (currently $168,351.20) and a Daily Accommodation Contribution (DAC) would have been payable to the maximum of $57.14/day. The 2 year rule only applies to the age pension. The former home is exempt for 2 years from the date your mother entered care or 2 years from the date your father vacated the residence. It then becomes assessable at the market value. A potential red flag - Robert adds that his understanding (based just on the information you have provided) indicates there is a risk that in April 2020 your mother’s pension and pensioner concession could be impacted. He also adds that if this occurs your mother can apply for the Commonwealth Seniors Health Card. Aged Care finances are never straight forward so I would strongly recommend that you firstly ring the Department of Human Services on 1800 200 422 to clarify this situation (particularly about any potential impact on your mothers pension) or speak with a specialised aged care financial adviser such as Affinity if you require further assistance.
Aged Care 101 team
I’m concerend too. Mum entered in Aug 2017. My brother was her full time carer for more than 5 years, however is not entitled to any Centre link benefits now. How will this affect Mum?? She receives a DVA pension and is a gold card holder. I/we dont want to sell her house as my brother has no where else to l
Hi new to forum. would luke some feed back re two year rule:1.Mum entered home 14th feb 2017 cost we approx 80% of her pension. No other income stream owned own home valued at $550K2.Dad was still at home3.Dad passed 1st may 2018.4. Mum is still home paying same amount5. How will 2 year rule affect her .I have POA so I am trying to establish, if anything I need to do to ensure her on going care at the nursing home is not interrupted. Thanking you in anticiaption. By the way this website is GOLD!!! Thank you
According to the government website (see link below) all rental income is included in the aged care means test for residents who entered care from 1 January 2016 or moved to a new service from 1 January 2016. Rental income will be treated in the same way as any other income stream in the aged care means test. New entrants into residential aged care after this date will have the net rental income assessed. Residents who entered aged care prior to 1 January 2016 will continue to have rental income from the former home exempt from aged care means test if they are making periodic payments. However if a resident leaves the aged care home for more than 28 days and re enters home they are affected by the removal of the rental income exemption. From 1 January 2017 the rental income exemption ceases to apply to the age pension.
Hope that helps,
the agedcare101 team
and after July 2017 ?
Hi team,Would the same rule as said in your post applied to resident who entered into aged care after July 20
Cheers- thanks for the response Robert and agedcare101…I can now do some modelling to ensure he maximises pension and minimises means test payments !It’s the old giveth with one and and take with the other!
Thanks for your question. Sorry with the slight delay to respond. We had to ask advice from the wonderful Robert Craven from Affinity Aged Care Financial Services.
How will the home be assessed after my father has been in permanent residential care for 2 years?
He entered care after 01 January 2016 but prior to 01 January 2017 with no protected person living in the former home.
For Aged Care Means Test:
Under the assets test: The home will continue to be assessed at the capped value currently $165,271.20. Under the income test: The net rental income will be assessable.
For the Centrelink Pension Test:
Under the assets test: As he is paying part of his accommodation costs by way of a DAC, if it is rented & remains so, the home will be exempt indefinitely. If it is not rented, it will be assessed at it market value. However, your father will then be classified as a non-home owner, so the higher income will be exempt.
We hope this helps,
The agedcare101 team
Hi agedcare101…Can you pls can confirm the below for me or advise otherwise.