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Factsheet IS81 - Aged Care and Your Income Support Pension

Purpose

This Factsheet explains how your income support pension (service pension, age pension, veteran payment and the income support supplement) is affected if you move into residential aged care.

*Note: whilst this Factsheet uses the term "Pension" and "Pensioner" it also applies to those receiving veteran payment.

What happens to my income support pension if I move into residential aged care?

If you or your partner has been admitted to residential aged care on a permanent basis, you are considered to be living apart because of your health.  For partnered pensioners who have to live separately because one or both of you is too frail or ill to stay at home and the separation is likely to continue indefinitely, you will each be paid pension at the higher singles rate.

You need to let us know that you are living apart because of ill health as soon as possible so that we can adjust your pension promptly.

How will I be paid when I move into residential aged care?

Your pension will continue to be paid directly into your bank, building society or credit union account.  Alternatively, you can nominate, in writing, for your pension to be paid into an account controlled by a third party, who will act as your agent or trustee.

If you require your pension to be paid directly to the aged care facility, a representative from the facility will need to be appointed as an agent.  Your agent is obliged to manage the pension in accordance with your wishes.

If a person is incapable of managing their financial affairs due to age, infirmity or ill health, an independent party such as the Protective Commissioner, or Public Trustee may be appointed as their trustee.

For more information, please refer to Factsheets LEG01(a) Arrangements for Other People to Act on Your Behalf and LEG01(b) Arrangements for Other People to Receive Payments on Your Behalf.

Will residential aged care fees and charges affect my pension?

Fees and payments that you incur in residential aged care are not counted as income or as an asset for the purpose of calculating your pension. While refundable lump sum accommodation payments to the aged care facility are non-assessable assets for pension purposes, they are counted as assets for the calculation of aged care fees.

If you receive your pension at a reduced rate and you have used some of your financial assets to pay aged care fees and charges, you should let us know as soon as possible.  If the change you tell us about results in an increase to your pension, the increase will apply from the day you notify us.

What happens to my pension if I own my home before entering care?

If you are single, the value of the home in which you resided prior to you becoming an aged care resident is not counted in your assets for pension purposes, for up to 2 years from the day you entered care.

The 2 year period is to give you time to decide what to do with your home.  During the exemption period, the homeowner (low) assets limits will continue to apply.

What if my partner remains in the family home?

The value of your former home will not be counted as an asset for pension purposes for as long as your partner remains in the home.  If your partner who remains in the home, moves into aged care, or passes away, a 2 year exemption period will start from the day your partner leaves the family home.  If your partner vacates the home for any other reason, you should contact DVA to work out the impact on your pension.

What if I sell my former home?

If you sell your former home, you need to tell DVA as soon as possible.  What you do with the sale proceeds may affect your pension.  For example, if you sell your home and deposit the money into your bank account, the proceeds from the sale of your home will be counted as a financial asset and will be deemed to be earning income for pension purposes.  If your former home is sold during the 2 year exemption period after entering care, your principal home exemption ceases and you will be considered a non-homeowner.  This applies even if another house is purchased with the sale proceeds.

If the asset value of your former home is capped for the aged care means assessment, the cap will no longer apply after you sell your former home. If you choose to use some or all of the sale proceeds to pay a refundable lump sum accommodation payment, the full value of that lump sum will be counted as an asset for aged care purposes. However, a refundable accommodation deposit (RAD) or refundable accommodation contribution (RAC) is not an assessable asset for pension purposes.

What if I rent out my former home?

Entering Residential Aged Care prior to 1 January 2016

If you are renting out your former home, and you entered residential aged care before 1 January 2016, your former home is not counted as an asset within your pension assessment for as long as you are renting out the home and:

  • you are paying a daily accommodation payment; or
  • you are paying a daily accommodation contribution; or 
  • you are paying an accommodation charge; or
  • you are paying all, or part, of an accommodation bond by periodic payments.

While you meet these conditions, any rental income received from your home is not counted as income for pension purposes or for means testing of aged care fees.

Entering Residential Aged Care between 1 January 2016 and 31 December 2016

If you are renting out your former home, and you entered Residential Aged Care between 1 January 2016 and 31 December 2016, your former home is not counted as an asset within your pension assessment after the end of the standard two year exemption for as long as you are renting out the home and:

  • you are paying a daily accommodation payment; or
  • you are paying a daily accommodation contribution; or
  • you are paying an accommodation charge; or
  • you are paying all, or part, of an accommodation bond by periodic payments.

Any rental income received from your home is not counted as income for pension purposes however it is counted as income for means testing of aged care fees.

Accommodation costs paid by lump sum only

If you entered care after 1 July 2014, and your accommodation costs were paid by lump sum only, these exemptions do not apply.  Any rent you receive from your home will be counted as income and the value of the home will be counted as asset for pension purposes after the end of the standard two year exemption.  Please note that daily care fees, means tested fees or extra service fees are not accommodation costs for the purpose of these exemptions.

Entering Residential Aged Care from 1 January 2017

If you are renting out your former home and you entered Residential aged care from 1 January 2017, the rental income is counted in the pension assessment and the aged care means test assessment. The former home is also counted as an asset in the aged care assessment (at a capped value), but it will not be included as an asset in the pension assessment until the standard two year exemption period expires.

What happens at the end of the exemption period?

DVA will write to you towards the end of the 2 year exemption period, requesting details of your former home and an estimate of its value.  Where your pension may be affected, DVA will arrange a valuation at no expense to you.

Once the exemption period finishes, you will be considered a non-homeowner and the market value of your former home will count as an asset.  The total value of your assets will be assessed against the non-homeowner (high) assets limits.

Depending on the value of your total assets, the rate of your income support pension could be affected.  If you want to discuss your circumstances and the impact this event could have on your income support pension, you or your representative should contact DVA approximately 6 months before the end of the exemption period.

Do I get rent assistance in residential aged care?

Generally speaking, a person living in a residential aged care facility is not eligible for rent assistance.  You will only be eligible for rent assistance if you are not receiving Commonwealth Government subsidised care.

If you were residing in rented accommodation and your partner is still paying rent (other than government rent), then their rent assistance may be adjusted.  Your partner will be eligible for rent assistance at the singles rate.  Your partner will need to tell DVA if the amount of rent they pay has changed.

What do I need to tell DVA when I move into residential aged care?

You will need to notify DVA and provide the following information:

  • when you are entering care;
  • your new residential address;
  • where you would like your mail directed;
  • your telephone contact details; and
  • any changes to your income and assets.

You should also forward a certified copy of your residential aged care agreement to confirm the details.  This will allow us to update your records and adjust your pension as required.

Can someone else make contact with DVA on my behalf?

You can authorise another person, or organisation, to represent you in dealings with DVA.  This person can be a relative or friend, the Public Trustee, or the Guardianship Board.  The type of arrangement will depend on what you need the appointed person to look after on your behalf.

For more information, please refer to Factsheets LEG01(a) Arrangements for Other People to Act on Your Behalf and LEG01(b) Arrangements for Other People to Receive Payments on Your Behalf.

Do I have any obligations?

When you are granted an income support pension or payment, and periodically after that, you will be notified of your obligations.  You will be required to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of changes to your circumstances that might affect the rate of income support pension or payment you receive or your eligibility to receive that pension or payment.  These obligations apply equally to trustees.

Usually an overpayment of pension or payment will not occur when you have met your obligations.  Sometimes however, even if you have met your obligations, an overpayment can occur because we have not been able to process the change before the next payday.  We do our best to avoid this occurring, but it is not always possible. To provide you with your exact entitlement we are obliged to recover overpayments of pension or payment where they do occur.

More Information

DVA General Enquiries

Phone: 1800 555 254 *

Email: GeneralEnquiries@dva.gov.au

DVA Website: www.dva.gov.au

Factsheet Website: www.dva.gov.au/factsheets

* Calls from mobile phones and pay phones may incur additional charges.

Related Factsheets

Disclaimer

The information contained in this Factsheet is general in nature and does not take into account individual circumstances. You should not make important decisions, such as those that affect your financial or lifestyle position on the basis of information contained in this Factsheet.  Where you are required to lodge a written claim for a benefit, you must take full responsibility for your decisions prior to the written claim being determined.  You should seek confirmation in writing of any oral advice you receive from DVA.

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31 May 2018