Does that family member also receive Centrelink or Veteran’s Affairs income support?
Assisting a family member to enter aged care is a lot of hard work and a very emotional journey. Many emotional and financial decisions need to be made in a very short time.
One of the more difficult decisions is whether the family house should be sold, kept vacant, or rented out.
From a financial perspective, many, if not most, people assume that the concessional treatment when determining the home’s assessable value for Aged Care purposes and Centrelink purposes is the same, but it’s not.
The Aged Care Act 1997 is the main law that covers government-funded aged care. On the other hand, the Invalid and Old-age Pensions Act 1908 provides for the payment of Invalid and Old-age pensions. They are two separate Acts.
Importantly, if the home is kept empty, the home is assessable up to a capped value of only $186,331.20 for Aged Care purposes.
Also, if a ‘protected person’ remains in the home, it is exempt from Aged Care assessment. A protected person is
- “your partner or dependent child,
- your carer, who is eligible to receive an Australian Government income support payment and who has lived in your home with you for the past two years
- your close relative who is eligible to receive an Australian Government income support payment and who has lived in your home with you for the past five years.”
“ If your home is occupied by a protected person, it may not be counted as an asset for aged care purposes.”
“This exemption may be lost if the protected person living in the home moves out of the home.”
Also, if a spouse remains in the home, it is exempt for Aged Care purposes.
Importantly and conversely, the value of the home for the purpose of the Aged Pension, if a spouse lives in the home, it will continue to be an exempt asset (like the Aged Care assessment). However, if another person lives in the home or the home is empty, the home will remain an exempt asset, and the pensioner will continue to be assessed as a homeowner, but only for two years or until the home is sold. At the end of this period, the pensioner will be assessed as a non-homeowner, and the home will be assessed at its net market value.
Many pensioners do not want to sell their homes. Many feel that as soon as the home is sold, they will not be able to leave the aged care facility. On the other hand, if it is not sold, it may be probable that the pensioner loses his or her aged pension and entitlements.
As stated earlier, this is an emotional and financial journey. It is best to discuss the wishes of aged care retirees and spell out the financial implications as soon as practical rather than leaving these decisions to the last minute.
Should you require further information about Aged Care, please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166 to book an obligation-free appointment.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.