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C53/1996 ENTRY CONTRIBUTIONS TO HOSTELS
DATE OF ISSUE: 11 DECEMBER 1996
ENTRY CONTRIBUTIONS TO HOSTELS
The purpose of this instruction is to advise of changes to the Department's policy on the assessment of entry contributions to Government funded hostels.
2.A case was recently brought to our attention which revealed that the Department's treatment of entry contributions to hostels is different to that of DSS. Under DVA's current policy, asset tested pensioners residing in hostels are generally treated less fairly than if they were assessed under DSS Policy.
3.DVA currently assesses entry contributions to hostels under its special residence rules. This means if the entry contribution is more than the “extra allowable amount” (the difference between the applicable property owner and non property owner assets limits) the asset value of the entry contribution is exempted from a client's pension assessment. However, if the entry contribution is less than or equal to the “extra allowable amount” the asset value of the entry contribution is maintained as an asset.
4.The special residence provisions only apply deeming to entry contributions in situations where the entry contribution is less than the “extra allowable amount” (ie. the difference between the applicable property owner and non property owner assets limits). If the entry contribution is greater than the “extra allowable amount” it is disregarded as an asset. Accordingly, if a pensioner were asset tested, his or her entry contributions would be held as an asset and the value of the entry contribution would not reduce.
5.DSS policy allows entry contributions to be assessed under either the special residence provisions or the care situation provisions (nursing home provisions under DVA policy), whichever rules result in the higher rate of pension.
6.Under the care situation provisions of the SSA there are no special rules for dealing with the entry contribution. (This is because, under current Department of Health and Family Services rules, entry contributions cannot be charged on admission to nursing homes).
7.In situations where the entry contribution comprises a loan, a donation, or a combination of the two, the deeming rate is applied. This means in situations where hostels deduct a retention amount from entry contributions at regular intervals (e.g. six-monthly), only the refundable portion of the loan would be assessed as a financial asset. Accordingly, if a person is asset tested, the amount of the entry contribution held in their assessment would reduce over time thereby increasing the person's service pension as his or her loan/entry contribution decreases.
8.If the care situation provisions are applied, the relevant provisions for payments of rent assistance and exemption of a pensioner's home should also be applied.
Comparison of DVA & DSS Policy
9.By treating entry contributions to hostels under the special residence rules only, DVA could be open to criticism for applying harsher rules than DSS in some circumstances. This is because some asset tested pensioners would receive more pension if assessed under the nursing home provisions. Accordingly, the purpose of the following changes is to bring DVA's policy in line with that of DSS.
10.The Department will now treat entry contributions under either the nursing home or special residence provisions, whichever results in the higher rate of pension.
11.The new policy will only affect pensioners who are asset tested and residing in hostels.
12.The care situation provisions and the special residence provisions affect pension entitlement in different ways. Accordingly, each case should be decided on an individual basis by testing it separately against the nursing home provisions and the special residence provisions. The provisions which provide the most beneficial result to the pensioner should then be applied.
Identifying asset tested pensioners residing in hostels
13.A list of asset tested pensioners currently residing in hostels who may be affected by this policy change will be forwarded to the Manager Income Support in each State for reconsideration under both the nursing home and special residence provisions.
Reviews for hostel residents assessed under the care situation provisions
14.In cases where hostel residents are assessed under the nursing home rules the amount to be deemed is the refundable amount of the loan from time to time. Accordingly, client records should be noted for periodical review to recalculate entitlement and to establish the most beneficial basis for assessment.
15.The relevant amendments to GOSP will be made to reflect this change in policy. The amendments will be available at the next release of GOSP amendments.
16.Any further queries in respect of this matter should be directed to John Bruce on telephone 06 289 6441, fax 06 289 4853, LAN C-C-BA-09.