Example - application of income test. | Compensation and Support Reference Library, Departmental Instructions, 1998, C12/1998 AGED CARE REFORMS , IMPACT ON INCOME SUPPORT POLICY, INCOME TESTING OF AGED CARE FEES

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Example - application of income test.

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Roger is a single self-funded retiree who enters a hostel.  He receives a superannuation pension at the rate of $1,400 per fortnight, plus disability pension of $636.80 per fortnight.  He also has $40,000 of financial assets from which income is deemed at the rate of $69 per fortnight.  Because of his high level of income Roger does not receive a service pension. However, he is a veteran with qualifying service.

As Roger has qualifying service, his disability pension is exempt as income.  Thus, Roger's total assessable income, for the purposes of determining his aged care fees is $1469.00 per fortnight.

The single income free area of $100 per fortnight would apply to Roger if he were an income support pensioner.

The maximum additional income tested fees that Roger can be required to pay would be calculated as follows:

Income tested fee=  25% of Roger's income less his income free area

=  0.25  ?  ($1469.00  -  $100.00)

=  0.25  ?  $1369.00

=  $342.25 per fortnight.

Expressed as a daily amount this represents an income tested daily resident contribution of $24.45 per day.

However, Roger is assessed by an Aged Care Assessment Team as requiring category 7 care.  This category of care would attract Commonwealth Government funding of $21.00 per day.  Therefore, the maximum additional fee Roger is required to pay is the lesser amount of $21.00 per day.  This is in addition to the basic daily resident contribution he must pay which is $26.40 per day (non-pensioner rate).

In summary, Roger's total daily fees would be made up as follows:

Basic daily resident contribution$26.40

Additional daily resident contribution$21.00

Total daily resident contribution$47.40

Roger is later reassessed by the ACAT as requiring the higher category 6 level of care.  This category of care attracts a Commonwealth Government subsidy of $27.50.  Again, he will pay the lesser of the $27.50 Government subsidy or the income tested daily resident contribution of $24.45 per day (assuming that his income has not changed).  Thus, in this case he pays the lower income tested daily resident contribution of $24.45 per day.

In this situation Roger's total daily fees would be made up as follows:

Basic daily resident contribution$26.40

Additional income tested contribution$24.45

Total daily resident contribution$50.85

Note:  figures used in example are pre 2 April 1998 increase.