Under the pre 1 October 1997 rules, pensioners who entered nursing homes and hostels were entitled to rent assistance (residential care allowance) to help cover the cost of their care and accommodation.  However, as pensioners paid 85% or 87.5% of their pension to the hostel or nursing home respectively, most of the benefit of the rent assistance was passed-on to that facility.

From 1 October 1997, income support pensioners who are approved care recipients in aged care facilities (ie. are receiving Commonwealth Government subsidised care) will no longer be entitled to rent assistance (residential care allowance).

In addition, no rent assistance is paid to pensioners who become approved care recipients after 1 October 1997.

Under the aged care reforms, rent assistance is no longer paid to income support pensioners receiving Commonwealth Government subsidised care in such aged care facilities.  Instead, an additional subsidy known as “pensioner supplement” is paid directly to the nursing home or hostel by DH&FS..

To compensate income support pensioners for this change, they pay a lower basic daily resident contribution (basic daily fee) for their aged care.  Instead of being charged a basic daily resident contribution of $26.40 per day indexed ($26.91 from 2 April 1998), income support pensioners are generally charged a basic daily resident contribution of $21.10 per day indexed ($21.52 from 2 April 1998).  For those entering aged care on or after 1 March 1998, a separate income tested daily fee may be payable by reduced rate pensioners in addition to the basic daily fee.

The reduction in basic daily resident contribution approximates the value of the maximum rent assistance that may have previously been paid to the resident.

There will, however, be some income support pensioners who are residing in an aged care facility but are not approved care recipients (ie they are not receiving Commonwealth Government subsidised care).

These people continue to be entitled to rent assistance and are discussed under Residents still Entitled to Rent Assistance below.

There are three groups of pensioners who may continue to be eligible for rent assistance following 1 October 1997. These groups are:

• pensioners residing in nursing homes or hostels that are not approved facilities under the Aged Care Act 1997 (see What is an Approved Facility below);
• pensioners who are residing in a nursing home or hostel but who are not approved care recipients (ie are not receiving Commonwealth Government subsidised care).  For instance, a person may be residing in a nursing home or hostel to be near to their partner who is receiving care (known as co-habitees) or a person may be in a multi purpose service (MPS) unit; and
• pensioners residing in an approved facility but who receive accommodation only, require no care and therefore are not receiving Commonwealth Government subsidised care.

An approved facility under the Aged Care Act 1997 is one that has been assessed to meet certain standards of care and accommodation.

Please note that nursing homes and nursing home beds fully funded by a State Government do not come under the Aged Care Act 1997.

Pensioners in any of the above categories remain eligible for rent assistance after 1 October 1997 because no Commonwealth Government subsidy, including pensioner supplement, is payable to the facility in respect of their places.

This generally means that such pensioners are paying the full cost of their accommodation and any care they may receive.

Those people residing in facilities that are not approved under the Aged Care Act 1997, and people residing in approved facilities who are not approved care recipients (such as co-habitees) and are therefore not receiving Commonwealth Government subsidised care, should continue to be paid rent assistance.

These people did not appear in DH&FS records and thus were not data matched.  As these people were not data matched, they were excluded from the automatic cancellation of rent assistance for payday 9 October 1997.

A data matching run conducted prior to 1 October 1997 identified those service pensioners and Income Support Supplement (ISS) recipients who received subsidised care and rent assistance.

Where DVA records for these income support pensioners confirmed that they were residing in an aged care facility (i.e. they have an appropriate residential situation recorded), their rent assistance was automatically cancelled with effect from payday 9 October 1997.

Some pensioners who enter aged care prior to 1 October 1997 will not be included on the data tape and these people require manual cancellation of their rent assistance for payday 9 October 1997 or the first available payday thereafter.

It is important to ensure that no persons still eligible for rent assistance are cancelled. It will be necessary to either await the appearance of the resident on the new admissions report before cancelling rent assistance paid in respect of aged care fees or alternatively contact the aged care proprietor to confirm that the resident is an approved resident on behalf of whom a Commonwealth subsidy is payable before cancelling rent assistance.    More [10]

Each daily data matching transmission run will generate a “new admissions” report that lists all DVA income support pensioners who have entered subsidised aged care since the last data matching run.    More [12]

The report indicates whether or not each new admission is receiving rent assistance.  This will enable examiners to manually cancel the rent assistance of any new admissions to aged care who have not advised DVA of their changed circumstances.  Again a check should be made at the time to ensure the pensioner is not an unfunded resident and therefore eligible for rent assistance.

War widow/ers whose rate of income support pension is limited by a ceiling, and who will remain on the ceiling after removal of the rent assistance component of pension will not notice the cancellation of rent assistance.

They will benefit from a reduction in their aged care fee and a pensioner supplement will be payable to the care provider.