In Care Assessment Rules

Illness separated couples entitled to single rate of pension

Where one or both members of a couple are 'in care', they may be determined to be an illness separated couple. Members of an illness separated couple are entitled to be paid the higher single rate of pension.

In order for the definition of illness separated couple to be met, the couple must be living apart due to the illness or infirmity of one or both members of the couple.    

Homeowner's basic assessment rules

If the person was previously a homeowner and has retained that home, for the purposes of the pensions assets test the residence the person vacated to enter (or provide) care will continue to be regarded as the person's principal home. The home therefore remains exempt from the assets test assessment and the lower assets value limit applies.

The homeowner rules apply for the following periods:

• up to 2 years beginning from the day the person starts to be 'in care',
• as long as the person's partner resides in that home,
• up to 2 years beginning from the day the partner leaves the home to be 'in care', or from the partner's date of death,
• for as long as the aged care resident is paying (or there is a liability to pay) daily accommodation payment or a daily accommodation contribution , an accommodation charge or all or part of an accommodation bond by periodic payments and rents out the former home and entered care before 1 January 2017.

In these cases, the home is exempt from the assets test and the rental income is exempt from the income test.     

The homeowner rules also apply for up to 2 years while the person is absent from the residence and is personally providing community-based care for another person.

The non-homeowner rules will apply once the exemption period expires. If the person still owns the former home, it may be counted as an asset.

Renting the former home during exemption period

If the home is rented out during the exemption period, the home remains an exempt asset, but net rent is counted as income, unless the special rules that apply for some aged care residents are triggered. The special rules mean that any rent received is not assessable, and are triggered where the person entered care before 1 January 2017 and is paying (or there is a liability to pay):

• a daily accommodation payment or a daily accommodation contribution, and renting out their former home, or
• an accommodation charge for high-level care and renting out their former home, or
• an accommodation bond wholly or partly by periodic payments and renting out their former home.     
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Selling the former home during exemption period

If the home is sold before the end of the exemption period, the person will be assessed as a non-homeowner. This applies even if another house is purchased with the proceeds of the sale. This is because a house is only able to be exempted from assessment where it is the former principal home of the person entering care. Where the person has never lived in the house, this definition cannot be met and the value of the new house must be included in the pension assessment. However, this does not apply when the partner of the person in aged care still resides in the new house. This is because the continued occupancy of a home by the spouse establishes it as a principal home for both members of the couple and for the partner in care, homeowner status is retained.

Test of “liability to pay”

The test to be applied in these cases of former principal home and rental exemption is that the person has a “liability to pay” at least a part of the accommodation costs periodically. This liability to pay arises out of the resident agreement which is regulated under the Aged Care legislation and agreed by both parties. The agreement should specify the frequency of any periodic payments, how they are to be calculated, and any other matters of interest to both parties.

The resident agreement protects the interest of both the resident and the provider.  As such, the preferred method for confirming a “liability to pay” accommodation costs periodically is that the arrangement is part of a valid resident agreement.  If the agreement does not indicate periodic payments, but the resident informs DVA of changed payment arrangements with their provider, the delegate should request evidence to that effect.  This could be validated by a letter from the facility outlining the specifics of the periodic payment commitments, and/or the resident’s bond or fee statement/s showing actual payments being made and accepted. The delegate may consider that an informal arrangement exists for the payment of some of the amount periodically if they are satisfied with the documentation provided.  

It will also be necessary for the parties to enter into a revised resident agreement, meeting the requirements of the Aged Care legislation, and which provides for at least some payment of the accommodation costs by periodic payments.    

Non-homeowner's basic assessment rules

If the person was not previously a homeowner, has not retained that home, the exemption period has expired, or the person no longer meets the required conditions, the person is a non-homeowner. The high assets value limit applies to non-homeowners.    

Pre 1 October 1997 rules

Pensioners who were already residing in hostels, or entered hostels before 1 October 1997 may be assessed under the pre 1 October 1997 nursing home rules (home exempt for two years), or hostel (entry contribution) rules, whichever is to their advantage.    

Rent assistance eligibility

A person who is in care may, in some circumstances, be eligible for rent assistance. Their eligibility may depend on whether or not the accommodation cost is Australian Government subsidised, the type of care they are receiving and whether the rent assistance criteria are met.

Where the person is eligible for rent assistance, only the portion of rent that is payable for their accommodation is treated as rent for rent assistance purposes. If the component cannot be identified, then two-thirds of the total amount paid is treated as rent.

Aged care residents are not eligible for rent assistance. This is because the rent assistance criteria require that a person is not an aged care resident.

A person in respite care is not regarded as an aged care resident. They are therefore eligible for rent assistance, provided that the rent assistance eligibility criteria are met. 

Fees payable in respect of home care packages are not considered rent and therefore do not attract rent assistance.

*All eligibility criteria must be met for rent assistance to be payable. Where an approved care provider is receiving an Australian Government subsidy in respect of a person, then they will not be eligible for rent assistance.

Assessment of accommodation payments

A lump sum accommodation payment is exempt from assessment under the pension assets test.

The accommodation payment balance is exempt under the assets test while the person remains in care. However, if a person leaves the aged care facility, the refunded amount may be assessed as a financial asset, (depending on what the person has done with the funds), and deeming provisions may apply.