Where a hostel resident pays an accommodation bond more than ten times the annual rate of social security age pension, the pensioner supplement paid by DH&FS to the aged care facility to replace rent assistance is no longer paid.
Currently, ten times the annual rate of social security aged pension is $90,500 rounded up. On 2 April 1998 this will increase to $92,000 rounded up.
Consequently, pensioners who pay more than $90,500 as an accommodation bond ($92,000 from 2 April 1998) will pay the higher basic daily resident contribution of $26.40 per day indexed ($26.91 from 2 April 1998).
The $90,500 corresponds to ten times the rate of age pension and approximates the extra allowable amount ($90,000) used under the special residence (entry contribution) rules to determine whether a person is assessed as a homeowner or not.
The $90,500 thus approximates the point at which a person loses rent assistance eligibility under the entry contribution rules and that is why the subsidy cuts out at this point.
With subsequent indexations of the rate of age pension the link between the pensioner supplement cutout point used for subsidy purposes and the extra allowable amount used for pension purposes will be lost.