If clients move into aged care and leave their former home vacant, the home is assessable and will have an impact on the fees calculated for aged care. How the home is assessed depends on when the person moved into care.
If the home is included in the means-tested amount (MTA) calculations for aged-care fee purposes, it is not the full market value that counts, but only an amount up to the capped value of $159,631.20 (as at March 20, 2017).
While only a portion of the home is assessable, it is this portion that has the greatest impact. Inclusion of the capped amount will prevent the client from being assessed as a low-means resident so they will need to pay the full requested accommodation payment. They may also need to pay a means-tested fee.
The rules may become more complex when deciding the outcome when another person continues to live in the home. If that person meets the definition of a “protected person”, the home will be exempt. This test needs to be checked at point of entry and on an ongoing basis.
The changes in legislation
When deciding how the home is to be assessed, it is important to check the date the person entered residential care. A series of legislative changes have applied since the new rules commenced on July 1, 2014, to remove many
of the concessions on the home.
There are also two sets of rules – one for determine the MTA and one for determining
income support eligibility. The January 1, 2017, changes bring these rules into alignment for the income assessment but the asset rules are still quite different.
Who is a protected person?
For Centrelink/DVA purposes, only a current spouse still living in the home will qualify for an indefinite exemption. But when calculating the MTA for aged-care fees, the exemptions extend further to cover a “protected person” still living in the home.
A protected person includes a spouse but also includes:
- A dependent child (ie a child who the person in care is legally responsible for and is either under age 16 or 16-24 and in full-time study)
- An eligible carer who has lived in the home for at least two years
- An eligible close family member who has lived in the home for at least five years.
With the carer and family member criteria, the person also needs to qualify for a means-tested income support payment from Centrelink or Department of Veterans’ Affairs. This part of the definition is a point-in-time assessment, so the person just needs to qualify at that point in time, not for the whole time they lived in the home.
The MTA is recalculated every quarter. If circumstances change in the future and the protected person moves out of the home or ceases to qualify as a protected person, the exemption is lost and the home will start to be assessed up to the capped value.
Example
Joanne moved into her elderly mother’s home six years ago. Joanne was working for most of the time but six months ago she started to receive the age pension.
Her mother is now moving into residential aged care. Joanne is a close family member and has lived in the home for more than five years. She has not been eligible for income support for this whole time (only the last six months). At the time of submitting the MTA assessment form Joanne does qualify for age pension so she will meet the definition of a protected person.
While Joanne lives in the home the home will be an exempt asset for the MTA calculations. However, Joanne decides the house is too big for her and moves into an apartment closer to her mother 12 months later. The mother’s house will now be assessed at the capped value when determining her ongoing care fees.
If Joanne was younger and had qualified as a carer to receive the Carer Payment, she might have also met the criteria to be a protected person. However, the Carer Payment would cease soon after her mother moves into care. Unless she qualified for another income support payment, she would lose the status of a protected person and the home would become assessable.
Home assessment based on date of entry into care
| Date entering care system (inclusive) |
Impact for MTA (care fees) |
Impact for Centrelink/DVA income support |
| July 1, 2014 to December 31, 2015 |
Home assessed at capped value or exempt if a protected person continues to live there. The rental income is exempt if paying some DAP. |
Home is exempt while spouse continues to live there or for up to two years. This can extend indefinitely if some DAP is paid and the home is rented. The rental income is exempt if paying some DAP. |
| January 1, 2016 to December 31, 2016 |
Home assessed at capped value or exempt if a protected person continues to live there. The net rental income is assessable income. |
Home is exempt while spouse continues to live there or for up to two years. This can extend indefinitely if some DAP is paid and the home is rented. The net rental income is exempt if paying some DAP. |
| From January 1, 2017 |
Home assessed at capped value or exempt if a protected person continues to live there. The net rental income is assessable income. |
Home is exempt while spouse continues to live there or for up to two years. The net rental income is assessable income. |
