Aged care is something that is often thought about when we are getting closer to retirement age. It can be a difficult decision to make, as you want to ensure that you will be able to live comfortably and receive the best possible care. In this blog post, we will discuss means testing for aged care. What is it? How does it work? And most importantly, what does it mean for you? Keep reading to find out!
Aged care means testing is the process of assessing your financial situation to determine how much government funding you are eligible for. This assessment takes into account things like your income, assets, and any other sources of financial support. The aim of means testing is to make sure that people who can afford to pay for their own aged care do not receive government funding, and that those who cannot afford to pay get the financial assistance they need.
There are two main types of aged care means testing: income-tested and asset-tested. Income-tested looks at your taxable income and any other sources of income, such as pensions or investments.
The Australian Government uses the following income details to work out the cost of means-tested aged care services:
- Your income from work and net rental income
- Your income support payments from the Australian Government or DVA
- Your financial investments value
- Your superannuation, overseas pensions and money from outside the Australian Government
- Your income from income stream products, such as annuities and allocated pensions
- Your family trust distributions or dividends from private company shares
- Your gifting over the allowable amounts
Asset-testing assesses the value of your assets, including your home and any other property you own.
An asset test is used to assess the value of your assets. The following assets (not exhaustive) are included in this assessment, including assets held outside Australia:
- Financial investments
- Real estate
- Shares
- Household contents
- Personal effects
The Australian Government takes half of the overall combined assets if the care recipient is part of a couple. It makes no difference whose name the asset has.
Their house counts as an asset if both of the following apply:
- They enter residential aged care on or after 1 July 2014
- A protected person isn’t occupying their home
It is important to remember that means testing is not the only factor that determines your eligibility for government funding. Other things, such as your care needs and the type of care you need, will also be taken into account.
Generally speaking, the more you have, the more you pay, but the more we can do to help.
If you are thinking about entering an aged care facility, or if you are already in one, it is a good idea to speak to a financial adviser specialising in Aged Care and Centrelink about your options. They can help you understand the means testing process and give you advice on how to maximise your chances of getting government funding.
