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Aged care and age pension assessment

Included in the Government’s December 2015 Mid-Year Economic and Fiscal Outlook (MYEFO) is a proposal to change elements of the age pension means test for those entering aged care from 1 January 2017. These changes will broadly align the Centrelink means test treatment of the former family home with the changes to aged care assessment of the former family home which apply to residents who enter care from 1 January 2016. Based on these proposals, for new residents who enter into aged care from 1 January 2017, net rental income from the former family home will be included in the income test for the age pension regardless of how the aged care resident funds their accommodation cost (eg either by lump sum, regular payments or a combination). Net rental income is currently exempted from the Centrelink income test where the aged care resident is paying at least part of their accommodation cost as a Daily Accommodation Payment (DAP) or a Daily Accommodation Contribution (DAC).

In addition, it has also been proposed that the aged care resident’s former family home be included in the Centrelink assets test, removing the exemption that currently applies when the accommodation cost is paid on a periodic basis (ie as a DAP or DAC). The Centrelink assets test exemption that applies when a protected person occupies the aged care resident’s former family home is not mentioned. At this time there is no indication that the value of the former family home will be capped as it is for aged care means tests.

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