There’s no denying that the Australia aged care system can be overwhelming to navigate. One area that confuses a lot of people is aged care income and asset testing. Not only how it actually works, but how it will affect what you pay for aged care and what decisions you make about selling assets such as the family home.

If you or a family member are considering transitioning to aged care, understanding how aged care income and asset testing works will help you get a better picture of your aged care costs. You can then more adequately compare the costs of entering residential aged care with other aged care options, such as home care and aged care communities.

First steps to understanding aged care income and asset tests

The main purpose of the income and asset assessment is to determine if you are eligible to receive assistance with your residential aged care accommodation costs from the Australian Government and if you need to pay a means-tested care fee. The means-tested care fee is a contribution towards the cost of care that some people may need to pay. The care fee contributes to your day‑to‑day care costs in an aged care home.

The way your income is considered for aged care purposes is different from how it is considered for tax purposes, as some of the financial guidelines are different.

A good starting point is to have a look at the fee estimators, tools and checklists on the My Aged Care website. These tools are provided as a guide only but can give you a general picture of what effect your income and assets will have on your aged care costs if you or your loved one will need to move into residential aged care.

What does the aged care income and asset test include?

The aged care income and asset test includes five main areas you should be aware of:

• Assessed income – This is any income you receive including the aged pension, superannuation and investment income, net rental or business income.
• Deemed income – This any investment deemed to be earning a certain rate of income, such as shares or bank deposits.
• Assessed assets – All your assets, including property and financial investments, are considered but special rules apply in some situations.
• Gifted assets – If you have gifted away assets of more than $10,000 in a single year or $30,000 in total during a rolling period of five years, these amounts will be included in your assets assessment.
• The value of your family home – Part of the value of your former family home may be counted in your assets assessment, but not in all cases. If you keep your home, only a capped amount of $162,815.20 (as at 20 September 2017) is included or the net market value of your house, if lower. The value of the family home won’t be counted in the assets test under special conditions, including if a partner or dependent child remains living in the home.

More information on these areas of the aged care income and asset testing is available on My Aged Care website.

How to arrange an aged care income and asset test

Before you enter care, you should seek a formal assessment of your income and assets through Department of Human Services. If you do not complete an income and assets assessment, you will not be eligible for any Australian Government assistance towards your care or accommodation costs.

No need for income or asset testing at Seasons

At Seasons, we are an aged care community rather than a residential aged care provider so we don’t rely on an income and assets test to work out your accommodation and care costs.

All our ingoing, ongoing and outgoing costs are a set price for each of our residents, regardless of their assets or income. This means that as long as you have the finances to afford your ingoing contribution (which is a set fee for your chosen apartment) and 85% of the base age pension for your weekly fees, your other investments and assets don’t need to be mentioned or considered.

While you weigh up your financial options and make your way through the aged care income and asset testing maze, it’s a good idea to get some professional financial advice.

Discover more about the Seasons difference.