Are you starting to consider Aged Care for your loved ones but aren’t sure on how to go about the Means Testing?
Aged Care Ready Associated Director and Founder of the Facebook Group ‘Ageing Parents Support Group’, Naomi Anderson, spoke with Patrick Curlis from Mint Financial Solutions about about Means Testing and what that actually means in terms of how much a person needs to pay towards aged care .
The full interview can be viewed on our YouTube Channel.
Ms Anderson began the interview by gaining a deeper understanding of a Means Test.
Mr Curlis explained it is the process you go through with Centrelink to determine what your means are and therefore how much you can afford to pay in Aged Care.
“The means test also determined your level of Aged Pension from Centrelink,” he said.
“There is both an income and an assets test. Whichever is more favourable to Centrelink is the one that determines your age pension and your means tested fee (in residential Aged care).”
*Note certain assets are considered different by Centrelink (for Age pension) and Centrelink (for residential Aged care).
Ms Anderson clarified if this extra money that families/the elderly person has to pay is on TOP of the RAD/DAP/BDF/ESF?
In residential Aged Care, if you have the capacity to do so, you must pay the additional ‘means tested fee’ in addition to any other costs you must pay.
Mr Curlis explained there is a cap to this and you wouldn’t pay more than ~$28,000 per annum or ~$67,000 over your lifetime. These numbers are indexed along in March and September each year.
The interview continued and Ms Anderson asked if the person has ‘too many assets’, couldn’t they just gift them away?
Patrick answered with a YES.
“Yes you can although it may be of very limited assistance with a) increasing your aged pension or b) reducing your means tested fee,” said Patrick Curlis.
“Gifting” rules determine how much you can ‘gift’ before being penalised for it.
If you give more than $10,000 in a financial year or more than $30,000 ove five financial years, the following applies:
“Deprived assets (ie: gifts) of recipients qualified or eligible to receive a pension, benefit or allowance are assessed for 5 years from the date of the relevant disposal”.
“This affects aged care as it assists your aged pension only very minimally (within the $10,000 cap) if you gift,” he explained.
“It makes a lot more sense to spend the money than to gift it and have it be assessed for a number of years as if you still own the asset.”
Whilst it may be be wonderful to have a series of assets under their belts, the reality is not ever elderly loved one has assets.
You may be wondering if they can still get care?
Mr Curlis of Mint Financial Solutions explained they will receive care but they will be fully funded by the government.
“They will still pay the basic daily care fee as that is pinned to their aged pension but as they have minimal assets and income they will very likely not need to pay any means tested fee,” he said.
Naomi then wanted to explore the strategies available from a financial perspective to receive more.
She asked: Are there many strategies available to a) increase the centrelink aged Pension and b) reduce the Means tested fee?
Mr Curlis’ response was there are less strategies available to employ compared to a few years ago.
“Some adjustments will increase your pension but may not affect the means tested fee payable,” he said.
“This is definitely where you need specific advice as your circumstance may have many (or few) opportunities to adjust how your assets are assessed by Centrelink/ MyAged care,”
“A prudent adviser can often extend/increase your retirement income just by amending your investments.”
Naomi is the Associate Director of Aged Care Ready and hosts weekly interviews with industry professionals.
Patrick Curlis is an experienced Financial Planner (ADVDIP FP, AMC.) and has more than a decade of experience in the industry. He has a special interest in Aged Care advice.
Aged Care Ready do the hard work for you and we often save our clients on numerous fees because of our relationship with the providers.
If you or your loved ones are seeking care but don’t know where to begin or have found yourself in a sticky situation, contact our team today on 1300 023 589 and we will guide you through.
Direct link to video interview: https://youtu.be/OQFzgu-xBfI