Financial Information Service

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Age Pension Aged care
Presenter Uma Chandrasekaran
Financial Information Service
20 September 2008
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Who we are.....

• Financial Information Service
• completely free
• available to everyone
• at Centrelink offices

"accessible information for all Australians"
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Our service to you....

• financial seminars
• phone
• personal consultations

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Agenda

• Assessment of Income and Assets
• Aged care issues

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Maximum Rates
567.90 pf 472.40 pf each (14,765 pa)
(12,282 pa each)
Rates current at 20 September 2008
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Assessment of Income
Financial Information Service
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Income Test - Single

• maximum rate if assessed income is below 138 pf
  (3,588 pa)
• rate reduces by 40c for each 1 of income above
  the free area
• no pension paid if income is above 1,557.75 pf
  (40,501pa)

Rates current at 20 September 2008
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Income Test - Couple

• income is combined
• maximum rate if assessed income is below 240 pf
  (6,240 pa)
• each person's rate reduces by 20c for every 1 of
  income above the free area
• no pension paid if income is above 2,602 pf
  (67,652 pa)

Rates current at 20 September 2008
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Assessment of Income ........

• earnings from employment
• gross amount before tax and other deductions
• excludes 9 employer contribution to Super
• generally, income assessment stops when you stop
  work

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Assessment of Income ........

• earnings from employment
• income stream products
• Annuities, Allocated Pensions, Term Allocated
  Pensions, Account Based Pensions
• Gross Income - Deduction Amount

• Beware
• Withdrawals from these products will affect the
  Deduction Amount
• Discuss with FIS or your Financial Planner

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Assessment of Income ........

• earnings from employment
• income stream products
• superannuation pensions
• paid from defined benefit funds (not purchased)
• Comsuper, Defence Forces, State Super, some large
  company schemes
• gross amount received

Under the new superannuation rules applying since
1 July 2007 there may be a Deductible Amount -
your fund will advise you if there is
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Assessment of Income ........

• earnings from employment
• income stream products
• superannuation pensions
• farm or business income, rental income
• net income after expenses
• assessed from Tax Returns
• most Tax deductions are also permitted for
  pension assessments

Special assessment rules apply to Private
Companies and Trusts
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Assessment of Income ........

• earnings from employment
• income stream products
• superannuation pensions
• farm or business income, rental income
• deemed income on financial assets

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Deeming

• All financial investments are aggregated
• (cash, shares, bank accounts, investments, loans)
• Single
• first 41,000 is assessed at 4
• remainder is assessed at 6
• Couples
• first 68,200 combined is assessed at 4
• remainder is assessed at 6

Irrespective of the actual income received
Rates current at 20 September 2008
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Deeming - example
Brian is single and has the following
investments Bank account 4,473 _at_ 1
44pa Term deposit 62,000 _at_ 7.25 4,495
pa Shares 8,000
320pa Total 74,473 4,859 pa (186
pf) Brian's deemed income first 41,000 _at_
4 1,640 pa remaining 33,473 _at_ 6
2,008 pa Total 74,473 3,648 pa
(140 pf)
Rates current at 20 September 2008
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Assessment of Assets
Financial Information Service
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Asset Test

• Assets the things that you own
• different thresholds for
• homeowners
• non-homeowners
• assets above the threshold reduce pension at
  1.50 pf per 1,000

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Asset Test Thresholds
Threshold
Cut-out Point
Single
Homeowner
171,750
550,500
Non-homeowner
296,250
675,000
Couple
Homeowner
243,500
873,500
Non-homeowner
368,000
998,000
Thresholds are indexed annually on 1 July
Rates current at 20 September 2008
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Assets include........

• motor vehicles, boats, caravans etc
• household contents and personal effects
• bank accounts, investments, loans
• real estate
• farms, businesses
• antiques, collectables
• gifting

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Assets DO NOT include........

• principal home and surrounding land on same title
• up to 2 Ha under private land use test
• no limit under extended land use test

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Assets DO NOT include........

• principal home and surrounding land on same title
• funeral bonds, prepaid funerals
• special disability trusts
• superannuation/rollover investments
• up until Age Pension age
• Ministerial exemption

Paul is 65 yo, and his wife Gill is 58
yo. Superannuation in Gill's name is not included
when assessing Paul's Age Pension
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Pension Rate Paid
Potential Maximum
Rate using Asset Test
Rate using Income Test
Lower Rate Applies
The applicable test may change as circumstances
change
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Aged Care Fees and Charges
Today's presentation is based on the new rules
for the assessment of Aged Care fees and charges
introduced on 20 March 2008. Please note that,
in most cases, the fees for those who entered
Aged Care prior to 20 March 2008 will continue to
be assessed under the old rules.
Post Reform / Pre Reform
Financial Information Service
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Overview - Low care resident
Basic Daily Care Fee
Ongoing fees
Income Tested Fee
Accommodation Bond (Low Level Care)
Accommodation Charge (High Level Care)
A one-off lump sum payment
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Overview - High care resident
Basic Daily Care Fee
Ongoing fees
Income Tested Fee
Accommodation Charge (High Level Care)
Accommodation Bond (Low Level Care)
An ongoing charge
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Accommodation Bond Accommodation Charge
Financial Information Service
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Accommodation Bond

• based on the person's level of assets
• no maximum amount for the bond,
• but person must be left with at least 34,500
• bond is repaid when the resident leaves
• less a "retention amount"

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Accommodation Charge

• rate is agreed and fixed at entry
• no increased with indexation etc
• no change if circumstances change
• financial windfall
• change in pension status
• payable indefinitely

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Pension Assessments and Aged Care
Financial Information Service
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Pension Assessment

• rate increased for couples (living apart)
• same as single pension each
• couple (combined) income and asset tests apply
• Rent Assistance ceases
• Accommodation Bond is not assessed

remember to advise Centrelink if other assets
have reduced as a result of paying an
Accommodation Bond
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Exemption of Principal Home

• former home remains exempt from pension Assets
  Test
• for 2 years from entry to care, or
• indefinitely if partner still lives there

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Exemption of Principal Home

• former home remains exempt from pension Assets
  Test
• for 2 years from entry to care, or
• indefinitely if partner still lives there
• exempt indefinitely home is rented, and,
• the person is liable to pay an Accommodation
  Charge, or
• the person is paying an Accommodation Bond (fully
  or partially) by periodic instalments

and the rental income is exempt from assessment
for both Pension and the Income Tested Fee
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Exemption Period Ends

• sale of principal home
• proceeds now as asset
• investment options will determine treatment
• end of exemption period and home retained
• now assessed as an asset (valuation)
• higher Non-Homeowner assets test threshold applies

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Questions
www.facsia.gov.au
www.centrelink.gov.au
www.seniors.asn.au
www.health.gov.au
Financial Information Service
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Thank you!

Financial Information Service