Residential aged care and your income support payment

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What is residential aged care

When you're no longer able to live comfortably and safely in your own home, you may move into a residential aged care facility (RACF).

If you or your partner move into a RACF, your income support payment may increase or decrease. Payments that can be affected include:

• Service Pension
• Age Pension
• Veteran Payment
• Income Support Supplement

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Residential aged care and your payments

If you are partnered and one of you has entered residential aged care, you will be considered an illness-separated couple. If this situation is likely to continue indefinitely, you'll each receive the higher single rate of pension.

If you're single, or if both you and your partner move into a RACF facility, you will receive your pension at the single rate.

When you move into a RACF you can have your pension paid to:

• your own bank account
• a third party who can manage it for you; or
• the aged care facility through their agent

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How your assets affect your payments

We strongly suggest that you seek independent financial advice before you begin the process of going into aged care. Doing so could provide you with significant savings on your aged care fees. 

If you cannot find independent financial advice, a Financial Information Service (FIS) officer from the Department of Human Services (DHS) may be able to help you.

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Financial assets

When you move into a RACF, you may be asked to pay fees to the facility. 

If you were receiving a reduced rate of pension and you had to use some of your financial assets for fees, your pension rate may be affected. 

Any payments you’re receiving as part of the Home Equity Access Scheme may also count as income on your income and asset assessment. 

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Selling your home

Moving out of or selling your home may affect how we calculate your payments.

• If you pay a lump sum either Refundable Accommodation Deposit (RAD) or Refundable Accommodation Contribution (RAC) to a RACF with proceeds from selling your house, they will not form part of your financial assets for pension purposes. 
• If you have received a loan from the Home Equity Access Scheme, you will need to pay back the remaining balance on the loan with the proceeds from selling your home.

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2 year exemption period

We won't count your family home as an asset for payment purposes for 2 years after it has been vacated. The exemption period starts from the day both you and your partner have left the home. 

During the 2 year exemption period, the homeowner assets limits continue to apply.

If you sell your home during the 2 year exemption period after entering a RACF, you will be assessed under the non-homeowner asset limits. 

Proceeds from the sale of your home will be considered financial assets, and counted as producing income for your pension assessment.

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Buying another home during the 2 year exemption period

If you sell your home during the 2 year exemption period, you will still be considered a non-homeowner if you buy another house with the proceeds.

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After the 2 year exemption period

We will contact you asking for details of your house and an estimate of its value near the end of your 2 year exemption period. 

If you want to discuss how this might affect you, you should contact us about 6 months before the end of your exemption.

After the 2 year exemption period is up or you have sold your home, you will be assessed under the higher non-homeowner asset limits. The market value of your home will be counted as an asset for pension purposes. 

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Renting out your home

During your 2 year exemption period, any income you receive from renting out your home will be counted for pension purposes if you move into a RACF after:

• 1 January 2017; or
• 1 July 2014 and paid all your accommodation costs as a lump sum

Your house will also be counted as an asset after the 2 year exemption period.

If you moved into a RACF before 1 January 2016 and are renting out your home, we won't count it as an asset, or any rental income for pension purposes so long as you are:

• paying a daily accommodation payment
• paying a daily accommodation contribution
• paying an accommodation charge; or
• paying all, or part, of an accommodation bond by periodic payments

If you moved into a RACF between 1 January 2016 and 31 December 2016, the same conditions apply for counting your house as an asset, but your rental income won't be counted at all.

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Things you should know

• While refundable lump sum accommodation payments to the aged care facility are non-assessable assets for pension purposes, they are counted as assets for the calculation of aged care fees.
• We can arrange a no-cost evaluation of your home's value if your pension may be affected.
• All information provided here concerns Commonwealth-funded aged care facilities. Private facilities may have their own procedures. 
• You could save a significant amount on your aged care fees by getting independent financial advice before you begin the process. A Financial Information Service (FIS) officer from DHS may also be able to help you

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What to tell us

If anything changes that could affect your entitlements, you need to let us know within 14 days (or 28 days if you receive the Remote Area Allowance or live overseas).

When you're entering a RACF you need to tell us:

• about any changes to your income and assets
• when you or your partner have entered care
• your new residential address
• where you would like your mail directed; and
• your telephone contact details

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