Q & A of the month – Aged care asset test

A: For Centrelink purposes the home is exempt for up to two years from the time the spouse passed away. After two years, the home is assessed at market value.

For aged care purposes the home is assessed up to the home exemption cap from the time the spouse passes away unless a protected person lives in the home. There is no two year means test exemption for the home when calculating aged care fees.

Explanation:

Any net income derived from the principal home is assessed as ordinary income for both Centrelink and aged care income tests.

Centrelink asset test

Where the client vacates the home temporarily the home is exempt for 12 months. However, where the client vacates the home to enter a care situation, the home is exempt for up to the later of two years after:

• the client vacates the home to enter a care situation
• the remaining spouse passes away or vacates the home to enter a care situation.

After the two-year period the market value of the home is assessed.

Aged care asset assessment

The market value of the home up to the home exemption cap ($171,535.20 at 20 September 2020) is assessed.
However, the home is exempt if a protected person lives in it. The aged care income and assets assessment is assessed every quarter.

A protected person is:

• the spouse
• a dependent child under age 16 or aged 16 to 25 who studies full-time
• a carer who resided in the former home for at least 2 years and is eligible for income support at the time of assessment
• a close relation (parent, sister, brother, child or a grandchild) who lived in the home for at least five years and is eligible for income support at the time of assessment.

While the former home may become assessable for Centrelink after the two year period after the client enters a care situation, it may continue to be assessed concessionally for the aged care asset test for more than two years, including being completely exempt where the person living in the home continues to be a protected person.

Click here to read additional information about considerations when entering residential aged care in our strategy guides.