NB! The rates and thresholds in this commentary were applicable at 20 March 2014 but are regularly indexed. To see the correct rates for the period that you are looking for, please refer to the container above headed “Aged Care Rates”
The income tested daily care fee is limited to –
Pre-reform resident {pre 20 March 2008}
Assessed at the lower of:
- Maximum of $73.86 per day;
- Cost of care;
- 25% of income above threshold;
- 5/12ths formula (see below)
Note: Pre-Reform residents will only be assessed under the new calculation method if it results in a lower fee.
If the pensioner is receiving a pension affected by the income test, then the new calculation method and the previous 25% of excess will result in the same ITF being payable. A pensioner affected by the assets test will generally find that the new calculation method will result in a lower ITF.
Post-reform resident {post 20 March 2008}
Assessed at the lower of:
- Maximum of $73.86 per day;
- Cost of care;
- 5/12ths formula (see below)
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The 5/12ths formula is calculated as follows:
Income tested Fee (per day) = 5/12 x ([Assessed Income pf + Pension pf + Direct Deduction Income pf] - [Maximum single pension rate pf + Pension Allowable Income pf]) / 14
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For a Single person
Total income per fortnight is made up of Centrelink or DVA pension received, their assessable income used for pension assessment purposes and direct deduction income (if any).
Two thresholds apply:
1. Entered into care from 20 September 2009
a) A Standard Nursing Home Resident
From the total income, an amount of * $951.20 pf is deducted leaving the excess income. The income tested fee payable per fortnight is 5/12th of the excess income.
* This represents the maximum single pension including pension supplement, plus the income test free threshold for a single, less the minimum pension supplement.
b) A Phased Nursing Home Resident
From the total income, an amount of * $951.20 pf is deducted leaving the excess income. The income tested fee payable per fortnight is 5/12th of the excess income.
Example: At 20 March 2014
Jane :
Ø Non-homeowner
Ø receives an account based pension of $40,000 per annum (UPP - $23,000)
Ø has $10,000 in the bank
Ø and therefore is a phased nursing home resident
Ø also receives an age pension of $590.03 pf including the supplements
Jane’s Daily Income Tested Fee is calculated as follows:
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Age Pension including Pension Supplement
|
$590.03
|
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Less: The Minimum Pension Supplement
|
-$33.70
|
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Less: The Clean Energy Supplement
|
-$14.10
|
|
|
$542.23
|
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Add: Centrelink Assessable Income
|
|
|
Account Based Pension ($40,000 – $23,000)/26
|
$653.84
|
|
Deemed Income ($10,000 * 2.0%)/26
|
$7.69
|
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Total Income
|
$1,203.76
|
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Less:
Income Test Free Threshold for a Phased Single
|
-$951.20
|
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The Excess Income
|
$252.56
|
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5/12ths
|
$105.23
|
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Daily Income Tested Fee
|
$7.52
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2. Entered into care before 20 September 2009 (Protected residents)
From the total income, an amount of * $806.90 pf is deducted leaving the excess income. The income tested fee payable per fortnight is 5/12th of the excess income.
* This represents the maximum single pension including pension supplement, plus the income test free threshold for a single, less the minimum pension supplement.
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For a Member of a Couple
Total income per fortnight is made up of their Centrelink or DVA pension received, 50% of combined assessable income used for pension assessment purposes and 50% of combined direct deduction income (if any).
Two thresholds apply:
1. Entered into care from 20 September 2009
a) Standard Nursing Home Residents
From the total income, an amount of * $933.20 pf is deducted leaving the excess income. The income tested fee payable per fortnight is 5/12th of the excess income.
* This represents the maximum single pension including pension supplement, plus 50% of the income test free threshold for a couple, less the minimum pension supplement.
b) Phased Nursing Home Residents
From the total income, an amount of * $933.20 pf is deducted leaving the excess income. The income tested fee payable per fortnight is 5/12th of the excess income.
2. Entered into care before 20 September 2009 (Protected residents)
From the total income, an amount of * $788.90 pf is deducted leaving the excess income. The income tested fee payable per fortnight is 5/12th of the excess income.
* This represents the maximum single pension including pension supplement, plus 50% of the income test free threshold for a couple, less the minimum pension supplement.