Much has been written about the effects of the changes to the asset test assessment from Jan 1st 2017 for those receiving the Aged Pension. There is another section of the retired community that hasn’t had the same publicity: those people in Aged Care. Their situation is quite different because they have existing agreements with the facilities and there is an expectation that both parties will honour their contracts.
Pensioners will have reduced income
The reduction in the assets test threshold means that many pensioners will have reduced income or even have their benefits cut off entirely. This could put pensioners, and their Families in an awkward situation especially if they own fixed assets that can’t be easily cashed in such as real estate or term deposits. I can see that this will be a stressful time for many families as they need to review the financial position and make appropriate decisions that’s in the best interest of the family member in aged care. Then there’s the aged care facility that’s relying on receiving ongoing resident care fees.
Single Aged Pensioners
The Centrelink changes will be complicated enough in a couple relationship but this is even more difficult when a spouse dies and becomes a single Aged Pensioner. The asset test limit for a single person doesn’t provide much leeway so this group of pensioners are more vulnerable.
Aged Care loan maybe a solution
A solution that has merit is an Aged Care loan where the principle home of the aged care resident is used as security to either arrange a lump sum or regular draw down income payments. There are significant advantages including retaining the Family home and arranging the loan proceeds so as to not impact Centrelink benefits.