Cecile Apolinario explains the implications recent rule changes have had for same-sex couples going into aged care.
When a person moves into an aged care facility, they are generally required to pay some fees and charges for their care and accommodation that are based on their income and assets.
An income test is used to determine the fees payable (if any) and an assets test is used to determine whether they are required to pay an accommodation bond (for low-level care and extra service facilities) or an accommodation charge (for high-level care facilities).
The old rules
Previously, when a person in a same-sex relationship went into aged care, they were treated as a single person. As a result:
- Their partner’s income and assets were disregarded for the purpose of determining the aged care fees and charges; and
- If the partner was still living in the couple’s home, some or all of the value of the home might have been included in the asset assessment.
This meant people in a same-sex relationship often paid higher fees than opposite-sex couples, all other things held equal. In some cases, it even meant the couple’s home had to be sold to pay for the person’s aged care costs.
The rule changes
Since 1 July 2009, same-sex couples have been treated for aged care purposes in the same way as opposite-sex couples. This means that when a member of a same-sex couple goes into aged care:
- Only half the couple’s combined income and assets are counted; and
- If the person’s partner, or dependant child, is still living in the couple’s home, the home is excluded from the asset assessment (which is undertaken at the time of entry).
This exclusion of the couple’s home from the assets test means that when a member of a same-sex couple moves into aged care, they may now be required to pay a lower accommodation bond or charge than would have been the case if they had entered the facility before 1 July 2009.
On the other hand, the inclusion of a partner’s income in the income test could result in lower fees for some current and future aged care residents and higher fees for others, when compared to the previous rules. This will depend on the value of assessable assets owned (and therefore the assessable income received) by each partner.
The Federal Government has, however, indicated that accommodation bonds and charges for members of same-sex couples who entered care before 1 July 2009 will generally not be affected by the reforms.
That said, if a person moves to a different aged care facility after 1 July 2009, they might have another asset assessment, which could affect the accommodation charge or bond amount.
Strategy tip
If both members of a same-sex (or opposite-sex) couple are going into aged care, they should move in at separate times where possible. By doing this, the home will only be included in the calculation of the second accommodation bond or charge, which can potentially reduce the amount payable by the partner who moves in first.
The social security implications
Since 1 July 2009, same-sex couples have also been treated the same way as opposite-sex couples for social security purposes. Below is a summary of the key implications.
A higher pension may be paid after moving into care
Same-sex couples are now considered to be an illness-separated couple when one or both of them lives permanently in an aged care facility. This means that, like opposite-sex couples:
- They are assessed under the joint means test; and
- Because the payment is based on the single pension rate, a higher pension may be payable when compared to their entitlement before moving into aged care.
Rent assistance
When a person enters aged care, they are no longer eligible for rent assistance. Instead, different subsidies are paid directly to the aged care facility by the Department of Health and Ageing. However, if one of the same-sex (or opposite-sex) partners remains in the rented home, he or she could still be eligible for rent assistance.
Treatment of family home
The principal place of residence is generally exempt from the assets test for up to two years from the time a person moves into aged care. However, when a member of a same-sex (or opposite-sex) couple enters aged care:
- The home remains exempt from the assets test indefinitely, so long as the partner continues to reside in that home; and
- The resident is treated as a homeowner during the time the home remains exempt.
Furthermore, while Centrelink generally treats the home as the principal place of residence for two years from the date the last partner leaves the home, this period may be increased where the person entering the aged care facility rents out their former home and:
- Pays some, or all, of the accommodation bond by periodic payments; or
- Pays or accrues a liability for the accommodation charge.
Note that under both these options, the rental income is disregarded under the social security income test, as well as the aged care income tested fee.
Homeownership status
During the period of time that the home is an exempt asset for social security/DVA purposes, the resident is treated as a homeowner (ie, a lower asset-free area applies). However, once the home becomes an assessable asset, the resident is treated as a non-homeowner (ie, a higher asse- free area applies).
Cecile Apolinario is a technical consultant with MLC Technical Services.
