Means testing or income testing: What does it mean?

Key Points:

• The Government uses either a means or income test to assess how much you need to pay towards the cost of your Government aged care
• You need to provide certain financial and asset details to the Government before you can enter aged care
• If you are part of a couple, you will be considered to own half of the total combined assets, regardless of whose name the asset is under

The Government will tell you if you qualify for Government funded aged care services, as well as how much you will contribute towards your aged care costs, if any at all.

You will be subject to either a means test or income test to assess your financial situation to work out how much you will contribute towards your care and services, and the test you undertake will depend on the aged care you are accessing.

Working out how much you will pay plays a part in deciding what aged care services or homes are right for you, as some of the fees and costs you pay depend on your financial situation.

So, what do these tests require from you?

Types of care and the financial testing required

Different types of care require different types of information to assess how much you are expected to pay and how much Government subsidy you may receive.

For basic care at home under the Commonwealth Home Support Programme (CHSP), you will not need to complete a means assessment. The Government wants basic home care to be affordable, so you won’t pay towards the cost of your care if you can’t afford to.

Similarly, short-term care, like residential or emergency respite, does not require you to complete a means test. But if you can afford it, you will be expected to make a contribution to your provider for as long as you receive services or for the type of services.

If you cannot afford to contribute towards your care, you can talk to your provider about it and figure out an appropriate care option.

If you are accessing higher levels of care at home through a Home Care Package (HCP), you will be income assessed to determine how much you will contribute towards the cost of the services you receive, if any at all.

You will also need to complete a means test when accessing residential aged care, which will gauge how much you will pay as a contribution towards the cost of your care based on your income, assets and fees.

What financial details do you submit?

To find out what you need to pay towards the cost of your care and the level of subsidy you may receive from the Government, you need to produce your income and asset information – known as your ‘financial details’. This will be processed through either Services Australia or the Department of Veterans’ Affairs (DVA).

If you currently receive the Age Pension or the Service Pension, Services Australia or the DVA may already have your financial details on file to process for you.

How much you will pay towards the cost of your care and services depends on:

• Your financial situation
• The type of care you get or would like to get
• How much your aged care provider charges

From there, Services Australia or DVA will determine what this cost is for you to pay, as well as where the Government needs to cover the rest.

What income details are considered?

Details about any income you may receive are needed to work out the cost of your aged care. These include:

• Income from work and net rental income
• Income support payments from the Government or Department of Veterans’ Affairs
• Value of financial investments
• Superannuation, overseas pensions and money from outside of Australia
• Income from income stream products such as annuities and allocated pensions
• Family trust distributions or dividends from private company shares
• Gifts over the allowable amounts. For a single person or a couple, the combined allowable amount to gift is $10,000 in one financial year, and $30,000 across five financial years

The Government does not count rental income from any home you may own if you make regular or a mix of regular and lump sum payments for accommodation in residential aged care.

The rental income from your former home will become part of the assessment if you leave residential care for more than 28 days and then re-enter care.

What asset details are considered?

An asset is any property or item of value you and your partner may own or have an interest in, both in and outside of Australia.

These include:

• Personal effects
• Household contents
• Shares
• Financial investments
• Real estate

If you are part of a couple, you will be considered to own half of the total combined assets, regardless of whose name the asset is under.

Your home counts as an asset if you enter residential aged care and a protected person is not occupying your home, like a partner, dependent child, carer or close relative.

If a protected person does live in your home, a carer or close relative must be eligible to get an Australian Government income support payment and have lived in your home with you for the past two years.

There is also a cap on the value of your home included in the assessment.

If your home counts as an asset, you need to provide an estimated value, which Services Australia or the DVA will then verify.

What if you don’t want to provide your details?

You do not have to provide your financial information to be assessed if you don’t want to, but this means you will pay the maximum costs when applying for aged care services.

These include maximum fees and accommodation costs related to your care.

Can I seek financial advice?

It is recommended that you seek independent financial advice before deciding how to pay for your aged care.

Services Australia’s Financial Information Service (FIS) is a free service available to everyone where an officer can show you how to make informed financial decisions and help you to understand the financial implications of your aged care costs.

They can also help you understand how different payment methods for residential care may affect your pension and aged care costs.

To find out more about FIS, or to make an appointment, call 132 300 and say “Financial Information Service” when asked why you are calling, or visit the website.

You can also engage independent financial advisors to get assistance understanding your financial situation and aged care costs. You can learn more about expert help in our article, ‘What a financial advisor can do for you‘.

What happens next?

Once you have undertaken a means or income test, the outcome of your assessment will be sent to you via letter outlining the fees you need to pay.

This initial fee advice is valid for 120 days unless you tell My Aged Care, Services Australia or the DVA of a change in your circumstances.

You must notify Services Australia or the DVA about changes to your income and assets within 14 days.

If you have already completed a means or income test, you can update your details online using your Centrelink online account.

You can also call the Older Australians line on 132 300 between 8am-5pm Monday to Friday, or visit a Services Australia branch to receive assistance in updating your details.

How have you found navigating these tests? Let us know in the comments below.

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