Assessed Assets on entry to Permanent Residential Aged Care

Assessed Assets on entering permanent residential aged care

By Christine Hopper

The amount of your Assessed Assets on entry to Permanent Residential Aged Care impacts on your potential costs of living in care.  Your Assessed Asset amount determines the maximum amount that you could be asked to contribute towards the cost of your accommodation in residential aged care.  So what is your Assessed Asset amount?

A word of caution:
Be modest because your Assessed Asset amount determines your maximum Accommodation Bond amount, it is in your interests to give the lowest reasonable value for each item.

A word of warning
: check out ‘Who is a Couple at Centrelink?’ before you start on the Asset Assessment for a person who has been in a couple relationship.  You may be surprised by the Couple Separated by Illness definition.  Read more at http://www.financialcareservices.com.au/newsletters/vol-1-ed-3/

What does Assessed Assets on entry to Permanent Residential Aged Care look like for a Single at Centrelink person
For a Single at Centrelink person who was living alone before needing to enter residential aged care, the Assessed Asset amount is the total value of all the potential aged care resident’s assets.

Please remember that any “excess gifts” count as financial assets for 5 years. Read about Centrelink amd gifting at http://www.financialcareservices.com.au/newsletters/vol-1-ed-9/

Single home owner living alone in a house on a separate title
For example, a widow might have sole ownership of the former family home and its contents plus a small amount in a bank account.  Thus her Assessed Assets comprise the home, its contents and her bank account.

The Assessed Asset amount is the balance of her bank account after she has paid all bills and made any allowable gifts, plus $3,000 for her personal effects and household contents at ‘garage sale’ values, and the Capital Improved Value of the home taken from the most recent Council Rates Notice.

Alternatively if you already have a contract for the sale of her home, then the value of the home could be taken as the amount that she would receive after deducting the costs of selling the home.  (You could reasonably deduct the estate agents fee, the advertising costs and the lawyer/conveyancing fees.)

This Assessed Asset amount for a typical home owner widow would be well in excess of $110,000.  Hence she would not be a Supported Resident and she does not need to complete the Blue Form, more correctly known as a “Permanent Residential Aged Care Request for an Assets Assessment”.

An estimate of her Assessed Asset amount is still needed so that she can confirm that she has sufficient assets to support the negotiated Accommodation Bond amount or the maximum Accommodation Charge.

Single home owner living alone in a retirement lifestyle or assisted living facility
If her home is an apartment or unit in a Retirement Village, Assisted or Lifestyle Community Residence, then the ‘value’ of the home requires careful assessment.

Beware, strata title units might have their own Council Rates Assessment Notices but a deferred management fee could still be applied together with ongoing service fees.  Seek help from Christine at Financial Care Services with this assessment before any member of the family gives any hint of the potential resident’s asset range.  Remember you cannot ‘undisclose’ data later.

A Single at Centrelink resident of a retirement lifestyle community needs to ascertain the net amount that would be available after vacating her independent living unit or apartment within that community.  The net amount is the ‘resale’ price less the costs of refurbishing and possibly upgrading the unit or apartment in preparation for selling, less the regular service fee for the period from when the apartment is vacated until the new occupant takes over paying, less the deferred management or service fee, less any other deferred fees or exit fees or capital gain sharing charge.

For example, the resale price of a lifestyle community unit might be $400,000 but the net amount available to the resident who departs after 12 years, could be only $250,000 calculated as
$400,000 Resale price
Less     $25,000  Refurbishment and bathroom upgrade costs
Less   $120,000  Deferred management fee of 3% per year for a maximum of 10 years
Less       $3,000  Service fee for 6 months after vacating the unit
Less       $2,000  Selling costs

A word of advice: Ask the manager of the retirement lifestyle community residence for an estimate of the resale price and the net amount payable to the departing resident.

The Blue Form requires the net amount of the resale proceeds, that is, the amount the resident would get back once the unit or apartment is resold.  Help with determining your assessed asset amount is available just call Christine 03 9808 0338 at Financial Care Services to arrange an appointment. 

Single homeowner who was not living alone
If the aged care entrant was the sole owner of her home then the home might not need to be included in the assets assessment.  For the home to be an ‘exempt asset’ the home owner had to have had another person living with her and the other person must be
– the spouse or partner of the aged care entrant, or
– a close relative of the aged care entrant whose primary income is an Age Pension or Disability Support Pension from Centrelink, or
– has been living in the home as the aged care resident’s carer for the last 5 years, and does not own a home and could not enter the paid workforce because of age or disability.

For example, following a debilitating long term illness an adult son moves in with his widowed mother.  He has few assets and is no longer physically capable of work.  Thus he receives the Disability Support Pension plus Rent Assistance from Centrelink.  The home could be an ‘exempt asset’ when the widow needs residential aged care but her son is just able to cope at home alone.

In contrast, a son who has a stable full time job, became single again and moved back to live with his widowed mother for companionship and to share costs.  As this guy is capable of working, his mother’s home would not be an ‘exempt asset’ just because he chose to live there.

Please remember that including the home as an assessed asset does not mean that it must be sold to finance residential aged care; sometimes the son might stay in the house and pay a commercial rent.

Help with determining if your home must be included as an assessed asset is available just call Christine at Financial Care Services on 03 9808 0338 to arrange an appointment.

Assessed Assets on entry to Permanent Residential Aged Care for one member of a Couple at Centrelink

When a member of a ‘Couple at Centrelink’ needs residential aged care then the Assessed Asset amount is half of the total value of all the couple’s assets.

If only one member of a Couple at Centrelink is entering residential aged care then the home could be an ‘exempt asset’ because the other member of the couple continues to live there.  But if both members of a Couple at Centrelink need residential aged care then the home is usually counted in the assessed assets.

Consider Joe and Mary who own their own home valued at $300,000 and have $5,000 of personal assets and $25,000 in the bank.  Joe has had a stroke and needs nursing home care but Mary is happy to continue living at home.  The assessed assets excluding the home amount to only $30,000 in total.  Thus Joe’s assessed asset amount is $15,000 and he could qualify for a Fully Supported aged care place.

Before Mary looks at nursing homes for Joe she must complete the Blue Form more correctly known as a “Permanent Residential Aged Care Request for an Assets Assessment”.  The form is not hard for Mary as the only assets she has to declare are the personal stuff and the bank balance.  Once Mary has her Notice of Permanent Residential Aged Care Assets Assessment, she can ask for a Fully Supported place for Joe in a nursing home.

If later while Joe is still in the nursing home Mary decides to move into residential aged care, the home would no longer be exempt and her assessed assets could be about $165,000, that is, half of the total asset value of $330,000.

Seek advice from Christine at Financial Care Services before completing the Permanent Residential Aged Care Request for an Assets Assessment for a couple who might both need residential aged care.  The order and timing of the placements could impact on the Accommodation Bond and/or Accommodation Charge amounts.

Coming soon, the complexities of aged care accommodation costs for Couples at Centrelink who met later in life.

If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial issues please contact Christine Hopper (03) 9808 0338.

Financial Care Services – call (03) 9808 0338

Disclaimer: The information contained in this website is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility. Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations. © 2012 Financial Care Services Pty Ltd. All rights reserved.
To make an appointment for professional advice, call Financial Care Services (03) 9808 0338