Volume 10 Edition 4
Financial Care Services Newsletter

Volume 10 Edition 4 – 30 April 2020

Financial Care Services, the specialist adviser to seniors in transition to new lifestyles

Financial Care Services is still open for business.

Financial Care Services is a ‘home based’ business. Christine your adviser at Financial Care Services is in good health and ready to help you.

We might not be able to have face to face family meetings. But we can still guide you to understanding the costs of aged care for your family. Christine is ready and able to help you navigate the wonders of Centrelink benefits and application forms.

Christine has neat handwriting just right for inserting your data into small printed spaces. She helps clients complete Centrelink forms. Christine could help you with collating your supporting documents and then mailing your form to Centrelink.

Christine charges fees based on the work involved in advising you about pensions and aged care fee solutions.

To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle costs, granny flat or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.

Deeming rates dropped from 1 May 2020.

The Australian Government’s response to coronavirus (COVID-19), announced on 22 March 2020 included “On 1 May 2020 the deeming rates will drop from: 1.0% to 0.25% for the lower tier and from 3% to 2.25% for the higher tier.”

This means that on 1 May 2020 the Centrelink deeming rates will drop by 0.75% pa.

For a single person, the new deeming rates will be 0.25% pa on the first $51,800 of financial assets and 2.25% pa on any financial assets in excess of $51,800.

If you have a domestic partner then Centrelink could treat you as a member of a couple and base your deemed financial income on the total value of the financial assets of both members of the couple.
Thus for a couple, the new deeming rates will be 0.25% pa on the first $86,200 of financial assets and 2.25% pa on any financial assets in excess of $86,200

Where is the deeming rate used?

The Commonwealth uses deemed income for many of the Income Tests impacting seniors.

Centrelink use the deeming rate to assess ‘deemed income from financial assets’ for the Age Pension Income Test.

Centrelink also use your ‘deemed income from financial assets’ in the Income Tests for Disability Support Pensions (DSP) and Carer Payment.

Remember DVA pay Service Pensions to veterans and their partners, using the same Pension rates and Income and Asset Tests as the Age Pension.
Hence DVA use the deemed income from financial assets in the Income Tests for Service Pensions and the Income Support Supplement to War Widow Pensions and DVA Disability Pensions.

The Means Tested Care fees for residential aged care and Commonwealth home care packages use deemed income from financial assets in the calculation of the Income Tested part of your daily fee.

Centrelink include the deemed income from your allocated pension account in your ‘adjusted taxable income’ for the Commonwealth Seniors Health Card.

Commonwealth Seniors Health Card

The Commonwealth Seniors Health Card allows for seniors to pay only the Pensioner Concession prices for PBS prescription medications. Holders of the Commonwealth Seniors Health Card are being paid the $750 ‘economic support payments’ in April and July 2020.

To qualify for the Commonwealth Seniors Health Card, you must be an Australian citizen or permanent resident who has attained your Age Pension Age. The Commonwealth Seniors Health Card has an Income Test only.

The Income Test for the Commonwealth Seniors Health Card allows a single person to have a maximum ‘adjusted taxable income’ of $55,808 as at April 2020. Currently, the combined total ‘adjusted taxable income’ of the couple must not be more than $89,290 for a member of a couple to hold a Commonwealth Seniors Health Card.

Your ‘adjusted taxable income’ for the Commonwealth Seniors Health Card Income Test includes your taxable income as you would show on your Income Tax return with several ‘adjustments’.
One of the adjustments is the inclusion of the deemed income from your allocated pension accounts.

Reduced deeming rates for Commonwealth Seniors Health Card

The May 2020 reduction in deeming rates might lower your ‘adjusted taxable income’. to below the cut-off level for a Commonwealth Seniors Health Card.

Sadly, many seniors have seen their allocated pension accounts decline in value over recent months. These lower account values would also lower your ‘adjusted taxable income’.
The combined impact of these changes could allow more seniors to claim the Commonwealth Seniors Health Card.

Claiming the Commonwealth Seniors Health Card

Claiming the Commonwealth Seniors Health Card just requires you to complete the Centrelink form sa296, and lodge it together with proof of your identity and supporting documents.

Centrelink expect you to be able to download the form, complete it online then print a copy that you will sign and lodge via your MyGov account.

Alternatively you could ask Christine at Financial Care Services to help you. A short personal financial factual information consultation with Christine can help you assess your ‘adjusted taxable income’. If you are likely to be eligible for Commonwealth Seniors Health Card then Christine could help you with the form filling. Christine has clear neat handwriting; very good for writing in small boxes on Centrelink forms.

Age Pension Income Test uses deemed financial income

Your deemed income from financial assets is used for the Age Pension Income Test.

Remember, Centrelink uses deemed interest rates to assess your ‘income from your financial assets’. Your ‘financial assets’ includes your actual financial investments including your cash and any loans to family and friends together with your ‘excess gift amounts’. Read more about ‘financial assets’ at Centrelink.

Age Pension increase when deeming rates drop in May 2020

Your Age Pension payment rate could increase in May 2020 if you are impacted by the Income Test only.

If your deemed income from financial assets is reduced when the deeming rates drop then you could expect a small increase in your Age Pension.

But if the Asset Test hits you harder than the Income Test then your Age Pension will not change just because the deeming rates dropped.

Read more about when both the Income Test and the Asset Test could hit.

Means Tested Care Fee for Commonwealth regulated aged care

Seniors who have more income than a full rate Age Pensioner could be paying an ‘income’ related contribution towards the costs of their aged care at home or in a residential care facility.

Daily fee for a Home Care package

Seniors benefiting from Commonwealth ‘home care’ packages pay part of the costs. The daily ‘home care’ fee has a dollar amount and an ‘income tested amount’.

Your ‘deemed income from financial assets’ is included in your assessable income for this ‘income tested amount’ of your ‘home care’ package fee. If you are paid the full rate of Age Pension then you are not usually charged an income tested fee for a home care package.

Means Tested Care Fee for residential aged care

Centrelink calculate a Means Tested Amount for each permanent resident of a Commonwealth regulated aged care facility. The Means Tested Amount then determines the daily amount that the resident pays for ‘personal support and nursing care’.

Your ‘deemed income from financial assets’ is included in your assessable income for this ‘income component’ of your Means Tested Amount.

Your Means Tested Care Fee for Commonwealth regulated aged care can change as your circumstances change.

Some families are surprised when a reduction in the deeming rates results in an increase in the Age Pension payment together with an increase in the Means Tested Care Fee. The aged care resident might only keep half of that increase in the Age Pension payment.

Contact Christine at Financial Care Services your independent adviser for help with understanding the fees and charges for residential aged care

Financial Care Services is an independent advisory service specialising in retirees of modest means and aged care entrants.
Our core values include working with clients in claiming DVA and Centrelink entitlements.

The team at Financial Care Services are here to answer your Age Pension questions and guide your understanding of aged care costs.

Help with Centrelink challenges is available from Christine Hopper at Financial Care Services, the specialist adviser to seniors in transition to new lifestyles.

Christine has neat handwriting just right for inserting your data into small printed spaces. She helps clients complete Centrelink forms.
Christine could help you with collating your supporting documents and then mailing your form to Centrelink.

Assistance with completing the Commonwealth aged care means testing forms is available to clients of Financial Care Services.

Christine charges fees based on the work involved in advising you about pensions and aged care fee solutions.

To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle costs, granny flat or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.

______________________________

Christine Hopper
Financial Care Services Pty Ltd
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact info@financialcareservices.com.au
Address – mail to 172 Warrigal Road, Camberwell Victoria 3124
Website – visit financialcareservices.com.au
LinkedIn – connect https://www.linkedin.com/in/christinehopper1
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Past newsletters – see http://financialcareservices.com.au/newsletters/
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Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”.
All eligibility for Commonwealth benefits will be determined by Centrelink or DVA, based on your personal position as documented and the legislation and Regulations in force at that time.

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