Financial Care Services Newsletter

by Christine Hopper
Volume 14 Edition 7 – 30 July 2024

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

Age Pension means tests

Is your objective to retire and live off the Age Pension after working and paying taxes for forty plus years?

As a long-term Australian citizen who has attained age 67 years, you could apply to Centrelink for an Age Pension.
But how much, if any, Age Pension you could actually be paid depends on your circumstances.

Firstly, the payment rate for a member of a couple is lower than the rate for a single person.
Secondly, the Asset Test and/or the Income Test could cut down your payment rate or totally exclude you from any Age Pension.

July 2024 Indexation increases in Income Test and Asset Test Allowances

The means test Centrelink Age Pension Income and Asset Test Allowances increased marginally as from July 2024.
Here is a summary of the new July 2024 cut off levels.

Age Pensions for single non-partnered seniors

A single person can only be paid the full rate of Age Pension if she has an income of not more than $212.00 per fortnight and assets of not more than $566,000 or a home plus not more than $314,000 of other assets.

A single person would be excluded from any Age Pension if she has an income over $2,251.20 per fortnight, $58,531 per year, and/or assets of more than $905,866 or a home and more than $653,866 of other assets.

Remember the Income Test reduces your Age Pension by fifty cents for each additional dollar of income over the Income Test Allowance of $212 per fortnight for a single person.

The Asset Test reduces the Age Pension by three dollars per fortnight for every one thousand dollars’ worth of assets over the Asset Test Allowance for a single person.

Centrelink will apply whichever of the Asset Test and Income Test hits you the hardest.

If your fortnightly Age Pension rate drops below one dollar for the fortnight then you get a Nil Age Pension payment.
You need to be eligible for at least one dollar per fortnight of Age Pension in order to qualify for some Pension and the Pension Supplement plus the Clean Energy Supplement.

Who is a single person at Centrelink
Remember, at Centrelink you cannot be treated as a ‘single’ person if you have a domestic partner.

You are treated as part of a ‘couple separated by illness’ if your usual domestic partner needs to stay in residential care or prison.

Generally, a ‘couple at Centrelink’ is any two adults who share domestic arrangements and present socially as a couple.
You cannot be treated as a single person at Centrelink just because you and your domestic partner keep your finances separate.

Age Pensions at the partnered rate for senior members of couples

A member of a couple can only be paid the full rate of Age Pension if the total joint income of the couple is not more than $372 per fortnight and their combined assets total not more than $722,000 or a home plus not more than $470,000 of other assets.

A partnered person would be excluded from any Age Pension if the total, combined income of the couple is over $3,445.20 per fortnight, $89,575 per year, and/or their combined assets total more than $1,234,200 or a home and more than $982,200 of other assets.

Remember the Income Test reduces the total combined Age Pension of a couple by fifty cents for each additional dollar of their total combined income over the Income Test Allowance of $372 per fortnight.
That is, a reduction of twenty-five cents per fortnight per person, is applied to the partnered rate of Age Pension for each one dollar of income of the couple over the Income Test Allowance of $372 per fortnight for the couple.

The Asset Test reduces the total combined Age Pension of a couple by three dollars per fortnight for every one thousand dollars of their total combined assets over the Asset Test Allowance for a couple.
The Asset Test is applied as a reduction in the partnered rate of Age Pension by $1.50, one dollar fifty cents, off each person’s partnered rate of Age Pension for each one thousand dollars that their total combined assets exceed the couple’s Asset Test Allowance.

Help to understand how your situation fits in the Age Pension system

The calculation of your Age Pension amount, if any, can be challenging.
The easy route is to ask for the Age Pension Illustration Personal Data form as a checklist of essential data and then arrange for a ‘$99 Special Age Pension Illustration Short Consultation’ with Christine Hopper of Financial Care Services.

Christine at Financial Care Services writes these Newsletters.
She can help you to understand your Age Pension situation.

Christine Hopper of Financial Care Services offers Short Consultations for ‘personal factual financial information’ in the form of an Illustration of the amount of Centrelink Age Pension you could receive today provided that you satisfied the age and residency conditions for a Centrelink Age Pension.

Contact Christine at Financial Care Services to obtain the Age Pension Illustration Personal Data form.
You will also receive our Client Services Guide that provides essential information about Christine Hopper of Financial Care Services.

Alternatively you could search through the Centrelink website for clues about Pension rates and means tests then do the sums yourself.

Increase in the notional value of a home

The Asset Test Allowance gap between the Allowances for ‘homeowners’ and ‘non-homeowners’ has increased to $252,000 for both Age Pensioner singles and couples.

Thus, if your home purchase price is under $252,000 you might choose to be treated as a ‘non-homeowner’ with your ‘home’ counted as an asset.
Your ‘home’ might be ‘manufactured housing’ placed on a leased site, a permanently moored houseboat or a modest older style retirement village unit.

As a ‘non-homeowner’ Age Pensioner, you could ask Centrelink for Rent Assistance to help with the site fees and service charges for your ‘home’.

Deemed income from financial assets

The Age Pension Income Test uses your ‘deemed financial income’ rather than your actual income from ‘financial assets’.

Your ‘financial assets’ include your bank accounts, most superannuation accounts, gold bullion and financial investments together with any ‘excess gift’ amounts and loans to family or friends.

Deemed financial income for a single senior

As from July 2024, the annual rate of deemed financial income for a single person is calculated as 0.25% of the first $62,600 of financial assets plus 2.25% of any additional financial assets.

Thus for, a single person with no more than $62,600 of financial assets, the deemed financial income is 0.25% per annum of her financial assets.
For a single person with over $62,600 of financial assets, the annual rate of deemed financial income is 0.25% of the first $62,600 plus 2.25% of her financial assets in excess of $62,600.

Consider Mary who has $100,000 of financial assets.
Her annual rate of deemed income is calculated as
0.25% on $62,600 plus 2.25% on ($100,000 – $62,600)
That is, 0.0025 x $62,600 + 0.0225 x $37,400
= $156.50 + $841.50 = $998.00
Centrelink count $998.00 per year of deemed financial income as part of Mary’s ‘assessable income’ for the Age Pension Income Test.

Deemed financial income for a senior couple

For a couple at Centrelink, the annual rate of deemed financial income is calculated as 0.25% of the first $103,800 of financial assets plus 2.25% of any additional financial assets of the couple.

The deemed income rates are not expected to change before July 2025.

Deemed financial income assessments could apply to self-funded retirees seeking Commonwealth Seniors Health Cards

Centrelink also use deemed financial income as part of the Income Test for the Commonwealth Seniors Health Card.

The Income Test for the Commonwealth Seniors Health Card uses your ‘adjusted taxable income’.
This is your actual taxable income as reported on your last Income Tax Return plus some adjustments for ‘income like items’ that are excluded from your taxable income.
Your superannuation could be counted in these ‘adjustments’.

One adjustment is your deemed financial income from your account-based superannuation.
Centrelink ask for details of your account-based superannuation, that is, your allocated pension accounts and any accumulation phase superannuation accounts.
Centrelink then include the deemed financial income from these accounts in your ‘adjusted taxable income’ for the Commonwealth Seniors Health Card Income Test.

Deemed financial income is used in the assessment of means tested fees for Commonwealth ‘funded’ aged care

Means tested fees for home care packages as Commonwealth funded ‘Help to stay at home’

The amount that the Commonwealth contributes to each ‘home care package’ is reduced by the amount of the care recipient’s Income Tested Fee.
This Income Tested Fee is based on the care recipient’s ‘assessable income’.
This ‘assessable income’ is equivalent to any DVA or Age Pension, plus their income as defined for the Age Pension Income Test.

Permanent residents of Commonwealth regulated aged care facilities contribute to the costs of their aged care accommodation and/or personal support and nursing care.

The amount of each aged care resident’s contribution is based on their Means Tested Amount.
The Income component of the Means Tested Amount is based on resident’s ‘assessable income’.
This ‘assessable income’ is equivalent to any DVA or Age Pension plus their income as defined for the Age Pension Income Test.

In summary, your deemed financial income could impact how much you could be asked to pay towards your aged care costs.

Help to navigate the aged care fees and charges for Commonwealth funded aged care

Christine at Financial Care Services can help you with the Centrelink aged care entry challenge.
Christine at Financial Care Services understands the DVA Pensions and Centrelink assessment of the means tested amount for aged care both home care and residential aged care.

A consultation with Christine at Financial Care Services helps you understand your potential aged care costs together with the Centrelink implications of rearranging your assets, leasing or selling the former home.

Christine can Illustrate the costs of placing your family member in your preferred aged care facility.
She can help you check if your family can afford that place or maybe ask for a lower Accommodation Room Price.

Christine could complete your Centrelink form ‘Permanent Residential Aged Care Request for a Combined Assets and Income Assessment SA457’ for you to sign.
She has neat handwriting just right for inserting your data into small, printed spaces.
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 Christine at Financial Care Services.
Christine at Financial Care Services charges hourly rate fees for helping with Centrelink matters.

Christine at Financial Care Services

Christine at Financial Care Services writes these Newsletters.

She could help your family navigate your Centrelink challenges.
Christine at Financial Care Services charges hourly rate fees for helping with Centrelink matters.

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
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact Christine@financialcareservices.com.au
Address – mail to 2B Thomas Street, Camberwell Victoria 3124
Website – visit financialcareservices.com.au
LinkedIn – connect https://www.linkedin.com/in/christinehopper1
Past newsletters – see http://financialcareservices.com.au/newsletters/
Newsletter – subscribe http://eepurl.com/js41T

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.

© 2024 Christine Hopper @ Financial Care Services. All rights reserved.