Pension protection for Hostel residents
The Commonwealth Government introduced provisions, on 1 July 2005, which have exempted lump sum accommodation bonds paid to a residential care facility, from Social Security (Centrelink) and Department of Veterans Affairs (DVA) assets tests.
This means that, from 1 July 2005, amounts paid as accommodation bonds to residential care facilities will not be treated as an 'asset' when a person is being assessed for a pension under the Centrelink or DVA assets test.
The bond will remain exempt until refunded to the person when they leave a facility, or their estate.
Renting the family home
Under current guidelines the family home is excluded from the pensions assets test for a period of two years or, if a partner remains in the home it will be exempt indefinitely or for two years after that person enters an aged care facility.
Special provisions apply to residents who pay all or part of their bond by installments (periodic payments). They are able to rent out their former home without the value of the home or the rental income affecting their pension.
Transferring bonds
It appears many providers will consider assisting residents by agreeing to accept transfer of bonds paid by hostel residents when they transfer to high-level care.
It is essential that independent financial advice be obtained when deciding:
- to keep the family home, or
- pay the accommodation bond by periodic payment, or
- pay the bond by part lump sum and periodic payment
Apart from independent advice, Centrelink and or DVA must be contacted to ascertain the effect of any bond and fee arrangement offered by a provider.
