This can benefit people who:
- have a means tested amount just under the threshold (currently $56.14 per day)
- do not have the capped value of a former home included in their means tested amount assessment
- In some cases, strategies can be put in place prior to the date the person permanently enters aged care, to reduce their means tested amount to below the threshold (currently $56.14 per day) to qualify as a low means resident
- Strategies such as gifting (i.e. $10,000 per financial year or $30,000 over 5 years) or funeral bonds (maximum $13,000 for 2018/19) may reduce means tested amount below threshold
- Low means residents pay an accommodation contribution (rather than an accommodation payment) which may result in lower accommodation costs
- If a person entered aged care as a low means resident they will remain a low means resident even if their asset and/or income increase in the future.
- A person can choose to drawdown DAC from RAC
Things to be aware of:
- Before implementing strategies to qualify as a low means resident, always check that the person will be able to enter their facility of choice and that the room is of a standard that meets their needs
- Where the capped value of the former home is included, it is not possible to reduce their means tested amount below the threshold (currently $56.14 per day)
- This strategy is only effective where the persons means tested amount exceeds the threshold (currently $56.14 per day) by a relatively small amount
- Strategies to reduce the persons means tested amount below the threshold (currently $56.14 per day) must be in place before the date of permanent entry to residential aged care
- In some cases, the accommodation contribution may be higher than an accommodation payment
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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.