Category: Advice Library

A range of resources to assist advisers deliver great advice; SOA wording, checklists and department forms.  Up to date and easy to access resources for all our members.

SOA Wording Asset Test Changes

Centrelink Assets Test Change  The Age Pension assets test is a means-based test which helps Centrelink determine your eligibility for the age pension and other social security payments. If you have assets over the lower threshold, your entitlement to the Age Pension will reduce.  Under the current rules, the asset test reduces your rate of Age Pension by $1.50 per fortnight for every $1,000 over the lower threshold.  Under the new rules that will apply from 1 January 2017:  The lower threshold is increasing  The rate at which your Age Pension reduces if your assets exceed the lower threshold is doubling from $1.50 per fortnight to $3.00 per fortnight for every $1,000 over the threshold.  This has the effect of reducing the cut-off limit where an Age Pension is no longer payable.  What are the new asset test thresholds? As at 1 July 2021 The table below provides a summary of the current and new Age Pension asset test thresholds. Please note that the lower thresholds have increased and the cut-off thresholds where you are not entitled to an Age Pension have lowered.    Current lower threshold   New lower threshold (estimated)  Current cut off limit  New cut-off limit  (estimated)  Single homeowner  $270,500  $250,000  $791,750  $546,250  Single non-homeowner   $487,000  $450,000  $943,250 

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RV SOA Wording Revised

There are lots of different terms used by retirement communities, from the traditional “Retirement Village” or “Over 55’s Community” to the more contemporary “Gated Community”, “Lifestyle Resort” and even “Aged Care”. In reality most retirement communities are either a Retirement Village or a Land Lease Community.

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SOA Wording Cost of Extra Services Additional Services

Cost of Aged Care – Extra Services/Additional Services  The formula of fees that apply to all residents moving in to Extra Services is:  Accommodation Payment + Basic Daily Fee + Means Tested Care Fee + Extra Service Fee   Accommodation payment   Residents are required to pay for their cost of accommodation via a lump sum referred to as a refundable accommodation deposit (RAD), a daily charge referred to as a daily accommodation payment (DAP) or a combination of both.   These payments are based upon the market price set by the facility. The DAP is calculated on any amount of unpaid RAD at the government set interest rate, as at 1 July 2022 interest rate is 5.00%.   A resident cannot be charged a refundable accommodation deposit (RAD) that would leave them with less than $52,500 in assets. If the resident is a member of a couple, the combined assets of the couple are divided by half and $52,500 is subtracted from each share to determine the maximum accommodation payment.  The aged care facility can deduct the daily accommodation payment from the lump sum at your request.    The accommodation payment quoted by xx facility is $xx by RAD and $xx by

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SOA Wording_Funeral Bond or Prepay Funeral Expenses

Funeral bonds Funeral bonds are investments of up to $13,000 per person (as at 1 July 2017) that are exempt from Centrelink’s asset and income tests. Any growth on your funeral bond is also exempt even if this takes the balance over $13,000. Each member of a couple may invest up to $13,000 in a funeral bond effectively making up to $26,000 exempt for a couple. Benefits can be paid to your estate or directly to a funeral director, giving your family the peace of mind in case funds are not immediately available via the estate. If the amount of the funeral bond is greater than the expense, a refund will be directed to your estate, however, if your funeral bond is insufficient to meet the expense your estate will need to pay the difference. I/We recommend that you make an initial investment of $xx into a funeral bond with a regular contribution of $xx <pfn / pm / pa >. Benefits of the strategy Money is set aside specifically to take care of funeral expenses, taking this burden away from loved ones. The value of the funeral bond will increase if the underlying investments perform well. Any residual balance

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SOA KEEP AND RENT FORMER HOME

Strategy Overview There is a two year general exemption that applies to your former home after entering aged care whereby the home is exempt from the assets test when calculating Age Pension entitlements. The purpose of this rule is to enable people to move back into their former home if they are able to do so. Any rental income received is fully assessable. After two years, the property will be included as an assessable asset and your pension will be assessed on the basis of a non-homeowner which provides a higher asset threshold. When calculating the aged care means tested amount, the former home value will be assessed up to a capped value of $178,839.20 unless a ‘protected person’[1] resides in the home, in which case the value of the home is exempt. A protected person includes: Your spouse or de-facto partner A carer who has resided in the home for at least 2 years who is eligible to receive an income support payment A close relative who has resided in the home for at least 5 years who is eligible to receive an income support payment Rental income from the former home will be included in the aged care

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SOA Wording – 2017 Asset Test Changes July 2020 NOT CURRENT.docx

Centrelink Assets Test Change The Age Pension assets test is a means-based test which helps Centrelink determine your eligibility for the age pension and other social security payments. If you have assets over the lower threshold, your entitlement to the Age Pension will reduce.  Under the current rules, the asset test reduces your rate of Age Pension by $1.50 per fortnight for every $1,000 over the lower threshold. Under the new rules that will apply from 1 January 2017: The lower threshold is increasing The rate at which your Age Pension reduces if your assets exceed the lower threshold is doubling from $1.50 per fortnight to $3.00 per fortnight for every $1,000 over the threshold. This has the effect of reducing the cut-off limit where an Age Pension is no longer payable. What are the new asset test thresholds? As at 1 July 2020 The table below provides a summary of the current and new Age Pension asset test thresholds. Please note that the lower thresholds have increased and the cut-off thresholds where you are not entitled to an Age Pension have lowered. Current lower threshold New lower threshold (estimated) Current cut off limit New cut-off limit (estimated) Single homeowner

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