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Information Sheet 13 - Financial Hardship Assistance

Information sheet providing detailed information in relation to community and residential care issues for older Australians, young people with disabilities and their carers and the associated costs.

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The Aged Care Act 1997 (the Act) has “financial hardship” provisions for residents who have genuine difficulty in paying their aged care payments and relevant ongoing expenses.

Financial hardship assistance may be available to residents who do not have the income or assets to utilise to pay their costs of care. Each case is considered on an individual basis, based on a resident’s financial circumstances.

Financial hardship assistance is only available for essential ongoing expenses, e.g. high pharmaceutical costs.

Financial hardship assistance is not intended to cover the circumstances where a discretionary choice has resulted in financial difficulties. Following are some cases where hardship assistance would not normally be approved:

• where a personal choice is made not to use a particular asset which could help with the payment of care fees, e.g. investments or savings;
• where money or an asset has been gifted or disposed of;
• where finances or an asset are being earmarked for inheritance purposes; and

Where a person has chosen to accept an extra service place, financial hardship assistance is unable to be provided.

The hardship provisions/eligibility

Financial hardship provisions allow for financial assistance to be provided for fees and accommodation payments on application to the Department of Health and Ageing. Residents may apply for:

• financial assistance with their basic daily fees and income tested fees; and/or
• financial assistance with an accommodation bond or accommodation charge.

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Will a resident's home be "protected"?

It should be noted that some residents' homes are "protected" by the Act. This means the residents' homes are exempt from any calculations to determine the residents' eligibility to pay an accommodation bond or charge if, at the time of a resident’s date of entry to residential aged care, or the date of the assessment of the resident’s assets, whichever is earlier, the home was occupied by:

• the partner or dependent child of the resident; or
• a carer of the resident who had occupied the home for the past 2 years and was eligible to receive an income support payment at the time mentioned above; or
• a close relation of the resident who had occupied the home for the past 5 years and was eligible to receive an income support payment at the time mentioned above.

Assessing a resident's hardship application

An application for financial hardship assistance will be considered on a resident's overall financial situation. This includes:

• total income and assets;
• eligibility for a pension;
• whether any assets are unrealisable; and
• whether they have income or assets which they can use to pay their fees, accommodation bond or accommodation charge.

Important notes:

1. If residents are married or partnered, their combined income and assets are considered, irrespective of in whose name these are held. A person with a spouse or partner is considered to own a half-share of the couple's total income and assets.
2. If a resident wishes to sell their home to meet a bond or a charge payment, they should ask their aged care provider for a deferred payment arrangement until their home is sold.

Financial hardship is not usually granted to cover the sale period, unless a home has been on the market at a price commensurate with the property's value on the person’s Centrelink or Department of Veterans’ Affairs (DVA) Assets Summary Statement for entry to residential aged care for at least six months.

A resident will need to provide documentary evidence that their home has been marketed at this price if they wish to be considered for financial hardship assistance in respect of an accommodation bond or charge.

Financial hardship for respite care residents

Respite care residents are not required to pay an accommodation bond, an accommodation charge or an income tested fee but can be asked to pay the standard rate of basic daily care fee of up to 84% of the annual single basic age pension.

Each application from a respite care resident is assessed on its merits taking into consideration the income and financial assets available to assist with daily fees plus the expenses of the resident. Essential expenditure that is taken into consideration includes basic daily fees, rent, mortgage payments, rates, pharmaceutical costs and other similar expenses that a resident continues to incur while in respite care.
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Important Notes:

1. An application for financial hardship assistance can take up to 28 days to process after all the necessary information has been received. Therefore, anyone who wants to receive approval before entering respite care should, as far as possible, lodge an application well in advance of the planned respite care dates.
2. Approvals for a reduction in care fees for respite care generally cover a 12 month period. Therefore, once approved, financial assistance is available for any period of respite care the resident takes in a 12 month period.

For further information about the hardship provisions please telephone 1800 200 422^*.

Residents' care fees and accommodation payments

There are different types of fees and accommodation payments that a resident of a residential aged care home (nursing home or hostel) may be asked to pay:

1. Basic daily fees

   All residents are asked to pay a basic daily fee, as a contribution towards accommodation costs and living expenses, like meals, cleaning, laundry, heating and cooling.
   
   The rates of basic daily fee are set using a percentage of the age pension. Most residents will pay the standard rate of basic daily fee, which is 85% of the single rate of the basic age pension. However, each resident’s rate is determined according to their circumstances at the time they entered permanent residential aged care.
   
   The basic daily fee is indexed on 20 March and 20 September each year in line with the indexation increases to the age pension.
   
   (Refer to Information Sheet 12 – Basic Daily Fees for Residential Aged Care for more detail)



2. Income tested fees

   Residents (other than respite residents) may be asked to pay an income tested fee, depending on their income and level of care. This fee is paid directly to the aged care home as part of the resident’s care fees. No resident will pay more than they can afford, and no resident will pay more than the costs of their care. Residents exempt from the payment of income tested fees include: full pensioners, residents with dependent children and former Australian prisoners of war.
   
   (Refer to Information Sheet 11 – Income Tested Fees for Residential Aged Care for more detail)



3. Accommodation bonds and accommodation charges

   These are paid by residents (other than respite care residents) whose assets are valued above the minimum assets threshold on entry to permanent care. This set amount will change over time. Residents whose assets are valued below this amount cannot be asked to pay an accommodation bond or charge.

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Accommodation Bonds

These may be levied on residents accepting a low care place (i.e. hostel care) and also on residents accepting an Extra Service Place regardless of their level of care. The amount of accommodation bond that can be requested by the aged care home is determined by market forces. However, residents cannot be charged a bond that will leave them with less than the minimum assets threshold.

(Refer to Information Sheet 16 – Accomodation Bonds for Residential Aged Care for more detail)

The Accommodation Charge

An accomodation charge may be levied on residents accepting a high care place (i.e. nursing home care) if they hold assets in excess of the minimum assets threshold. However, residents entering an Extra Service Place may be asked to pay an accomodation bond.

(Refer to Information Sheet 15 – The Accomodation Charge for Residential Aged Care for more detail)

Determining a resident's assets

The maximum amount of a resident's accommodation bond or charge depends on the amount of their assessable assets.

Centrelink or the DVA undertake assets testing for entry into permanent residential aged care on behalf of the Department of Health and Ageing. Centrelink undertakes all assessments except those for people who receive a means tested pension form DVA. Assets assessments can be undertaken before a person enters residential aged care.

An assets assessment is not compulsory unless a person wants to find out if they are eligible for government assistance with their accommodation costs for permanent residential aged care. Therefore, it is essential that a person applying for financial hardship assistance in respect of accommodation bond or accommodation charge has had his or her assets assessed.

To apply for an assets assessment a person or their authorised representative must complete a "Permanent Residential Aged Care – Request for an Assets Assessment" form. This form is available from the Aged care Assessment Team who determines eligibility for residential aged care or by calling 1800 200 422^*.

Note: Reference to a partner and/or couple includes both opposite and same sex couples.

*Cost of phone calls

• Calls to 1800 numbers are generally free to the caller when made from a land line.
• Calls to 13 or 1300 numbers are charged at a low fixed amount to the caller when made from a land line.
• All calls made from mobile phones are charged at the rates applicable to each phone provider.
• All calls made from public phones are charged at the rates applicable to each phone provider.

All information in this publication is correct as at September 2012

Disclaimer: This document is only a guide to the Government’s law and policies, and cannot take account of individual circumstances. The Australian Government Department of Health and Ageing recommends that you seek appropriate professional advice relevant to your particular situation.

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