Means testing

Means testing is a way to assess how much an older person has to pay for the cost of their aged care, based on their financial situation. Depending on their income or assets, some people are eligible for more help from the government towards the costs of their care. 

[Chapter 4 – Part 5]

General process for means tests

To have a means test, the older person gives a record of all their income and assets to the government. The government uses this information to assess how much the older person can afford to contribute towards subsidised services.

Means testing is worked out differently for services delivered in home or community settings than residential aged care services. 

Means not disclosed

If someone chooses not to have a means test or doesn’t provide the required records, they will be given ‘means not disclosed’ status. This can also apply if the department revokes – cancels – a decision related to their means testing. 

Someone with this status: 

• may not be eligible for certain government subsidies, such as accommodation or non-clinical care subsidies
• may have to pay a higher contribution amount for some services
• can choose to provide information for a means test at a later time. 

Changing contribution amounts

There are cases where the amount someone pays may need to change. 

An older person also needs to tell the department if there are any changes to their situation that may affect their means testing. For example, a change in relationship status or a change in their own or a partner’s income or assets. An older person has to tell the System Governor about these changes within 28 days of the change happening. 

A registered provider must also tell the department if there is a change that could affect an older person’s contributions.

The System Governor can also change or revoke a means testing decision or rate. For example, if it becomes aware of a change in the older person’s situation, and that change may affect the amount of subsidy payable or the contribution amount the older person must pay. An older person can also apply for their means testing decision to be changed or revoked.

Means testing in home or community settings

[Chapter 4 – Part 5 – Division 1]

Under the new Act, the framework for means testing for home or community services is very different to the previous framework. This is in response to recommendations from the Royal Commission into Aged Care Quality and Safety. These changes help make sure that contributions go towards services that support independence and everyday living costs for older people. Under this framework, individual contributions are no longer needed for clinical supports.

Means testing category and class

Means testing starts by looking at the: 

• type of service being delivered – this is the means testing category
• older person’s financial situation at a very high level – this is the means testing class. 

There are 3 different means testing categories set out in the Rules. These relate to the type of service being delivered:

• Clinical supports – for example, nursing care or nutrition.
• Independence – for example, transport or mobility product.
• Everyday living – for example, meals or domestic assistance.

There are 4 means testing classes. These are based on the benefits someone may get or be eligible to get:

• Full-pensioner
• Part-pensioner
• Seniors health card holder
• Self-funded retiree, including people with means not disclosed status.

Contribution rates

The category and class are used as the first step to work out the percentage of the cost of the service an older person will have to pay. This is their means tested individual contribution rate. The general method to work out the percentage for contributions in home or community care settings is shown in the table below.

The Rules have more detail about exceptions to these rates. For example, if someone is receiving short-term restorative care or has special conditions under the rules for the transition to the new laws.

Calculating contribution rates

The Rules include how to work out the contribution rate when it has not been set at a specific percentage. These calculations take into account:

• income reduction amount – based on the older person’s ‘ordinary income’ (defined in the Social Security Act 1991) in line with calculations for the pension rate
• assets reduction amount – using the value of the older person’s assets in line with the Social Security Act
• maximum reduction amount – applying the seniors health care card limit using the relevant calculator and the ordinary income 

These reduction amounts are used to work out the input contribution rate – the percentage of the contribution where the Rules have not set a specific percentage rate as shown above.

Means testing in a residential aged care setting

[Chapter 4 – Part 5 – Division 2]

Under the new Act, means testing for residential aged care has many of the same aspects as in the previous aged care system. However, there are some changes. 

In the residential aged care setting, means testing decides the individual contribution amount for: 

• accommodation
• hotelling
• non-clinical care. 

These contributions are worked out based on the older person’s daily means tested amount.

Daily means tested amounts

The daily means tested amount is worked out based on the older person’s:

• per day income tested amount, which is their total assessable income compared to 4 set income thresholds
• per day asset tested amount, which is their total asset value compared to 4 set asset thresholds.

The Act and the Rules provide the full calculations for working out the daily means tested amount. They also include how to work out someone’s total assessable income or asset value. This includes amounts that are not included in the calculations, such as gifts, disability pensions or the value of their home in some cases.