Retirement Home vs Aged Care

A client recently needed to make a decision on whether to enter a retirement village or an aged care facility. They needed to sell their home but were worried about the impact on the pension. Especially what impact the excess proceeds from the sale of the family home ($300k) had on the pension.   Considerations included:

1. If the cost of 'entry' to the retirement village was less than $142,500 (Centrelink term this the 'extra allowable amount'), then they would be treated as a non-home owner and may have been able to access higher assets tests and rent assistance etc.

2. In their case, the entry cost was more than $142,500, so they would be treated as a home owner. The 'excess' proceeds from the sale of the home would be used to pay this amount and the remainder - approx. $160,000 - would be added to the assets and income tests. As it happened they were on income threshold pension so this had minimum affect.

3. What they need to consider is in the future, is if they may need to enter an age care facility! Can they easily get access to this 'entry' cost to use as  part of a bond payment? In their case the retirement home and aged care facility were managed by the same company and verbal commitments are provided that this would be a relatively 'simple' process! This needs to be carefully considered.


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