Don't Wait for the OMG Letter
We are seeing an increasing number of people coming to see us only AFTER they have received the “OMG letter” from Centrelink. What is the “OMG letter”? I hear you say.
Well the OMG letter is the letter that Centrelink and the Department of Veteran’s Affairs (DVA) send out 2 years after someone moves into aged care, letting them know that their former home is now included in their assets, that they are now considered a non-homeowner for pension purposes and advising of their new pension entitlement – often zero.
Which is the point at which they exclaim “OMG!”
The situation normally comes about when a protected person (other than a spouse) is living in the home, often a child who was a carer. When Mum or Dad move into aged care they are told that they are a protected person and that the home will be exempt from aged care means testing. But what should be underlined here is Aged care exempt, the Age pension exemption is different.
From an Age pension point of view your home is exempt from the asset test for 2 years from the date you (or your partner) move out – you don’t need to have a protected person (or in fact anyone) living there. The exemption is designed to enable people to move back home if they can.
You can imagine the confusion and panic these family’s face when the letter arrives normally a matter of days before the pension is cancelled.
But here’s the good news. The residents that are coming to see us with their “OMG letter” today entered aged care in 2015 – before the changes to the assessment of the home and rent that occurred on 1 January 2016. These residents are in the unique position of being able to keep and rent their former home with the asset and rent being exempt for as long as they pay a DAC or DAP and rent the house.
Of course whether or not this is the best course of action will depend on a range of factors unique to the resident and their financial situation. It is a good example of how quality advice can ensure that aged care is affordable and in the future.
Steve Jenkosky trading as Golden Age Advisory is an Authorised Representative of Synchron AFS License No. 243313.
Unless specifically indicated, the information contained in this BLOG post is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a financial adviser.