What is the Income Tested Fee?
If you are a self-funded retiree or on the part pension you may be required to pay what is called the ‘Income Tested Fee’.
What is the Income Tested Fee?
The Income Tested Fee is a fee that care recipients of the Home Care Package may be required to pay if they are self-funded retiree or on the part pension. Full pensioners generally do not need to pay this fee. It is different from basic daily fee which Providers can elect to charge a recipient and is instead government mandated.
The Income Tested Fee depends on the person’s income, and it varies for each individual. That’s why if you are on the full age pension you are not required to pay it. Essentially, it represents your contribution to your Home Care Package funding, so if eligible for this fee, it forms part of your total care funding, alongside the government’s contribution.
This fee is determined based on a new assessment, separate to the one you will have with ACAT, facilitated by Services Australia. It will be an income assessment and Services Australia will review this for you every three months. If you are assessed as being required to contribute this fee, it will need to be paid to your Home Care Package Provider to supplement your total assessed funding.
How does the Income Tested Fee work?
The Income Tested Fee you pay will be based on an income assessment by Services Australia. If the outcome of your assessment requires you to pay an Income Tested Fee, you will have to pay this to your Home Care Package Provider, the Provider is unable to waive this fee.
How does it work?
Your contribution + Government contribution = Home Care Package Level Funding.
Let’s say we have three clients who have a Level 2 Home Care Package. Each week their package is worth $309.68. However the clients have the following Income Tested Fee each:
Client 1: $2 a day
Client 2: $15 a day
Client 3: No Income Tested Fee
Here’s how it works for their weekly funding:
All three clients have the same amount of Package funding available for their care services. The difference is, where the funding has come from. The fees payable by the client is the thing that changes, range this will be reviewed on an ongoing basis if there are changes to the income of the care recipient.
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The Income Tested Fee is calculated by the Australian Government’s Services Australia. When an individual applies for aged care services or a Home Care Package, they undergo a means-tested assessment. This assessment takes into account your yearly income and assets to determine their eligibility for government-subsidised aged care and to calculate the Income Tested Fee, if applicable. Self funded retirees and those on the part pension should generally have this assessment done.
To find out if you need to pay an Income Tested Fee for aged care services in Australia, apply for the services through Services Australia. They’ll assess your financial situation, including income and assets, and inform you whether you’re required to contribute to the cost and the amount. Keep your financial circumstances information up-to-date, as it’s periodically reviewed. Seek advice from financial experts or our Care Experts if needed to understand your obligations.
Yes, the Income Tested Fee in Australia is subject to annual and lifetime caps. These caps limit the maximum amount that an individual can be asked to pay as an Income Tested Fee over a specified period. The annual caps apply on a yearly basis, while the lifetime cap limits the total amount paid over a person’s lifetime. These caps are designed to provide financial protection and prevent excessive costs for individuals receiving aged care services. The specific cap amounts can change over time due to government policies and adjustments, so it’s essential to check the current caps with the relevant authorities or aged care providers.
If your financial circumstances change after your initial assessment for aged care services in Australia, you must promptly report it. Services Australia then reassess your Income Tested Fee accordingly. If your individual income decreases, your fee may decrease, and if it increases, your fee may increase. Keeping your financial information up-to-date is crucial to ensure your fee accurately reflects your current situation. Failure to report changes could result in incorrect fee calculations.
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