Question
My mother has been in an aged care home for the past two years.
As expected, her home became assessable by Centrelink in December and she lost her part-pension. That means we will be forced to sell her unit.
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She was able to pay her Refundable Accommodation Deposit in full on entry and the proceeds from the home sale will be significant enough to ensure that she is not entitled to any Centrelink benefits.
However, we are wondering if, and when, the lifetime contribution cap kicks in and she no longer has to make payments?
Answer
The cap you are referring to is the lifetime, means-tested daily care fee cap, which is the maximum amount payable by an individual towards their daily care.
This amount for residents who entered into residential aged care before the November 2025 changes kicked-in, is “grandfathered” under the old aged care rules. The current limit is $84,572 for people in that category and is indexed quarterly.
The daily care fee is the amount required to be contributed by her towards her daily care and is separate to any accommodation costs. The daily fee includes the basic daily care fee but might also include “extra services” which can range from $20 to $50 a day, depending on the facility.
The basic daily care fee is set at 85 per cent of the base rate of age pension. This means that, currently, the basic fee is about $65.55 a day — or about $917.70 a fortnight. While the means-tested care fee is very complicated to explain, you can easily identify what your mum is paying from the above numbers.
For example, if she is paying care fees of $150 a day, her means-tested care fee is the $150 less the basic daily fee of $65.55 and her extra services fee of, say, $20 — leaving $64.45 This amount would be her means-tested care fee and building towards her lifetime cap.
By virtue of the fact she receives no age pension, she must be self-funded. Even when she reaches the cap, she will still need to pay the basic daily care fee and, probably, the extra services fee.
Remember, you can ask for this fee to be reviewed if she is unable to make use of the extra services.
Question
Before Christmas Your Money had an end-of-year quiz, which was good fun but, I believe, it contained an error.
In one question you asked if an asset-tested pensioner would get an increase in their pension if they gave their kids a $100,000 gift.
You said that they would, but the rules quite clearly state the maximum gift allowed is just $10,000 a year. Do you need to correct the answer?
Answer
Luckily, no. Under the deprivation provisions of the Social Security Act, the value of gifts over the gifting limits remain included under both means tests for five years from the date of the gift.
Note that the wording specifies amounts over the gifting limits and that wording does not “kill-off” the entire value of the gift. When Centrelink is notified of the $100,000 gift, the entire amount will be recorded but the assessable assets will be reduced by the $10,000 amount.
That means the amount remaining assessable by Centrelink will be $90,000 and may continue to reduce the pension. Five years after the exact date of the gift, the remaining $90,000 will effectively “drop off” the system and that could result in a further boost to the part-age pension, but only up to the maximum pension amount payable at that time.
Because the assets have been reduced by $10,000 and our subject was asset-tested, that $10,000 reduction could see an increase of $30 a fortnight.
Each $1000 over the asset test threshold reduces a pension by $3 a fortnight, so any reduction in assets must result in an increase in pension, but only once Centrelink is notified.
