Calls to cut deeming rates have been made as part of stimulus measures and rates will be cut by 0.75% from May 1,2020.

This means higher pension entitlements and lower aged care means-tested fees for some.  But, pensions will not change if the maximum pension is already received or entitlements are calculated under the assets test.

The impact of Deeming rate cuts

Case Study

When Edna moved into residential care, she sold her home to pay her $400,000 accommodation cost.  She was left with $350,000 in the bank. She receives an age pension of $849.31 a fortnight and pays $1,133.96 a fortnight in residential care fees.

When deeming rates change on May 1, her pension will increase to $899.77 and fees will decrease to $1108.65 a fortnight. This improves her income by $75.77 a fortnight, which helps with extra income to meet her expenses.

Cash bonus

Aged Care residents who receive a means-tested pension (Centrelink/Veterans’ Affairs) or hold either a Commonwealth Seniors Health Card or Veterans Gold Card will receive two $750 cash payments as a boost to income.  Awesome!

As a bonus, this money is tax-free and not assessable. The first payment will be paid into bank accounts over the next two weeks. The second payment will be paid in late July so keep your eyes peeled for these.

If you’d like to learn more about what the deeming rates cuts mean for you, please reach out to the Gold Coast financial advisers at Wealth Planning Partners to review your personal situation.