Demystifying Income Tested Fees in Home Care

There’s a lot to consider when applying for a home care package — it’s no wonder many senior Australians often find the process overwhelming and need to seek support.

Above all, one of the biggest considerations for older people interested in pursuing home care is potential cost. Because whether it’s health support for you or a loved one, finding out if your family can continue to afford care on an ongoing basis is of critical importance.

Let’s take a closer look at income tested fees — what they are, how they are determined and impact your home care, and how you can find out more and reach out for support today.

What is home care support?

Home care support gives senior Australians an opportunity to access the health and care services they need as they get older, so they can continue living independently at home.

Assessing your care needs

When you apply for support via My Aged Care (MAC), they will determine your care needs by referring you to an assessment team to complete an in-home assessment. Depending on the information you provided when you applied, you will be referred to either:

The Regional Assessment Service (RAS): You probably need low-level support to stay independent and safe at home. This type of support is provided through the Commonwealth Home Support Program (CHSP).

An Aged Care Assessment Team (ACAT): You probably need support greater than what can be provided through CHSP. The types of care that ACAT assesses for include aged care homes, short-term care options, and home care packages.

Home care Packages

Home Care Package Program (HCP) is a government-subsidised program which allows individuals to access home care services. If you are 65 years old and eligible for this funding, you can connect with a range of personal care services to keep you connected with the community, remain independent, and live life your way.

On top of the Australian government subsidy, you may also be asked to financially contribute to the funds available in your home care package. This could be in the following ways:

• income tested fees (more below)
• basic daily fee (this fee is set by the Department of Health and Aging and an individual may be asked to pay this by your chosen care package provider)
• any additional home care package fees agreed upon with your provider

Together, all these funds form your home care budget. Once you choose a home care package provider, the provider will draw on these funds to organise and manage your care services.

Find out more on how to apply and access a home care package.

What is a home care package provider?

The Australian home care system is a consumer-directed care model, which gives senior Australians the choice and control over who provides their home care services and what they look like.

So if you are eligible for a home care package, providers will draw on your allocated package funding to provide tailored home care services to suit your needs and preferences. This could include domestic assistance like cleaning and meal preparation; assistance with personal care like bathing; and necessary therapies, like rehab or physiotherapy at home.

Once chosen, your home care provider will work with you to create a home care agreement, care plan and individualised budget.

What does home care cost?

Home care services are scheduled based on an individual’s specific care needs as well as their financial situation.

As part of your home care package assessment, not only will your eligibility be determined but also the package level to best meet your needs.

The government provides four levels of subsidy for home care packages. This ranges from Level 1, which is assigned to those needing a basic level of care, to Level 4, assigned to those with more complex care needs.

And depending on your current financial situation, in some cases, the government may also require you to pay an income tested care fee.

What is an income tested fees?

So that the government can subsidise the cost of home care — and essentially make this sustainable for Australians — it does ask for extra contributions from those who can afford it.

This comes in the form of the income tested fee — the amount the government requires you to pay toward your care needs. It is based on your financial assets.

Some important things to consider about income tested fees:

• Everyone’s fee is different, as it is based on an individual’s financial situation.
• They are calculated by Services Australia.
• They do not apply to those on a full age pension as well as those with an income up to $30,204.20
• They are reviewed every three months but if your financial circumstances change, you may need to arrange a new assessment.
• Fee amounts change with indexation on 20 March and 20 September each year.
• Income tested fees are paid directly to your chosen home care provider. It is combined with your basic daily fee (if applicable) and any additional fees.

Financial Hardship Assistance

• If a care recipient is experiencing hardship and having trouble paying their aged care costs, they may be able to access financial hardship assistance. For more on eligibility requirements, go to servicesaustralia.gov.au.

How exactly is the income tested fee assessed?

An individual’s income tested fee is determined by Services Australia according to their annual income, including any pensions.

To give you an idea of how much income tested fees are, My Aged Care reports the following examples.

An individual could pay up to $16.79 per day, if they:

• are single earning over $30,204.20
• are a member of a couple living together earning over $23,413.00
• are a member of a couple living apart due to illness earning over $29,632.20

An individual could pay between $16.79 – $33.59 per day if they:

• are single earning over $58,318.00
• are a member of a couple living together earning over $44,605.60
• are a member of a couple living apart due to illness earning over $57,746.00

Note: these cap amounts change with indexation on 20 March and 20 September every year and are up to date as at 20 September 2022.

Annual and lifetime caps

There are annual and lifetime caps that apply to the income tested care fee for home care. Once you reach the cap, you cannot be asked to pay any more in income tested care fees.

It’s also worth noting that any income tested care fee you pay while you are receiving home care will also be counted towards your annual and lifetime caps if you move into the aged care system.

Annual caps

There are two different annual cap amounts for the income tested care fee. These are applied daily in home care. The cap amount that applies to you depends on what you earn in a year.

According to My Aged Care, for a single person:

• If an individual is a part pensioner or if they earn between $30,204.20 and $58,318.00 a year, their income tested care fee is capped at $16.79 per day or $6,114.83 per year
• If an individual earns more than $58,318.00 a year, their income tested care fee is capped at $33.59 per day or $12,229.70 per year.

Remember: if you’re a full pensioner or have an income up to $30,204.20, you won’t pay an income tested care fee.

Lifetime cap amount

My Aged Care reports that, as of 20 September 2022, the maximum income tested care fees an individual can be asked to pay in their lifetime is $73,378.49. After they reach that cap, they will no longer have to pay income tested care fees.

Take the next step

For more on home care costs and how they may impact you, go to the My Aged Care website. You can also calculate an estimate of your income tested fee by using their estimator tool at www.myagedcare.gov.au/how-much-will-i-pay

For any other questions or concerns around your income tested fee, you can call Services Australia on 1800 227 475 or the Financial Information Service on 132 300.

We’re here to help! For more information about how to access a Home Care Package and get started with home care, including the available opportunities and Respect’s range of services, download our digital brochure. If you would like to connect with a member of our team, please call 1300 144 144 or email gethomecare@respect.com.au.