What is the income tested fee?

One of the most misunderstood components of the Home Care Package process is the Income Tested Fee (ITF). At CareAbout, we speak to people every single day who are having difficulty making sense of this fee.

This fee goes directly towards your own care services and is determined by the amount of money you make each year. The more money you make, the higher your fee will be. Full pensioners and low-income earners are exempt from paying this fee.

There are also daily, annual and lifetime caps on the income tested fee, which we explain further on in this article.

If you are looking for information regarding the means-tested fee for Aged Care Homes, click here.

For information on all of the other fees related to Home Care Packages, read this article.

Do I need to pay an income tested fee?

There is a lot of misinformation out there! For example, we hear from a lot of full pensioners who have been told that they need to pay an income tested fee. Rest assured, you do not. If you are on a full pension, you are exempt from the income tested fee.

As a full pensioner, you do not need to complete any income or financial assessment – Centrelink and/or the DVA will already have your financial information on file.

Australian retirees who are self-funded or who are receiving a part pension must complete an income assessment and depending on the results, may be required to pay an income tested fee. The Department of Human Services (through Centrelink) is the organisation who will undertake your financial assessment to determine your level of income and whether or not you need to pay a fee.

The income assessment takes into account annual income only – your assets, including the family home, are exempt.

If your income is below that of the maximum level of a full pensioner, you will not be required to pay the income tested fee – however you will still need to complete the assessment.

How much is the Income Tested Fee?

The fee amount is different for everyone and is dependent on how much income you are receiving, It is based on how much you can afford to contribute towards your care, so the more you earn, the higher your income tested fee will be.

The out-of-pocket amount does not get paid to the government or to the provider, it goes directly into your Home Care Package and is used towards your care.

The fee you pay goes directly towards your own care. It is not a fee paid to the government; the money instead goes into your pool of Home Care Package funding. As an example, if you have been approved for a Level 3 Home Care Package and the DHS determines that you can afford to pay $5,000 towards your care, the following will occur.

A level 3 Home Care Package has a set amount of funding that equals $34,174. If you can afford $5000 per year, you will contribute this money into your Home Care Package, and the government will contribute the remaining $29,174 so that the total amount equals $34,174.

I’m a part pensioner, how much will my ITF be?

If you are a part pensioner, it’s now easy to find out what your Income Tested Fee will be!

Follow these steps:

  1. Call Centrelink on 1800 227 475
  2. If your information is up-to-date, they’ll let you know straight away what your fee will be
  3. If your information is not up-to-date, let Centrelink know your bank balance and any income from shares, and they will call you back within 3 days to let you know your ITF amount

The Income Tested Fee has a cap

The income fee is capped at a certain amount – which means you will never have to pay more than the cap. Below are the daily, annual and lifetime caps for each income segment.

Low income bracket

Those who have low income as per the below details, will not pay any income tested fee. This applies to you if you are:

Single, with annual income of $0 – $27,840.80

A couple (separated by illness), with a combined income of $0 – $54,641.60

A couple (living together), with a combined income of $0 – $43,212

Middle income bracket

If you fall within the middle income bracket, you will pay the following income tested fee:

$15.43 per day, or $5,617.47 per year.

You are in the middle income bracket if your annual income is as follows:

Single, with an annual income between $27,840.80 – $53,731.60

Couple (separated by illness), with a combined annual income between $55,887.61 – $106,423.60

Couple (living together), with a combined income between $43,212 – $82,243.20

Higher income bracket

If you are in the higher income bracket, your income tested fee will be:

$30.86 per day or $11,234.96 per year.

You are in the higher income bracket if your annual income is as follows:

Single, with an annual income over $53,731.60

Couple (separated by illness), with a combined annual income of more than $106,423.60

Couple (living together), with a combined income over $82,243.20

There is a lifetime cap of $67,409.85 – you’ll never pay more than this. And the great news is that it carries through to income tested fees in Aged Care Homes. This means that if you do need to move into an Aged Care Home, the government counts the combined fees you’ve paid toward your Home Care Package.

How is the income tested fee calculated?

After you have submitted your Income Test form, the Department of Human Services will review your financial information and determine the fee you will be required to pay towards your Home Care.

Once this amount is finalised, DHS will notify you and your provider (if you already have one). The government will then subtract your ITF amount from the total subsidy they pay towards your Home Care Package.

If you do not submit an Income Test form, the fee you pay will be equal to the maximum amount for a self-funded retiree. This is $30.86 per day, or $11,234.96 per year.

What income gets assessed?

‘Income’ is the amount you have left after paying income tax and the Medicare levy.

The following are not counted as income:

  • Any pharmaceutical allowance, rent assistance or telephone allowance
  • The pension supplement
  • The Clean Energy Supplement
  • In the case of a pension payable under the Veterans, “Entitlements Act 1986” an amount equal to four percent of the amount of the pension

What if my income changes?

Your income is reviewed on an annual basis, so if your income changes, so will your ITF amount.

If your income changes significantly and you cannot wait for the annual review, you may request to have your income reviewed at any time – and by submitting another income tested fee assessment form.

Free, expert advice is just a phone call away

Our CareAbout Advisers know the ins and outs of the income tested fee and will give you excellent guidance. You don’t have to navigate the Aged Care maze on your own – we’re here to help you every step of the way, and it won’t cost you a thing. Give us a call on 1300 036 028.