Residential Care Subsidies can be confusing, especially when it comes to working out whether you or a family member are eligible or not.

To clarify, a subsidy helps with the cost of care in a rest home or hospital, and does not apply to retirement or lifestyle villages where you can buy a licence to occupy.

To qualify, you must be 65-plus, and your assets must be equal to or below the threshold for your circumstances. You may also qualify if you are between 50-64 years, are single and have no dependent children. In the latter case, you will not be asset tested.

Assets taken into consideration include money in the bank, bonus bonds, shares, life insurance policies, loans made to other people (including family trusts), vehicles and property owned.

Even assets that are given away to family and friends could be taken into consideration if not managed carefully. However, some assets are excluded from the subsidy’s means testing. For instance, a pre-paid funeral account of up to $10,000 per person is exempt if it is held in a recognised funeral plan, like those offered by Lyon O’Neale Arnold. Personal belongings, furniture and effects are also excluded.

If you meet the asset threshold, Work and Income then assesses your income to determine how much you contribute towards the cost of your subsidy.

Seeking sound legal advice can help you manage your assets effectively into your retirement years.