Over the years, I’ve noticed a pattern. Families often come to see me after they’ve received what I call the “OMG letter” – and by then, the damage is usually already done.
What is the “OMG Letter”?
The “OMG letter” is the letter sent by Centrelink or the Department of Veterans’ Affairs around two years after someone enters aged care.
It tells you that:
- The former family home is now counted as an asset
- You are now assessed as a non-homeowner
- Your Age Pension entitlement has changed – often reduced significantly or even cancelled
And understandably, this is the moment families say: “OMG… what just happened?” The problem? This letter often arrives with very little time to respond – sometimes just days before pension payments are impacted.
Why does this happen?
A common scenario looks like this:
- Mum or Dad moves into aged care
- A child (often a former carer) continues living in the home
- The family is told this person is a “protected person”
- They assume the home is exempt – full stop
But here’s the critical misunderstanding:
Aged care rules and pension rules are not the same.
What do people miss?
From a pension perspective:
- Your home is only exempt from the assets test for two years after you move into care
- This applies whether or not someone is living in the home
- After two years, the home is generally assessed unless a spouse remains living there
That’s when the “OMG letter” arrives – and the financial impact is often significant.
What about renting the home?
Many families consider renting out the property – and in some cases, this can be a smart strategy.
But it’s not that simple.
You also need to consider:
- Loss of land tax exemptions (via the State Revenue Office)
- Tax on rental income
- Impact on cash flow and aged care fees
This is where decisions made early can either save or cost tens of thousands of dollars over time.
Why does early advice matter?
This scenario is just one example of how complex aged care financial decisions can be.
There is no one-size-fits-all strategy.
The right approach depends on:
- Cash flow needs
- Asset position
- Estate planning wishes
- Tax implications
- Ability to pay for ongoing care
And most importantly – timing.
What if I wait?
By the time the “OMG letter” arrives:
- Options are often limited
- Strategies may no longer be available
- Financial stress is already building
Getting advice before or shortly after entering aged care gives you:
- More flexibility
- Peace of mind
- The chance to understand all your options and their consequences
Aged care is one of those areas where small decisions can have big financial consequences. Don’t wait for the system to tell you something has gone wrong.
Get clarity early – and make informed decisions with confidence.
