Carer allowance vs carer payment: which one is for you

Financial planner Rosie Bouton breaks down everything you need to know about the different forms of financial assistance available to carers

There are over 2.7 million unpaid carers in Australia, and this figure is expected to rise over the coming years. Carer Allowance and Carer Payment are the two main forms of government financial assistance available to people who take on a caring role.

As a financial planner dealing with retirees, I find many people are missing out on entitlements because they aren’t aware of the supports available. Often with older couples, they are providing substantial care to one another but don’t recognise that they are carers, too. They simply see it as their marital duty.

Carer Allowance is a supplementary payment, currently $153.50 per fortnight (as of 1 January 2024). This payment is designed to provide financial assistance to a carer who provides daily care and attention to someone with a medical condition or disability but may not need constant care or supervision.

Many carers in receipt of Carer Allowance work part-time or full-time, study or volunteer, and are still eligible for this payment.

The main eligibility criteria for Carer Allowance are:

1. The carer and care receiver meet Australian residency rules.
2. The care is being provided on a daily basis (note: this can be shared between carers in some cases).
3. The minimum required scoring from the treating health professional is met.
4. The carer has an adjusted taxable income of less than $250,000.
5. The carer is not a care receiver themselves (i.e. someone is not in receipt of Carer Allowance for them).

There is no requirement to live with the person you’re caring for, but if the carer lives elsewhere, they will need to prove they are providing daily care of at least 20 hours per week, measured against the treating health professional’s report and the responses to their questions in the claim form.

Carer Allowance is a low amount to be paid for a caring role. Lack of recognition for carers and their invaluable contribution to society more broadly is a real challenge faced by carers, not to mention the social isolation, emotional and physical strain, and financial pressures. However, Carer Allowance is designed to assist financially, to supplement a carer’s other income. It is not designed to be their main form of income. The annual figure amounts to around $4,500 per annum (including the supplement amount), so it’s worth the application process for most.

Carer Payment on the other hand is an Income Support Payment. This payment is designed to be a carer’s main source of income in recognition of their inability to undertake substantial employment, training, or study due to their caring role. Therefore, this payment is subject to means testing, with the maximum payments currently $1,096.70 per fortnight for single carers, and $826.70 for carers in a relationship. Depending on your and your partner’s income and assets, you are paid an amount similar to the Age Pension. This is the main difference between Carer Allowance and Carer Payment but note that Carer Allowance is generally paid in addition to Carer Payment.

Other differences include:

1. ‘Constant care’ is required and provided, defined as care for a significant period each day.
2. Carer Payment cannot be shared between other unpaid or professional carers.
3. The carer cannot work, study or volunteer more than 25 hours per week, including travel to/from that activity (although once on payments, it is possible to use your respite balance to offset weeks where you go over the 25-hour rule, for example, if you had to work overtime for a week or two).
4. You can only receive one Carer Payment, whereas Carer Allowance can be paid for a maximum of two adults.
5. The care receiver is also subject to an income and asset test if they are not on a means-tested payment. Currently, their income must be less than $135,640 before tax and their assets must be worth less than $836,750 per annum. The rationale is that a care receiver with higher means may be able to afford private care in their home.

Unusually, the qualifying score needed from both the treating health professional and the carer questionnaire in the claim form is lower for Carer Payment than Carer Allowance.

Other questions I often get asked and their responses:

What happens if I go on holiday?

Carers can take a break from their caring role by availing of respite. Each carer is provided with 63 days of respite per calendar year. If a carer exceeds this timeframe within one year, their payment will cancel, and they will have to reapply when they return to their role or when their respite balance refreshes the next year.

My mother has carers through her home care package. Can I still qualify?

Absolutely, as long as you meet eligibility criteria. If your loved one requiring care has a home care package or other home supports, this does not preclude you from receiving Carer Allowance or Carer Payment.

The person I care for was rejected for Disability Support Pension. Can I still qualify?

The care receiver does not have to be in receipt of a Disability Support Pension to enable a carer to qualify. They have to meet a minimum score on the Adult Disability Assessment Tool (ADAT), and the treating health professional needs to indicate that daily and/or constant care is required.

Can I get payments if my loved one needs to go into residential aged care?

Unfortunately, no. The Carer Allowance will cease automatically once they into residential care, but the Carer Payment generally continues for seven fortnights to enable the carer to arrange alternative income arrangements. Similarly, if the care receiver dies the Carer Payment is usually paid for seven additional fortnights. There may also be a bereavement lump sum paid to the carer in some instances to assist with funeral expenses.

Rosie Bouton is the principal financial planner at We Plan. Her expertise is in Social Security & Aged Care rules & legislation, developed during her career with the Department of Human Services Centrelink over more than ten years. Find out more about Rosie here.