Ontario Long-Term Care Income Test: What Actually Determines Your Parent's Rate

One of the most common fears Ontario families have is that admitting a parent to long-term care means the government will assess every dollar they own — savings, investments, the house — and use it to calculate what they pay. That fear comes from American Medicaid rules leaking into Canadian search results, and it's wrong.

Ontario's long-term care co-payment is determined by a single number on one document. Here's exactly what counts, what doesn't, and how to prepare.

It's an Income Test — Not an Asset Test

Ontario does not assess assets for long-term care rate reductions. The provincial Rate Reduction Program under O. Reg. 246/22 looks at one figure only: Line 23600 (Net Income) on the resident's most recent Canada Revenue Agency Notice of Assessment.

This means:

• The family home is completely exempt. Its value is irrelevant to the co-payment calculation whether the spouse still lives there, it's sitting vacant, or it's worth $2 million.
• Savings accounts, GICs, and investment portfolios are not assessed. The principal balance is invisible to the program.
• There is no Medicaid-style look-back period. Ontario does not review asset transfers from the past 5 years (or any period). Gifting money to children before admission does not trigger penalties.
• There is no estate recovery. Ontario does not place retroactive liens on the estate after the resident dies, unlike US Medicaid Estate Recovery Programs (MERP).

What IS Counted as Income

While the assets themselves are protected, any income they generate flows through to Line 23600 and affects the co-payment:

• Canada Pension Plan (CPP) payments
• Old Age Security (OAS) payments
• Guaranteed Income Supplement (GIS) — though GIS recipients typically qualify for significant rate reductions
• Private employer pensions and annuity payments
• RRIF mandatory minimum withdrawals — these are taxable income and appear on Line 23600
• RRSP withdrawals — any lump-sum withdrawal directly inflates Line 23600
• Rental income from investment properties or the family home if rented out
• Interest and dividend income from savings and investments
• Foreign pension income
• Employment income (rare at this stage, but counted if present)

The RRIF/RRSP Trap

This is where families unknowingly increase their parent's co-payment. Because the Rate Reduction Program is strictly income-tested, a large RRIF withdrawal in a single year can push Line 23600 high enough to eliminate the subsidy entirely.

For example: a parent with $18,000 in pension income would qualify for a meaningful rate reduction. But if the family withdraws $15,000 from the parent's RRSP to "help with expenses," Line 23600 jumps to $33,000 — and the co-payment increases to the full basic rate of $2,129.17 per month with no reduction at all.

The strategy is to minimize taxable income in years when the rate reduction is being calculated. Spread RRIF withdrawals across multiple years rather than taking lump sums.

The Rental Income Problem

If the family rents out the parent's now-vacant home, the net rental income gets added to Line 23600. A home generating $2,000 per month in rent adds $24,000 to the parent's annual net income — potentially eliminating any rate reduction.

Keeping the home vacant (or occupied by a spouse) avoids this income inflation. The family still pays property taxes, maintenance, and utilities out of pocket, but the parent's co-payment stays lower.

How to Prepare the Application

The CRA Notice of Assessment is the foundation document. If the resident doesn't have one (new immigrants, non-filers, or recently arrived to Canada), the alternative pathway uses Form 045-4809-69E with supporting documents: Service Canada rate letters, Ministry of Finance GAINS statements, and foreign income declarations.

For everyone else, the process is:

1. Locate the most recent NOA (available through CRA My Account online)
2. Find Line 23600 — this is the number that determines everything
3. Complete Form 045-4803-69E
4. Submit to the long-term care home's financial administrator within 90 days of admission

The Ontario Long-Term Care Costs & Subsidies Guide includes the co-payment calculator that takes your parent's Line 23600 and instantly shows the reduced monthly rate, plus strategies for minimizing taxable income before the NOA year is assessed.

See more Ontario guides →