Charging fees for additional care and services in residential aged care, including ‘asset replacement’ and ‘capital refurbishment’ type fees

Page last updated: 27 March 2018

Information for approved providers of residential aged care homes

NOTE: this information has been updated following a Federal Court decision on 2 March 2018.

The Federal Court of Australia has confirmed the department’s previous advice that residential aged care providers cannot charge the additional service fees that are known variously as ‘asset replacement charges’ or ‘capital refurbishment fees’, or fees with another name but having the same nature. This information outlines what providers and consumers should do if they have charged, or have been charged, these types of fees, and provides information about providers’ responsibilities to residents when charging legitimate additional fees for ‘other care and services’. 

This information complements the ‘Care and services in aged care homes: Information for approved providers’.

This information does not constitute legal advice. Approved providers should seek their own independent advice.

Legislative context

The Aged Care Act 1997 (the Act) and the Aged Care (Transitional Provisions) Act 1997 (the Transitional Provisions Act) provide a complete scheme of fees that aged care providers can charge to residents. Relevant provisions are found in Division 52C and Division 56 of the Act and Division 58 and Division 57 of the Transitional Provisions Act.

These provisions require that fees charged for, or in connection with, residential care, or for care and services specified in the Quality of Care Principles 2014 (the Principles) cannot exceed the maximum calculated under Division 52C of the Act and Division 58 of the Transitional Provisions Act. Fees charged for ‘other care or services’ must be agreed with the resident beforehand and the provider must give the resident an itemised account of the other care or services.

Providers are not permitted to charge fees above the maximum amount worked out under the Act and Transitional Provisions Act for services or activities that are part of the normal operation of an aged care home, or are required to be delivered as part of a provider’s responsibilities. In some circumstances providers may charge additional fees for ‘other care or services’ where the resident receives a direct benefit or has the capacity to take up or make use of the services. See further information below.

This differs from extra service fees that are charged for rooms within aged care homes (either individual rooms or across the home) that have been granted extra service status by the department. Extra service fees are for higher standards of food, accommodation and hotel-type services but not for care.

'Asset replacement' and ‘capital refurbishment' type fees’

‘Asset replacement charges’, ‘capital refurbishment fees’, ‘security deposits’ and similar fees are not permitted by aged care legislation. Providers are not permitted to charge fees other than those set out by the legislation. 

Capital refurbishment fees and asset replacement charges were amounts charged to a resident for work to be carried out after the resident has left the facility. It makes no difference when the amounts are actually paid, that is, during the resident’s stay or after they have left, or whether amounts are paid separately or deducted from a refundable deposit. These fees are not permitted in any way.

A security deposit was a lump sum that was required from certain residents, usually those who chose not to pay a refundable deposit or who paid a small refundable deposit, as security against future fees and charges. It makes no difference whether the provider allowed the resident to convert these into a refundable (accommodation) deposit. Whether a resident pays their accommodation as a lump sum, a daily payment or a combination of both is entirely up to the resident. Apart from requiring fees to be paid up to one month in advance a provider cannot require the payment of any lump sum. These security deposits are not permitted in any way.

What if I am currently charging ‘asset replacement’, ‘capital refurbishment’ or similar fees?

It is a provider’s responsibility to ensure that any fees they charge to residents are consistent with aged care legislation.

Providers who have charged or are charging ‘capital refurbishment fees’, ‘asset replacement charges’, ‘security deposits’ or similar fees should cease charging these fees and refund amounts already charged. 

What if I have been charged these sorts of fees?

Residents or their families who are being charged, or have been charged, ‘asset replacement charges’, ‘capital refurbishment fees’, ‘security deposits’ or similar fees should contact their provider in the first instance.

If you are not satisfied with the provider’s response you can contact the Aged Care Complaints Commissioner on 1800 550 552 or at the Complaints Commissioner’s website.

What types of services cannot attract additional fees?

Additional fees cannot be charged where they do not provide a direct benefit to the individual or the resident cannot take up or make use of the services, or where the activities or services subject to the fee are part of the normal operation of an aged care home and fall within the scope of specified care and services.

Providers cannot charge additional fees for:

  • items listed in Schedule 1 of the Principles (some exceptions apply for items in Part 3); or
  • other services or activities that would form part of the general operation of the aged care home; or
  • services that are required to be delivered as part of a provider’s responsibilities.  

Examples of ‘other care and services’ for which charging of additional fees to residents is not permitted include, but are not limited to:

  • maintenance inside and outside the aged care home;
  • any repairs or replacements necessary because of normal wear and tear;
  • general refurbishment of the resident’s room after they have left the aged care home;
  • services or activities that would form part of the general operation of the aged care home, or are required in order to deliver residential care to the individual;
  • employment of administration staff where the staff member is primarily undertaking activities related to the general operation of the aged care home; and
  • capital costs, asset management or replacement.

Obtaining agreement for additional services and fees

It is a provider’s responsibility to obtain agreement from residents before delivering any care or services for which you propose to charge additional fees.

In some circumstances, additional services and their itemised costs may be listed in resident agreements, whereby the provision of ‘other care and services’ will be agreed to as part of the person’s entry into the resident agreement.

  • Where the provision of ‘other care and services’ for additional fees are included in resident agreements, it is not sufficient to only state the overall cost. You should list the individual goods or services to be offered and the itemised cost for each of these.
  • Residents must continue to be provided with itemised accounts for the periods in which they received or were able to access the additional services they agreed to be charged for.
  • Even where a resident has agreed, as part of their resident agreement, to the provision of ‘other care and services’, you may only continue to charge for those services while the resident is able to access or benefit from them. In practice, this means that you will not be able to continue charging additional fees if a change in the resident’s circumstances (e.g. a reduction in mobility) prevents them from being able to take up or make use of the service/s.

If fees for additional services are not included in the resident agreement, then providers should ensure that residents are given a list or schedule of the services available and the cost of each item. It is a provider’s responsibility to provide residents with an itemised account and this should be provided for each period (e.g. month) in which the resident purchased goods or accessed services.

Contents and frequency of itemised account

It is a provider’s responsibility to give residents an itemised account of any ‘other care or services’ for which they are charged over the maximum amount of resident fees. The itemised account should contain a break‑down or list of the individual services and an itemised cost for each service. It is not sufficient to group the services together and state an overall cost; this is not considered to be an itemised account.

The frequency with which providers give residents an itemised account for ‘other care and services’ must be agreed between the provider and resident. However, itemised accounts should be provided within a reasonable period (e.g. monthly if you are charging fees on a monthly basis).

The itemised account should include a list of the services and itemised cost delivered during the period (e.g. the services utilised by the resident during the month).

Contacts

If you have any queries about this information, email:  agedcarefeesandpayments@health.gov.au or post to:

Director

Fees Projects, Department of Health

MDP 560, GPO Box 9848

Canberra ACT 2601

More information

Care and services in aged care homes: Information for approved providers

This information does not constitute legal advice. Approved providers should seek their own independent advice.