Residential care fees and charges for residents that entered care before 1 July 2014
Basic daily fee
Income tested fee
Income test assessment
Review of fees
Financial hardship assistance
Residents intending to move to a new aged care home
Basic daily fee, income tested fee, accommodation bonds and accommodation charges for residents who were already in care before 1 July 2014.
Residents who were already in care before 1 July 2014 (usually referred to as pre 1 July 2014 residents or continuing care recipients) may be asked to pay daily fees and contribute to their accommodation costs. The way their fees and charges are calculated may vary depending on the date they entered care and their financial circumstances.
Providers may ask residents to pay:
- a basic daily fee
- an income tested fee (if their income is over the maximum income for a full pensioner)
- an accommodation payment depending on the outcome of their assets assessment (accommodation bond or accommodation charge)
- Extra or additional service fees.
The maximum fees payable must be recorded in the resident agreement.
Information about the current rates of fees and charges is available on the Schedule of Fees and Charges for Pre-1 July 2014 Residents.
All residents can be asked to pay the basic daily fee. The rate is set according to the date the resident initially entered care and their financial circumstances at that time. The rate may be standard, non-standard or protected.
- The standard rate of basic daily fee that most residents pay is set at 85 per cent of the single basic age pension.
- The non-standard and protected rates of basic daily fee apply to some residents who were in care before 20 September 2009.
The amount of the basic daily fee is changed in line with changes to the age pension in March and September each year.
The Department of Veterans’ Affairs (DVA) will pay the basic daily fee for former Prisoners of War and Victoria Cross recipients.
Residents will know their status and is responsible for informing aged care providers when they enter an aged care service. For more information, contact DVA on 133 254 or 1800 555 254 (for regional callers).
Find out more about the basic daily fee in the information booklet and the Schedule of Fees and Charges for Pre-1 July 2014 Residents.
Depending on a resident’s assessed income, the provider may ask the resident to contribute to the cost of their care. This is the income tested fee and is different for everyone because it is either based on the resident’s income or their cost of care. This fee is in addition to the basic daily fee.
Some residents cannot be asked to pay an income tested fee including, but not limited to:
- respite residents
- Australian former Prisoners of War
- residents with a dependent child
- residents who were in permanent residential care after 30 September 1997 and before 1 March 1998.
Residents who have income above set thresholds can be asked to pay an income tested fee.
The amount a resident can be asked to pay is set at the lower of:
- their calculated income tested fee calculated amount;
- their cost of care; or
- the maximum income tested fee amount.
The resident’s cost of care is the amount of subsidies and primary supplements that the Government pays to the aged care provider for providing care to the resident. The payment to the provider is reduced by the amount of the income tested fee (income test subsidy reduction) that the resident can be asked to pay.
Caps on income tested fees
A daily cap is applied to income tested fees for pre-1 July 2014 residents limiting the amount they can be asked to contribute to their care costs.
The amount of the maximum income tested fee is set at 135 per cent of the single basic age pension and is subject to indexation.
Find out more about the income tested fee on the My Aged Care website.
The Department of Human Services (DHS) or the Department of Veterans’ Affairs (DVA) calculates an income tested fee based on an assessment of the resident’s financial information.
Following the assessment, DHS will advise the resident, their aged care nominee (if they have one) and the provider of the maximum fees payable.
Pre-1 July 2014 residents who have not had their income assessed can be asked to pay the maximum income tested fee.
DHS or DVA will generally have the income information for residents receiving an Australian pension. Residents not in receipt of an Australian pension should contact DHS if they have not had an income assessment, or there is a significant change to their income, so they are not paying more than they should.
Note, when residents that transfer to a new service, the treatment of rental income from the former principal home will change. As of 1 January 2016, this income is no longer exempt from the aged care means test. Read more about this change at Removal of the rental income exemption.
The income tested fee is reviewed quarterly (1 January, 20 March, 1 July and 20 September each year) and any changes to the resident’s income may result in a change to their income tested fee. If there is a change to the income tested fee DHS will send letters to the resident, their aged care nominee (if they have one) and the provider.
If the review shows that the resident may have paid more than they should, the review letter will advise the resident and the provider that a refund may be due. The advised refund amount only applies if the resident has paid the income tested fee amounts that DHS has advised them to pay in previous letters.
Residents may also contact DHS to request a review of their income tested fee if there has been a significant change to their assessed income and they would be financially disadvantaged in waiting for the quarterly review to be conducted.
Pre-1 July 2014 residents who had assets above the minimum assets amount on the day they entered care, may be asked to contribute to their accommodation costs through payment of an accommodation bond or accommodation charge.
Residents who were assessed as needing low care, or who entered an extra service place, could be asked to pay an accommodation bond.
Residents who were assessed as needing high care could be asked to pay a daily accommodation charge.
An assets assessment for entry into permanent residential aged care determines if a resident is eligible for government assistance with their accommodation costs.
On 1 July 2005, DHS and DVA commenced assets testing of new entrants to permanent residential aged care. Before this date, asset testing was undertaken by aged care providers at the time a person entered care.
Residents who entered care from 1 July 2005 and who choose not to have an assets assessment completed by DHS or DVA could have been asked to pay:
- an accommodation bond if they had low care needs; or
- the maximum amount of accommodation charge if they had high care needs.
Residents who are moving to a new home and who have not had an assets assessment completed by DHS or DVA, may choose to have an assets assessment for the entry to the new home to test their eligibility for government assistance with their accommodation costs.
An assets assessment can be performed by completing the form that is available on the DHS website.
Pre-1 July 2014 residents who initially entered low level residential care or an extra service place could be asked to pay an accommodation bond if their assets were above the minimum assets amount on the date they entered.
The accommodation bond amount was agreed between the resident and the aged care provider; however, the maximum amount of the bond was limited to the difference between the resident’s total assessed assets and the minimum assets amount.
Residents can agree to pay periodic payments for some or all the accommodation bond amount. The periodic payment is made up of the interest on the unpaid amount of bond and the monthly retentions. The Government sets the maximum permissible interest rate that can be charged and this is fixed at the resident’s date of entry to care. A provider can charge interest up to the maximum. The interest rate to be charged is set in the accommodation bond agreement.
Aged care providers can deduct monthly retention amounts from accommodation bonds for a maximum of five years. If the resident moves to another home, the new provider can only deduct retentions for the balance of the five year period. The amount of retention is set at the date of admission to that home. Further information on retentions including the maximum monthly retention amounts can be found at Accommodation Bond Retention Amounts.
Accommodation bond agreement
The accommodation bond agreement between the resident and the provider is required to contain details of the accommodation bond amount, the payment arrangements, calculation of interest payable and amounts that will be deducted from the bond balance.
More information on what should be included in the accommodation bond agreement can be found in subdivision 57-C of the Aged Care (Transitional Provisions) Act 1997.
Refund of accommodation bond
When the resident leaves the aged care home the balance of the accommodation bond is refunded to the resident or their estate.
If the accommodation bond is not refunded within set timeframes the aged care provider must pay interest until the bond is refunded.
Accommodation bond for residents who move to a new aged care home
Pre-1 July 2014 residents who have paid an accommodation bond, who move to another aged care home, and do not opt-in to the post-1 July 2014 fee arrangements, can only be asked to pay an accommodation bond of the amount they were refunded from their previous aged care home. If they now have high care needs, they can choose not to roll over their bond but pay an accommodation charge instead.
Find out more about accommodation bonds and refunds for pre-1 July 2014 residents.
Interest on fees – Deduction from an accommodation bond balance
Aged care legislation allows a provider to deduct from an accommodation bond balance:
- amounts owed to the aged care provider by the resident under an accommodation bond agreement, a resident agreement or an extra service agreement;
- amounts, worked out in accordance with the Aged Care (Transitional Provisions) Principles 2014, representing interest on the amounts referred to in these agreements; and
- retention amounts can also be deducted.
The interest rate must not exceed the maximum permissible interest rate (MPIR) that is set in the agreement.
The interest is calculated for a period – commencing from the day after the day, that is one month after the day, when the fee became payable. i.e. if the bond balance was due on 1 July 2013, interest can be applied from 2 August 2013. Interest is calculated until the day it is paid or the resident leaves the service (whichever happens first).
Pre-1 July 2014 residents who had total assessed assets above the minimum assets amount and required high level care on the date they entered care, can be asked to pay an accommodation charge. Different accommodation charge rules apply depending on the date the resident initially entered care.
Residents who were receiving high level care on 30 September 1997 and residents who occupy an extra service place are not eligible to pay an accommodation charge. Residents who entered care before 1 July 2004 can only be asked to pay an accommodation charge for five years.
The accommodation charge amount is based on the value of the resident’s assets at the date they entered care. The amount of accommodation charge does not change while the resident remains in the same aged care home.
For residents who entered care before 20 March 2008 the accommodation charge amount was set by their aged care provider. Residents who entered care from 20 March 2008 are advised by the Government of the amount they can be asked to pay.
Accommodation charge agreement
The agreed accommodation charge must be included in either an accommodation charge agreement or as part of a resident agreement.
The agreement must be entered into within 21 days of the resident entering the aged care home.
More information on what should be included in the accommodation charge agreement can be found in subdivision 57A-B of the Aged Care (Transitional Provisions) Act 1997.
Accommodation charge for residents who move to a new aged care home
Residents who have high care needs and who have not paid an accommodation bond to their previous home can be asked to pay an accommodation charge to their new home if they are eligible, based on their assessed assets amount.
Residents who move to a new home:
- within 28 days of leaving the previous home and who have not had an assets assessment completed by DHS or DVA - may be asked to pay the maximum amount of accommodation charge that applies on the day they enter the new home. These residents can apply for an assets assessment by completing the form that is available on the DHS website
- within 28 days of leaving the previous home and have had an assets assessment completed by DHS or DVA - cannot be asked to pay a higher accommodation charge than they paid in the previous home. However, if the value of their total assessed assets has reduced they can choose to have a new assets assessment as they may be eligible to pay a lower amount of accommodation charge.
- on or after 1 July 2014 with a break in care of more than 28 days – will be treated under the 1 July 2014 fees and payments arrangements.
The hardship supplement is available to residents in genuine financial hardship who do not have income or assets to pay their aged care fees and charges due to circumstances beyond their control.
Read more about the hardship supplement in residential care.
If a resident was in an aged care home on or before 30 June 2014 and they move to a new aged care home (and do not spend more than 28 days outside of care, other than on approved leave), can opt into the fee arrangements that started on 1 July 2014.
To make this choice, the resident will need to complete and sign the Continuing Care Recipient opting into the New Aged Care Arrangements from 1 July 2014 (AC022) form and submit this form to the new provider before they transfer to the new services. This completed and signed form is submitted with the Aged Care Entry Record (ACER) to DHS by the new provider.
The new provider will also need to give the consumer the New Arrangements for Aged Care from 1 July 2014 – Residential Care publication.
If the resident does not complete and submit this form to the aged care home before they transfer, they will automatically be classed as a ‘continuing care recipient’ and will remain on their pre-1 July 2014 fee arrangements. This is not a reviewable decision and must be done correctly in order for the resident to opt in to the post‑1 July 2014 fee arrangements.
For more information on the new residential care service requirements to provide information to a continuing care recipient see section 13 of the User Rights Principles 2014.
For enquiries about aged care fees, charges and payments, email firstname.lastname@example.org.
- Residential care fees, charges and payments
- Residential care fees for residents who enter care from 1 July 2014
- Schedule of aged care fees, charges and payments
- Charging fees for additional care and services in residential aged care, including 'capital refurbishment' type fees
- Residential care leave arrangements
- Residential care fee administration