Residential care fees for residents who enter care from 1 July 2014
Residents who enter care from 1 July 2014 (usually referred to as post‑1 July 2014 residents) may be asked to pay daily fees and contribute to their accommodation costs. The way their fees and payments are calculated will vary depending on their individual financial circumstances.
Providers may ask residents to pay:
- a basic daily fee
- a means‑tested care fee (depending on the outcome of their means test assessment);
- accommodation costs (depending on the outcome of their means test assessment)
- Extra or additional service fees.
Information about the current rates of fees and charges is available on the Schedule of Fees and Charges for Post-1 July 2014 Residents.
The Residential Care Fee Estimator can also help residents estimate what fees their provider may ask them to pay.
From 1 July 2014 all people who enter a residential aged care home can be asked to pay a basic daily fee of 85 per cent of the single basic age pension (currently $49.42 as at 20 September 2017).
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.
Find out more about the basic daily fee in the information booklet and the Schedule of Fees and Charges for Post-1 July 2014 Residents.
Some residents can expect to be asked to pay a means-tested care fee based on an assessment of both their assets and income, also known as a means test assessment.
Depending on a resident’s means test assessment, the provider may ask the resident to contribute to the cost of their care. This is the means‑tested care fee and is different for everyone because it is based on the resident’s means and their cost of care. This fee is in addition to the basic daily fee.
The amount a resident can be asked to pay is set at the lower of their means tested amount or the cost of their care.
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 means‑tested care fee (care subsidy reduction) the resident can be asked to pay.
Some residents cannot be asked to pay a means‑tested care fee including, but not limited to, respite residents, and Australian former Prisoners of War.
Find out more about the means‑tested care fee in the information booklet.
The Department of Human Services (DHS) will let the resident, their aged care nominee (if they have one) and their provider know when the cap has been reached after the quarterly review process (see review of fees for more information).
These caps are indexed on 20 March and 20 September each year, in line with changes to the age pension.
Information about the current rates of the annual and lifetime caps is available on the Schedule of Fees and Charges for Post-1 July 2014 Residents.
More information on these caps is available on the My Aged Care website.
Means test assessment
The Department of Human Services (DHS) calculates the means‑tested care fee based on the means test 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.
If the resident does not complete the means test assessment, they will not be eligible for any Australian Government assistance towards their care and accommodation costs. For these residents, their provider may ask them to pay:
- the full cost of their care (until they reach the annual or lifetime cap); and
- the accommodation price agreed before the resident entered care.
Any amount of accommodation paid as a lump sum (i.e. refundable accommodation deposit (RAD) or refundable accommodation contribution (RAC)) will be counted as an asset for aged care purposes. This applies irrespective of the source of funds for the lump sum. This means that the lump sum payment will be considered in the means test assessment of the person, including determining the amount of means-tested care fee payable.
More information on how a resident’s income and assets are assessed, is available on the My Aged Care website. Further information on the removal of the rental income exemption is available on the Department’s website .
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
The means‑tested care fee is reviewed quarterly (1 January, 20 March, 1 July and 20 September each year) and any changes to the resident’s financial circumstances may result in a change to their means‑tested care fee. If there is a change to the means‑tested care 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 means‑tested care fee amounts that DHS has advised them to pay in previous letters.
Residents may also contact DHS to request a review of their means‑tested care fee if there has been a significant change to their financial circumstances and they would be financially disadvantaged in waiting for the quarterly review to be conducted.
Some residents will have their accommodation costs met in full or in part by the Australian Government, whilst others will need to pay the accommodation price agreed with the provider.
If the resident is eligible for assistance with their accommodation costs from the Australian Government, DHS will tell them and their provider the amount that they can be asked to to pay based on the outcome of their means test assessment.
If the resident is eligible for assistance with their accommodation costs, the amount they can be asked to pay will be one of the following:
- No accommodation costs: the Australian Government will pay all of the residents accommodation costs to the provider as an accommodation supplement
- An ‘accommodation contribution’: the resident can be asked to pay for part of their accommodation and the Australian Government will pay the rest to the provider as an accommodation supplement.
If the resident is not eligible for assistance with their accommodation costs, the amount they can be asked to pay will be:
- An ‘accommodation payment’: the resident pays the full cost of their accommodation and will negotiate the room price (up to the published price of the room) directly with the provider.
If the resident does not complete the means test assessment, they will not be eligible for any Australian Government assistance towards their care or accommodation costs. For these residents, their provider may ask them to pay:
- the full cost of their care; and
- the accommodation price agreed before the resident entered care.
The Residential Care Fee Estimator can also help residents estimate what aged care fees their provider may ask them to pay.
Please see Service Provider Responsibilities Regarding Accommodation Agreements for more information.
For residents who have been asked to make an accommodation contribution, the daily amount will be advised by DHS. These residents can choose to pay their contribution as:
- a lump-sum refundable accommodation contribution (RAC)
- rental-style payments called a daily accommodation contribution (DAC)
- any combination of both (i.e. 30 per cent as a RAC and the remaining 70 per cent as a DAC).
For residents who have been asked to make an accommodation payment, they will need to agree the amount directly with their provider before they move in. These residents can choose to pay their accommodation as:
- a lump-sum refundable accommodation deposit (RAD)
- rental-style payments called a daily accommodation payment (DAP)
- any combination of both (i.e. 40 per cent as a RAD and the remaining 60 per cent as a DAP).
Note, when a resident chooses to pay their accommodation as a combination of a lump-sum and rental-style payment, this combination can be any percentage split the resident wants it to be.
Residents who have been asked to make an accommodation contribution or an accommodation payment have 28 days from the day they move into the home to decide which payment method they choose. The resident must pay their accommodation costs by the rental-style payment method until they decide on how they want to pay for their accommodation.
If the resident chooses to pay for their accommodation as a lump-sum within the 28 day period (in full or in part), they have six months after they enter aged care to pay the lump-sum amount and will pay by daily rental-style payment until the lump sum is paid.
Drawing down on lump-sums to pay aged care fees
Residents who pay a partial RAD can draw down a DAP from their RAD balance to meet their accommodation costs. The provider can request the resident to maintain the agreed accommodation payment if the RAD is reduced. The person may do so by paying additional DAPs, increased DAPs, topping up the RAD, or a combination of these. The resident can also ask the provider to draw down the additional DAP amount from the RAD. This will be set out in the accommodation agreement.
Residents who pay a partial RAC can draw down a DAC from the RAC balance to meet their accommodation costs. As per the above, the provider can request the resident to maintain the RAC amount if it is reduced. The resident has the same choice of payment options to maintain the RAC balance.
Residents may also wish to draw down their other aged care fees from their RAD or RAC. These amounts will need to be agreed to in writing between the resident and the provider.
Independent financial advice
It is recommended that resident’s seek independent financial advice before deciding which payment method to use as some payment methods may affect the resident’s pension and aged care fees (i.e. lump-sums are considered an asset for aged care purposes). In addition, if both members of a couple need to access aged care, the payment method of one may impact on the others aged care fees.
Please see the My Aged Care website for information on financial advice services.
Please see Refundable Deposit Balance and Accommodation Bond Balance Refund Interest Rates for more information on interest rates and the time frames providers have to refund lump-sums.
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 payments due to circumstances beyond their control.
Read more about the hardship supplement in residential care.
For enquiries about aged care fees, charges and payments, email email@example.com.
- Residential care fees, charges and payments
- Residential care fees for existing residents before 1 July 2014
- Schedule of aged care fees, charges and payments
- Removal of the rental income exemption
- Charging fees for additional care and services in residential aged care, including 'capital refurbishment' type fees
- Residential care leave arrangements
- Residential care fee administration
- Information resources for fees, charges and payments