Subsidy reductions for residential aged care

The Australian Government reduces the subsidy to residential aged care providers in certain cases. Providers won’t receive the total subsidy if the resident pays some types of fees or gets extra services.

What are reductions?

A reduction is an amount that we subtract from the basic subsidy amount.

The 5 types of reductions are:

  • compensation payment reduction
  • extra service reduction
  • adjusted subsidy reduction
  • income tested reduction (income tested fee) for residents in care before 1 July 2014
  • care subsidy reduction (means-tested care fee) for residents in care from 1 July 2014

Services Australia gives out the subsidy payments.

Compensation payment reduction

A person can get an entitlement to compensation through a:

  • settlement
  • judgement
  • reimbursement arrangement

This may be for things like an injury or illness from a workplace or car accident.

If the compensation covers some of the cost of their care, a reduction applies. Services Australia will deduct the compensation amount from the subsidy for that person.

What you need to do

If a person is entering your care and has an entitlement to compensation, provide the details at question 12 when you complete the Aged Care Entry Record Form.

If a person is already in your care and gets an entitlement to compensation, contact Services Australia.

We (or Services Australia) will tell you and the compensation payer the amount of the reduction. You can invoice the compensation payer directly for the reduction amount.

Extra service reduction

The residential aged care subsidy is reduced for residents who both:

The subsidy is reduced by 25% of the extra service fee for the place.

The maximum amount a provider can charge that resident is the fee for the extra service place plus the reduction amount.

Example

Sarah entered an extra service place on 20 March 2010. She pays an extra service fee of $20.

The Government reduces the subsidy you get for Sarah by 25% of $20 — that’s $5.

You can add that $5 onto Sarah’s fees. The maximum amount you can charge Sarah is $25.

Adjusted subsidy reduction

In 2007, the Government deemed some state and territory providers as adjusted subsidy aged care services.

This reduction applies for residents in those aged care services.

Income tested reduction

Some people who entered care before 1 July 2014 can be asked to pay an income tested fee to providers.

Services Australia calculates the maximum income tested fee based on an assessment of a person’s income.

The basic subsidy and primary supplements amount that the Government would normally pay for a person is reduced by the income tested fee.

There are times when the income tested reduction is set to zero, so you cannot collect the income tested fee from the resident. These circumstances are in:

  • section 44-22 of the Aged Care (Transitional Provisions) Act 1997
  • section 46 of the Aged Care (Transitional Provisions) Principles 2014

What you need to do

You do not need to do anything. Services Australia will automatically deduct the means-tested care fee from the subsidy the Governments pays you for that person.

Care subsidy reduction

Some people who entered care from 1 July 2014 can be asked to pay a means-tested care fee to providers.

Services Australia calculates the maximum means-tested care fee based on an assessment of a person’s financial information.

The basic subsidy and primary supplements amount that the Government would normally pay for a person is reduced by the means‑tested care fee.

There are times when the care subsidy reduction is set to zero, so you cannot collect the means-tested care fee from the resident. These circumstances are in:

What you need to do

You do not need to do anything. Services Australia will automatically deduct the means-tested care fee from the subsidy the Governments pays you for that person.

Contacts

Contact Services Australia for more information about compensation payment reduction.

Contact us for more information about:

  • extra service reduction
  • adjusted subsidy reduction

Contact the aged care fees team for more information about:

  • income tested reduction
  • care subsidy reduction
Last updated: 
4 February 2020
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