Managing accommodation bonds and charges for residential aged care
Residents who entered care before 1 July 2014 may be liable to pay an accommodation bond or charges. Residents can choose from lump sum or rental-style payment options, or do a mix of both.
What are accommodation bonds and charges?
Accommodation bonds and charges are payable by some residents who entered care before 1 July 2014.
For residents who entered care after 1 July 2014, learn how to manage accommodation contributions and payments.
Based on an assessment of a resident’s assets when they first entered care, they:
- were eligible for government assistance
- need to contribute to their accommodation costs
- a combination of both
If the resident was not eligible for government assistance for all of their accommodation costs, they would have paid, and may still be paying:
- an accommodation bond — a lump sum payment for low-care residents and residents in extra service places
- a daily accommodation charge — a rental-style payment for high-care residents
Residents transferring into your care
Residents who entered care before 1 July 2014 and are transferring into your care will stay on their pre-1 July 2014 arrangements. They can choose to be assessed under the post-1 July 2014 arrangements before they enter your service.
If the resident has not chosen to change to the newer fee arrangements, you will collect an accommodation bond or charge from the resident.
The bond cannot be larger than the bond refunded from the first service and the retention amounts do not reset.
A resident’s bond amount was agreed when they first entered care. The amount of the bond could not have been more that the resident’s total assessed assets less the minimum asset amount that applied at the time the bond was first agreed.
Accommodation bond agreement
The details of managing the bond are recorded in an accommodation bond agreement and may be included in the resident agreement. The agreement must include:
- the resident’s date of entry to the service
- the accommodation bond amount, agreed between you and the resident
- the payment arrangements
- a calculation of interest payable for periodic payments
- amounts that will be deducted from the bond balance for retention amounts
- whether paying the bond entitles the resident to specific accommodation or additional services
- any financial hardship provisions that apply to the resident
Provider responsibilities for accommodation bond agreements are in Chapter 4 of the Aged Care (Transitional Provisions) Principles 2014.
Residents can pay the bond as a lump sum or make monthly payments for some or all of their bond.
The resident pays interest on monthly payments. You must set the interest rate to be at or under the maximum permissible interest rate (MPIR) that applies on the day they enter your service.
You may either:
- deduct a retention amount from an accommodation bond balance
- include a retention amount in a bond periodic payment for each month, or part of a month
The maximum amount of time for deducting monthly retention payments is 5 years. The 5-year period started on the day the resident entered the aged care home as a permanent resident, unless:
- the aged care home was not certified on that day — the 5-year period started the day the aged care home became certified
- a determination of financial hardship was in force — the 5-year period started the day after the determination ceased
- the resident transferred from respite care — the 5-year period started the day of the transfer
Monthly retention amounts must be agreed between you and the resident. Monthly retention amounts are capped at a maximum set by the Government.
If a resident chooses to pay some of the bond as a lump sum, the maximum retention amount applies to the total bond.
If you need to refund the bond balance to the resident or their estate, you are liable to pay interest:
- at the Base Interest Rate (BIR) from the resident’s departure date until the end of the legislated refund period
- at the Maximum Permissible Interest Rate (MPIR) from the date the resident should have received their refund
The rate remains fixed at the MPIR until you complete the refund.
Check the current and previous BIR and MPIR interest rates. When calculating the BIR, use the rate published on the day after
- the resident leaves
- you’re shown a copy of probate or letter of administration
Deducting fees from bonds
You can deduct from an accommodation bond balance:
- amounts owed to you under the resident’s accommodation bond agreement, resident agreement or extra services agreement
- interest on the amounts owed
- retention amounts
Interest is calculated from 1 month and 1 day after the fee was payable.
A fee payable on 1 July 2020 will start attracting interest from 2 August 2020. Interest is charged until the fee is paid or the resident leaves, whichever comes first.
Pre-July 2014 residents who leave a service will have their bond balance refunded.
For these residents, you can only charge them the amount of the bond they were refunded and they are still eligible to pay an accommodation bond.
The 5-year period for the collection of retention amounts keeps going between providers if the resident moves. It does not restart.
The resident can also choose to either:
- move to the post-1 July 2014 fee arrangements
- change to an accommodation charge, if they have high-care needs
A resident’s accommodation charge amount was decided when they first entered care. The amount was based on the value of the resident’s assets at the date they entered care.
Residents who entered care before 2004 can pay an accommodation charge for up to 5 years. The 5-year limit does not apply to residents who entered care between 1 July 2004 and 1 July 2014.
The accommodation charge details must be agreed on within 21 days of the resident entering care.
Accommodation charge agreement
You must record certain details about managing the accommodation charge in the accommodation charge agreement. They are:
- the resident’s date of entry to the service
- the accommodation charge amount
- the interest to be charged on amounts owed
- that, after paying the accommodation charge, the resident will be left with assets to the value of at least their minimum permissible asset value
- if a resident has a financial hardship determination, they will be charged less than a specified daily amount
- whether paying the accommodation charge entitles the resident to specific accommodation or additional services
You can also add this information to the resident agreement.
Provider responsibilities for accommodation charge agreements are in Chapter 4 of the Aged Care (Transitional Provisions) Principles 2014.
Pre-1 July 2014 residents who move to a new aged care home and:
- have not had an assets assessment done — pay the maximum amount of accommodation charge
- have done an assets assessment — cannot be asked to pay a higher accommodation charge than before
- had a break in care for more than 28 days — will be reassessed under the post-1 July 2014 fee arrangements
See My Aged Care for details on how post-1 July residents can update their assets.
Your service may be eligible for an accommodation supplement for an incoming pre-1 July 2014 resident, depending on their assets.
You can ask the resident to call Services Australia's Aged Care Fee Assessments and Services line, who will advise the resident on how to update their assets, if they need to.
When to update accommodation bonds and charges
Accommodation bonds and charges are set on the day a resident enters care, according to their assets test. The bond or charge amounts don’t change while they remain in the same place.
Maximum monthly bond retention amounts
The Government sets the maximum monthly retention amount. The capped amount depends on the size of the bond, and changes annually in line with the Consumer Price Index. However, once set, a resident’s retention amount does not change.
|For residents who entered care or transferred to a new service in the period||For bonds of at least||Maximum monthly retention (Y)|
|1/7/2019 to 30/6/2020||$44,280||$369.00|
|1/7/2018 to 30/6/2019||$43,680||$364.00|
|1/7/2017 to 30/6/2018||$42,840||$357.00|
|1/7/2016 to 30/6/2017||$41,940||$349.50|
|1/7/2015 to 30/06/2016||$41,400||$345.00|
|1/7/2014 to 30/06/2015||$40,860||$340.50|
|1/07/2013 to 30/6/2014||$39,720||$331.00|
|1/07/2012 to 30/06/2013||$38,760||$323.00|
|1/07/2011 to 30/06/2012||$38,160||$318.00|
|1/07/2010 to 30/06/2011||$36,900||$307.50|
|1/07/2009 to 30/06/2010||$35,880||$299.00|
|1/07/2008 to 30/06/2009||$35,040||$292.00|
|1/07/2007 to 30/06/2008||$33,600||$280.00|
|1/7/2006 to 30/06/2007||$32,820||$273.50|
|1/7/2005 to 30/6/2006||$31,860||$265.50|
|1/7/2004 to 30/6/2005||$31,140||$259.50|
|1/7/2003 to 30/6/2004||$30,540||$254.50|
|1/7/2002 to 30/6/2003||$29,520||$246.00|
|1/7/2001 to 30/6/2002||$28,680||$239.00|
|1/7/2000 to 30/6/2001||$27,060||$225.50|
|1/7/1999 to 30/6/2000||$26,320||$220.00|
|1/10/1997 to 30/6/1999||$26,000||$215.00|
|For residents who entered care or transferred to a new service in the period||For bonds of no more than||Maximum monthly retention (X)|
|1/7/2019 to 30/6/2020||$22,920||$191.00|
|0/7/2018 to 30/6/2019||$22,620||$188.50|
|1/7/2017 to 30/6/2018||$22,200||$185.00|
|1/7/2016 to 30/6/2017||$21,720||$181.00|
|1/7/2015 to 30/06/2016||$21,420||$178.50|
|1/7/2014 to 30/06/2015||$21,120||$176.00|
|1/07/2013 to 30/6/2014||$20,520||$171.00|
|1/07/2012 to 30/06/2013||$20,040||$167.00|
|1/07/2011 to 30/06/2012||$19,740||$164.50|
|1/07/2010 to 30/06/2011||$19,080||$159.00|
|1/07/2009 to 30/06/2010||$18,540||$154.50|
|1/7/2008 to 30/06/2009||$18,120||$151.00|
|1/07/2007 to 30/06/2008||$17,400||$145.00|
|1/7/2006 to 30/06/2007||$16,980||$141.50|
|1/7/2005 to 30/6/2006||$16,500||$137.50|
|1/7/2004 to 30/6/2005||$16,140||$134.50|
|1/7/2003 to 30/6/2004||$15,840||$132.00|
|1/7/2002 to 30/6/2003||$15,300||$127.50|
|1/7/2001 to 30/6/2002||$14,880||$124.00|
|1/7/2000 to 30/6/2001||$14,040||$117.00|
|1/7/1999 to 30/6/2000||$13,670||$115.00|
|1/10/1997 to 30/6/1999||$13,500||$115.00|