Managing fees and charges for residential aged care

Calculating, setting and managing fees and accommodation costs is part of managing a residential aged care home. There are different fee rules depending on whether a resident entered care before or after 1 July 2014.

When you can charge fees

The fees you agree on with a resident depends on:

  • when they entered care
  • their financial situation

You cannot ask a resident to pay fees before they enter your care, unless they’re on pre-entry leave.

Once the resident has entered a resident agreement, you can ask them to pay fees up to 1 month in advance.

How to collect fees

Fees are calculated daily, but how often the resident is asked to pay is a decision for the provider.

See arrangements for residents who entered care:

Use the fee estimator on My Aged Care to estimate how much a resident will pay in fees.

Reviewing fees

You must ensure you’re charging the correct fees.

The basic daily fee changes in March and September each year.

Services Australia conducts a quarterly review of residents’ means assessments and income assessments to reflect:

  • changes in residents’ financial circumstances
  • changes due to indexation

This can result in changes to a resident’s:

Once they’ve completed the quarterly review process, Services Australia will send you and the resident (or their nominee) a letter if there is a change to the resident’s fees. You may owe the resident a refund as a result.

Refunding fees and refundable deposits

You must refund fees to a resident if they paid more than they needed to.

If a resident goes to another service, you must refund any balances of lump sum accommodation payments to them:

  • on the day they leave — if they give more than 14 days’ notice
  • within 14 days of them giving notice — if they give notice within 14 days before or after leaving
  • within 14 days of them leaving — if they don’t give notice

You must also refund the lump sum balance:

  • on the day a resident leaves to return home
  • within 14 days of being shown a probate or letter of administration after a resident dies
  • within 14 days of a service ceasing to be certified

Refunds made outside those timeframes will attract interest. Until you pay the balance, you will need to pay:

  • the Base Interest Rate (BIR) from the resident’s departure date, or the date you’re shown a probate or letter of administration
  • 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.

Read more about managing refunds for:

Late fees and charges

How you deal with late and unpaid fees must be in the resident agreement.

The resident agreement must also include either:

  • the rate of interest you will charge for late payments
  • a method to work out the interest amount

You cannot go above the MPIR.

If fees and charges are not paid

If a resident has not paid any agreed fees within 42 days of the due date for reasons within their control, you can ask the resident to leave. You must find alternative accommodation for the resident before you do this.

Read more about exiting residents from residential aged care.

Residents in financial hardship can apply for help if they need it. You can also apply for financial hardship assistance on their behalf. Financial hardship assistance can help to pay the basic daily fee, the means-tested care fee and daily accommodation payments.

Managing additional service fees

You can charge for some additional care or services that benefit the resident directly, if the resident agrees to them.

If the resident agrees, you must:

  • record additional service fees in the resident agreement and provide an itemised account of additional care and services fees
  • only charge the resident while they can access, and benefit from, the additional services they’ve agreed to pay for
  • continue to provide itemised accounts to the resident during this time

This is different to extra services fees, which only providers with extra service status can charge.

Additional service fees not permitted

You must ensure any fees you charge to residents are consistent with aged care legislation.

Under the Aged Care Act 1997 and Aged Care (Transitional Provisions) Act 1997, you cannot charge fees above the maximum amount for services or activities that are:

  • part of the normal operation of an aged care home
  • required to be delivered as part of a provider’s responsibilities

The maximum amount is calculated under Division 52C of the Act and Division 58 of the Transitional Provisions Act.

Asset replacement and capital refurbishment type fees

By law, providers cannot charge an additional service fee for:

  • asset replacement charges
  • capital refurbishment fees
  • fees of the same nature under any other name

In 2018, the Federal Court determined these fees to be prohibited under the Aged Care Act 1997.

Capital refurbishment fees and asset replacement charges were amounts charged to a resident for work to be carried out after the resident had left the facility.

These fees are not permitted in any way, regardless of how they were paid.

If you have charged or are charging these types of fees, you must cease immediately and refund amounts charged.

Security deposits

Security deposits are also not permitted. You must refund any security deposits to the resident if you have charged them.

A security deposit was a lump sum sometimes charged to residents who chose not to pay a refundable deposit. Or they may have paid a small refundable deposit as security against future fees or charges.

It’s entirely up to the resident to pay their accommodation as a lump sum, a daily payment or a combination of both. A provider cannot require the payment of any lump sum, apart from requiring fees to be paid up to one month in advance.

If you have been charged one of these fees

Residents or their families who have been charged these fees should talk to their provider in the first instance. If they’re not happy with the response, they should contact the Aged Care Quality and Safety Commission.

Base and maximum interest rates

Providers pay interest at 2 different rates:

  • Base Interest Rate (BIR) — see how to calculate the BIR in Section 4 of the Fees and Payments Principles 2014 (No.2)
  • Maximum Permissible Interest Rate (MPIR) — see how to calculate the MPIR in Section 6 of the Fees and Payments Principles 2014 (No.2)

Providers can charge residents up to the MPIR on late payments for residential care fees. The rate, or method for working out the rate, must be recorded in the resident agreement.

The BIR and MPIR are payable when refunding a resident’s:

  • refundable deposit balance
  • accommodation bond balance

Current and previous BIR and MPIR rates

For residents leaving care between 1 January 2020 and 31 March 2020, rates are:

  • BIR: 3.00%
  • MPIR: 4.91%

For residents leaving care between 1 April 2020 and 31 May 2020, rates are:

  • BIR: 3.00%
  • MPIR: 4.89%

For residents leaving care between 1 June 2020 and 30 June 2020, rates are:

  • BIR: 2.25%
  • MPIR: 4.89%

View the past BIR and MPIR rates on the National Library Web Archive.

Full requirements

Details of interest on refundable deposit balance and accommodation bond balance are in Part 7 of the Fees and Payments Principles (No. 2) 2014.

Contact

Residential aged care and home care fees contact

Contact us about fees for residential respite care, home care (basic daily fee, income-tested care fee) and residential aged care (means-tested care fee, income tested fee, additional service fees, time extensions to enter into accommodation agreements, accommodation payments, bonds and charges).

FPLBFeesandPayments [at] health.gov.au

View contact

Aged care prudential compliance contact

Email us if you have questions on refunding residential aged care fees and refundable deposits.

prudential [at] health.gov.au

View contact

Last updated: 
23 March 2020
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