Managing fees for residential aged care
Calculating, setting and managing fees 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.
How to collect fees
The fees you agree on with a resident depend on:
- when they entered care
- their financial situation
You cannot ask a resident to pay fees before they enter your care. The only exception is when a resident is on pre-entry leave and they need to pay the basic daily fee.
Once the resident has entered a resident agreement, you can ask them to pay fees no more than 1 month in advance. This applies to all types of fees. Any fees paid more than 1 month in advance must be refunded in accordance with section 11 of the Fees and Payments Principles 2014 (No. 2).
If a resident has asked you to hold onto an amount of money more than the total allowable under Aged Care Act 1997, it is considered a ‘loan’. This means it counts as an assessable financial asset (subject to deeming) for aged care purposes and age pension purposes. It is also liable to risk if the provider goes into liquidation. While lump sum amounts paid to cover accommodation costs are protected by the Accommodation Payment Guarantee Scheme, these protections do not extend to lump sums paid to or held by a provider for any other purpose. Before entering into this type of arrangement, both parties should seek independent legal and financial advice.
Fees and accommodation costs are calculated daily, but how often the resident is asked to pay is a decision for the provider.
Read more about fees for residents who entered care:
Use the fee estimator on My Aged Care to estimate how much a resident will pay in 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 (post-1 July 2014 residents) and income assessments (pre-1 July 2014 residents) to reflect:
- changes in residents’ financial circumstances
- changes due to indexation
- changes to the accommodation supplement the service is eligible for
This can result in changes to a resident’s:
- basic daily fee
- means-tested care fee (post 1 July 2014)
- accommodation contribution (post 1 July 2014)
- income tested fee (pre 1 July 2014)
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.
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
If fees are not paid
If a resident has not paid any agreed fees or accommodation costs 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.
You must refund fees or accommodation costs to a resident if they paid more than they needed to.
Fees on day of departure
On the day a resident permanently leaves your service, you can charge:
- a basic daily fee
- an accommodation payment (if applicable).
You can only charge these fees if you provided the resident with the services they are intended to cover on their day of departure.
You cannot charge:
- a means-tested care fee
- an accommodation contribution.
This is because the Aged Care Act 1997 limits the amount that can be charged for these fees as follows:
- a means-tested care fee cannot exceed the amount of basic subsidy and primary supplements payable for a day (section 44-21(2) of the Act)
- an accommodation contribution cannot exceed the accommodation supplement applicable to a service for a day (section 52G-6 of the Act).
A residential service is not eligible for any aged care subsidy or supplements for the day a resident departs care (see section 42-1(2)(b) of the Act). As a result, the amount of means-tested care fee and accommodation contribution is also zero.
These provisions prevent the residential care subsidy from being paid twice for a resident who moves from one service to another on the same day. The provisions still apply when a person departs one service and does not enter another.
Managing additional service fees
You can charge for some additional care or services that benefit the resident directly, if the resident agrees to them. Additional service fees can be charged no more than 1 month in advance.
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 (and thus cannot charge additional service fees) 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
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 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 charged one of these fees
Residents or their families who have been charged additional service fees that are not permitted should talk to you in the first instance. If they’re not happy with the response, they should contact the Aged Care Quality and Safety Commission.
Managing accommodation costs
Read about managing accommodation payments and contributions for residents who entered care on or after 1 July 2014.
Read about managing accommodation bonds and charges for residents on pre 1 July 2014 fee arrangements.
For full details see:
- refunds for overpaid resident fees – Section 11 of the Fees and Payments Principles 2014 (No. 2)
- security of tenure – Section 6 of the User Rights Principles 2014
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).