Refunding lump sums in residential aged care

You must refund a resident’s accommodation lump sum balance within a specific time frame when they permanently leave your care. You are liable to pay interest until you make the refund.

Accommodation lump sums

You are required to refund accommodation lump sum balances held by your service when a resident permanently leaves your care. This includes:

Refund period

If a resident permanently moves to another service, you must refund any balances of lump sum amounts to them within the legislated refund period:

  • on the day they leave – if they give more than 14 days’ notice
  • within 14 days of them giving notice – if they give up to 14 days’ notice
  • within 14 days of them leaving – if they don’t give notice.

You must also refund the lump sum balance:

  • within 14 days of a resident permanently leaving residential care
  • within 14 days of sighting probate or letters of administration after a resident dies
  • within 14 days of a service ceasing to be certified.

The refund period is specified in Section 4 of the Fees and Payment Principles 2014 (No. 2) and Section 52P-1(4) of the Aged Care Act 1997.

Interest rates

Until you refund the lump sum balance, you must pay interest at:

  • the base interest rate (BIR) – from the day after the resident’s permanent departure, or the day after the resident died, until the end of the legislated refund period
  • the maximum permissible interest rate (MPIR) – from the day after 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.

Which rate to use

The BIR and the MPIR are updated quarterly.

When calculating the BIR, use the rate current on the first day of the refund period:

  • if the resident died – the day after sighting a copy of probate or letter of administration
  • if the resident moves to another service and
    • gives up to 14 days’ notice – the day after the resident gives notice
    • gives no notice of departure – the day after the resident leaves
  • in any other case – the day after the resident leaves.

When calculating the MPIR, use the rate current on the day after the resident should have received their refund.

The BIR does not apply if the resident moves to another service and gives more than 14 days’ notice of departure. In this case the refund is due on the day of departure and the MPIR applies from the day after departure until you complete the refund.

Full requirements

For full details, see Division 52P of the Aged Care Act 1997.

Also see the Fees and Payments Principles 2014 (No. 2):

  • rules for refunding accommodation deposit balances and accommodation bond balances — see Part 7
  • base interest rate (BIR) — see how to calculate the BIR in Section 4
  • maximum permissible interest rate (MPIR) — see how to calculate the MPIR in Section 6.

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).

AgedCareFees [at] health.gov.au

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Last updated: 
25 February 2022
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