The government will fully fund all clinical care costs in residential aged care. This covers costs for things like nursing and medication management. However, older people may need to contribute to the other costs of the services they receive in the aged care home. The Act introduces:
- changes to means testing
- a new resident contribution for ongoing residential aged care.
[Chapter 4 – Part 3 – Division 2]
There is a ‘no worse off’ principle for older people who were already receiving or approved for ongoing residential aged care prior to 1 November 2025. This means their contribution arrangements stay the same while they are in residential care.
Calculating contributions – residential care
The resident contribution is the amount that older people have to pay for their ongoing residential aged care. The maximum they can be asked to pay is worked out using the following method:
- Work out the basic daily fee.
- Add the compensation payment fee (if any).
- Add the hotelling contribution (if any).
- Add the non-clinical care contribution (if any).
- Calculate the final resident contribution amount.
Work out the basic daily fee
The basic daily fee is the amount that everyone pays for the daily services they receive in an aged care home. In most cases, this is 85% of the single rate of the basic Age Pension amount. The Rules explain any exceptions.
Add the compensation payment fee
The compensation payment fee applies if an older person has received a compensation payment that has reduced the government subsidy. The fee is equal to the compensation payment reduction used to work out the subsidy amount.
Add the hotelling contribution
The Act introduces a hotelling contribution, which goes towards the cost of daily living, such as food, cleaning and utilities. The contribution is means tested and only applies if someone can afford to pay it.
If an older person can afford to pay this contribution, it reduces the hotelling supplement. This reduces the person-centred subsidy amount the government pays to the provider.
Add the non-clinical care contribution
The Act introduces a non-clinical care contribution. This contribution goes towards non-clinical care costs, such as bathing and lifestyle activities.
The method for working out the non-clinical care contribution is based on means testing. It only applies to older people who can afford to pay it after accounting for accommodation and hotelling contributions. This means that someone whose means tested amount is less than the sum of these supplements does not need to pay the non-clinical care contribution.
The department can set both the hotelling contribution and the non-clinical care contribution to zero in certain cases. For example, if an older person in care has a dependent child or if the contribution would be less than $1.
Final resident contribution amount
The maximum resident contribution amount is the sum of the basic daily fee and any applicable contribution amounts.
Other fees in residential care
The Act also allows providers to set particular fees with limits. These include:
- a pre-entry fee for older people moving into ongoing residential aged care
- a fee for reserving a bed in ongoing residential aged care – this may apply when an older person takes more than their set number of days of social leave from the home
- fees for delivering short-term residential care, such as a resident respite fee or a booking fee
- a higher everyday living fee, which can cover the costs of optional extra or higher quality services. The Rules set strict requirements and provider obligations for these fees, such as giving the older person information about the fees in plain language that they can understand. The higher everyday living fee replaces the Additional Service Fees and Extra Service Fees.
A provider can’t require someone to pay one of these amounts more than one month in advance. There are also certain requirements for refunding these amounts if an older person dies or stops these services.
Contributions for specialist aged care programs
[Chapter 4 – Part 3 – Division 3]
Contributions for specialist aged care programs are not means tested. Instead, these contributions are agreed in writing between the individual and registered provider. How much an older person might need to pay depends on the program and the service group.
The Rules explain:
- how contributions are worked out depending on the program
- the limits on advance payments
- when fees should be refunded, such as if someone stops using services.
Specialist aged care programs must have a financial hardship policy. The policy must explain how older people can apply to have their fee removed or reduced. The Commonwealth Home Support Programme and National Aboriginal and Torres Strait Islander Flexible Aged Care program must also have a customer contribution policy and make it available to the public.