Fees for people entering residential aged care from 1 July 2014

Current rates

Post-1 July 2014 fee arrangements

A resident entering your service for permanent care may pay up to 5 types of fees:

• a basic daily fee
• a means tested care fee
• accommodation costs
• an extra service fee
• additional service fees.

These fees are outlined below. You can use the Understanding fees for aged care homes fact sheet to help explain fees to your residents:

See the Residential aged care fee scenarios for some simplified examples of how fees are worked out for people with different financial circumstances.

The fees are different for people who entered into a resident agreement before 1 July 2014. See Fees for People who Entered Residential Aged Care before 1 July 2014.

Opting in to the post-1 July 2014 fee arrangements

Residents who entered care before 1 July 2014 and are transferring into your care will stay on their pre-1 July 2014 fee arrangements. They can choose to be assessed under the post-1 July 2014 arrangements before they enter your service.

You must provide some specific information to these residents. These obligations are set out in Section 13 of the User Rights Principles 2014.

If the resident would like to opt-in to the post-1 July 2014 fee arrangements, you must:

• give them a copy of the New Arrangements for Aged Care from 1 July 2014 – Residential Care document
• have them complete and sign the Continuing Care Recipient Form before they transfer into your service
• submit the signed form to Services Australia with the Aged Care Entry Record Form

Basic daily fee

Everyone who lives in an aged care home can be asked to pay the basic daily fee. This fee is also called a standard resident contribution in aged care legislation. The fee helps to cover the costs of daily living, like meals, cleaning, laundry, heating and cooling.

The maximum fee is 85% of the single basic age pension. The fee amount changes with the pension amount every March and September.

The Department of Veterans' Affairs pays the basic daily fee for former Prisoners of War and Victoria Cross recipients.

Means tested care fee

The means tested care fee is a person’s contribution towards their cost of care.  It is paid in addition to the basic daily fee.  This fee is different for everyone.

Before 1 October, the means tested care fee was based on a person's: 

• means assessment (income and assets)
• cost of care (subsidy and primary supplements).

From 1 October 2022 the Australian National Aged Care Classification (AN-ACC) care funding model replaced the Aged Care Funding Instrument (ACFI). This did not change the means assessment process for residents. Under AN-ACC the means tested care fee continues to be based on a person’s:

• means assessment (income and assets)
• cost of care (adjusted basic subsidy and primary supplements).

As was the case under ACFI, under AN-ACC the means tested care fee is limited by a resident's cost of care.

Means assessments

The aged care means assessment is undertaken by Services Australia. Residents can submit an Aged Care Calculation of your cost of care form to Services Australia either before or after starting aged care. The means assessment will determine whether a resident:

• needs to pay a means tested care fee
• is eligible for Australian Government assistance with their accommodation costs.

If the resident has a means assessment before they enter your service, they should have a fee advice letter which states whether they need to pay a means tested care fee and what they need to contribute towards their accommodation costs.

If the resident does the means assessment after they enter your service, Services Australia will let you and the resident know the outcome of the means assessment. You may choose to collect an interim fee from these residents while you wait for the means assessment to be completed.

Once the assessment is complete, Services Australia will set the means tested care fee at the lower of the resident’s means-tested amount or their cost of care.

When a person first enters your care, you will receive an interim subsidy until the resident is classified to determine their AN-ACC class of care funding. Once the resident is classified, you will be paid the applicable subsidy (including any primary supplements) less the means tested care fee for the resident backdated to their date of entry to your service.

Services Australia will either:

• deduct subsidy amounts already paid from future payments if you owe money
• add subsidy amounts to future payments if they owe you money.

See the Residential aged care fee scenarios for some simplified examples of how the means assessment works for people with different financial circumstances.

Interim fees

You may wish to start collecting fees while waiting for a resident’s means assessment to be finalised. Interim fees are set by providers, not by the Australian Government. You can use the My Aged Care fee estimator or the Residential aged care fee scenarios to determine an appropriate interim fee for the resident.

Read more about charging interim accommodation costs.

Means not disclosed

A resident can choose not to disclose their financial information to Services Australia. If they choose not to, they will have means not disclosed status. If this is the case, Services Australia will notify you, and you can ask the resident to pay the maximum means tested care fee based on their cost of care.

You can also ask the resident to pay the agreed accommodation price.

Before 1 October 2022 the default means tested care fee for a resident with means not disclosed status was set to the maximum possible subsidy reduction under ACFI:

• maximum basic subsidy amount
  • activities of daily living – high
  • behaviour – high
  • complex health care – high
• primary supplements
  • oxygen supplement
  • enteral feeding supplement – non-bolus.

Once ACFI was known, Services Australia would amend the resident’s means not disclosed amount to the ACFI amount.

From 1 October 2022 the default means tested care fee for a resident with means not disclosed status is set to the maximum possible subsidy reduction under AN-ACC:

• maximum adjusted basic subsidy amount
  • AN-ACC class 13
  • the default level Base Care Tariff (Standard MMM 1-4)
• primary supplements
  • oxygen supplement
  • the enteral feeding supplement – non-bolus

Once the resident is classified and their AN-ACC class and eligibility for supplements determined, Services Australia will amend the resident’s means not disclosed amount to their true adjusted basic subsidy plus primary supplements.

Services Australia will either:

• deduct subsidy amounts already paid from future payments if you owe money
• add subsidy amounts to future payments if they owe you money

If a resident is later found to be eligible for Government assistance with their cost of care or accommodation costs, any overpaid amounts must be refunded to them via an increased subsidy payment to you. This change can be backdated to the day they entered care.

If a person requires assistance to complete a means assessment

A person must complete a means assessment to determine their eligibility for Government assistance with residential aged care fees. In addition, a means assessment is required for a resident to be approved for financial hardship assistance.

If the person is unable to complete and sign a means assessment form due to physical or mental disability, a third party may complete and sign it on their behalf. The third party must be registered with Services Australia as a nominee for that person.  

The Authorising a person or organisation to enquire or act on your behalf form (SS313) lists third parties who can complete a means assessment and financial hardship form on another person’s behalf, such as a social worker.

Annual and lifetime caps

Annual and lifetime caps limit how much a person will need to pay in means tested care fees. This includes residents with means not disclosed status.

Annual and lifetime caps are indexed in March and September each year. The cap amount that applies for a resident is the amount current at the time the resident reaches the cap. Find current cap amounts in the Schedule of Fees and Charges for Residential and Home Care.

Once a resident reaches the annual cap, the amount of means tested care fee they can be asked to pay is reduced to zero. They start paying the fee again on the next anniversary of the date they first entered aged care.

You cannot ask a resident to pay their full annual amount of means tested care fees upfront, even if they will later reach the annual cap. Fees cannot be charged more than 1 month in advance. 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).

Services Australia will let you know when the resident has reached their annual cap, and when their means tested care fee can recommence.

Once a resident reaches the lifetime cap they will no longer have to pay any means tested care fees. The Government will pay the full cost of their care.

Services Australia will let you know when the resident has reached their lifetime cap.

A resident may have paid an income tested care fee for a Home Care Package before they moved into an aged care home. The amount they have paid in income-tested care fees will count towards their annual and lifetime caps.

The caps only apply to means tested care fees. Residents may still need to pay the basic daily fee and any accommodation costs.

Means tested care fee reviews

Services Australia regularly reviews residents’ means tested care fees. This ensures each resident is paying the right fee for their circumstances.

A resident’s means tested care fee may change when:

• their financial circumstances change
• the means testing thresholds are indexed
• there is a change to the cost of their care.

Services Australia will send you a letter if there is a change to the fee. You may owe the resident a refund as a result.

Residents should update their details with Services Australia if they have a change in their financial situation.

Accommodation costs

All residents must agree to an accommodation price before they enter care. The agreed price cannot be more than your published maximum accommodation payment amount for that room, but you can agree a lower amount.

The maximum price for a room cannot exceed a refundable deposit of $550,000 (or the equivalent daily payment) unless you have a current approval from the Independent Health and Aged Care Pricing Authority.

Whether you can ask the resident to pay the agreed amount will depend on their means assessment.

Services Australia will let you and the resident know if:

• the resident will need to pay the agreed accommodation price 
• the Australian Government will pay some or all of the resident’s accommodation costs through the accommodation supplement

If the resident is eligible for Government assistance with some of their accommodation costs, they will need to pay an accommodation contribution determined by Services Australia. They can choose to pay this as either:

• a refundable accommodation contribution (RAC)
• a daily accommodation contribution (DAC)
• a combination of these two.

If the resident is not eligible for Government assistance with their accommodation costs, they will need to pay the agreed room price.  They can choose pay this as either:

• a refundable accommodation deposit (RAD)
• a daily accommodation payment (DAP)
• a combination of these two.

You must not require a resident to pay any amount of their accommodation costs as a lump sum RAD or RAC before they enter your service. It is up to the resident how they choose to pay for their accommodation. If they do not make a payment choice within 28 days of entering your service, you can only ask them to pay by daily payments (DAP or DAC).

In the accommodation agreement, you must record:

• the resident’s date of entry to care
• the agreed room price for the resident’s accommodation
• all possible payment arrangements for the resident

Read about managing accommodation payments and contributions for residential aged care.

Extra service fee

If your aged care home has extra service status you can offer residents a bundle of extra services and charge an extra service fee. Extra services are hotel-type services, such as better-than-average accommodation, higher quality food and non-care services like recreational and personal interest activities.

You may have extra service status for your whole service or individual rooms in the service. You can only charge an extra service fee to residents who occupy an extra service room.

The Independent Health and Aged Care Pricing Authority approves extra service fees. Providers must set out these fees in an extra services agreement. 

Providers with extra service status can charge GST for any item included in the extra service package that is not GST-exempt.

Additional service fees

With the resident’s agreement, you can charge additional service fees for services not outlined under Schedule 1 of the Quality of Care Principles 2014. This includes:

• services you are not otherwise required to provide under the Schedule such as alcohol options with dinner, hairdressing services, Wi-Fi and pay TV
• services substantially better than the standard that you must provide under the Schedule.

What you cannot charge additional service fees for

Providers cannot charge additional service fees for:

• specified care and services outlined in the Schedule
• services required as part of your provider responsibilities
• services already covered by the paying of an extra service fee or an accommodation payment.

You also cannot charge fees for ‘asset replacement’ or ‘capital refurbishment’. Including, but not limited to:

• maintenance inside and outside the aged care home
• any repairs or replacements needed because of normal wear and tear
• general refurbishment of the resident’s room after they have left the aged care home
• services or activities forming part of the general operation of the aged care home, or required in order to deliver residential care to the individual
• employment of administration staff where activities mainly involve the general running of the aged care home
• capital costs, asset management or replacement.

The Aged Care Quality and Safety Commission (the Commission) may receive information about provider practice regarding additional service offerings and additional service fees, including through the Commission’s complaints process.

Where a provider is not meeting their responsibilities in relation to additional care and services, the Commission may respond in a range of ways, including:

• issuing directions to ensure a provider makes improvements to address the concern
• taking compliance and enforcement action where necessary.

Read more about managing additional service fees, including what to do if you have charged or are charging fees not permitted.

Difference between extra service fees and additional service fees

You need extra service status and approval from IHACPA to charge extra service fees. However, approved providers do not need to seek approval to offer and charge for additional services.

Extra services and additional services are not like for like. You cannot offer some items that may be allowed under an extra service fee arrangement as an additional service fee. When setting additional service fees, you should refer to the Schedule for items you must supply to the resident at no additional charge.

When fees can vary

Fees can vary when:

• a resident goes on temporary leave
• a resident gets financial hardship assistance
• a resident who entered care before 1 July 2014 is transferring into your care and chooses to be assessed under the post-1 July 2014 fee arrangements
• your accommodation supplement rate changes
• rates are indexed
• a resident’s cost of care (AN-ACC class and/or eligibility for primary supplements) changes
• a resident reaches their annual or lifetime caps on the means tested care fee

Services Australia will advise you of these changes after the next quarterly review.

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.

Agreeing on and recording fees and payments

You must:

• discuss and agree on any fees before residential aged care can begin
• include the agreed fees in the resident agreement, accommodation agreement and extra services agreement, although these might be one document

If you are charging additional service fees, you must provide the resident with an itemised account of the services and their costs.

The itemised account should clearly list the individual services and their costs. It’s not enough to group services together or give an overall cost.

The frequency of providing the itemised account should be:

• agreed with the resident
• in a reasonable timeframe — for example, monthly if you charge fees on a monthly basis
• only while the resident is accessing, and benefiting from, the agreed additional services.

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