Accommodation payments and contributions for residential aged care

Residents in permanent care may have to make an accommodation payment or contribution. You must work out the correct amount of payment or contribution to charge based on the agreed room price, Services Australia advice, and the payment method your resident chooses.

Means status and accommodation costs

Accommodation payments and accommodation contributions are payable by some residents who enter care from 1 July 2014.

Every resident negotiates and agrees to a room price before moving into an aged care home, but not all residents need to pay this price. A means assessment at date of entry to a service determines whether a resident is eligible for Australian Government support with their accommodation costs in that service.

A resident who is not eligible for government support will pay the agreed room price as an accommodation payment.

A resident who is eligible for support (low means status) will either:

For each low means resident, the government will pay you the difference between the maximum accommodation supplement and the amount of accommodation contribution the resident is eligible to pay. 

If the resident is not required to pay an accommodation contribution, the government will pay you the full maximum accommodation supplement your service is eligible for.

A resident’s status as ‘low means’ is set at their date of entry to a service. It will not change while they reside in the same service, regardless of how their means change after entry. This includes if another individual pays a lump sum for accommodation on the resident’s behalf.

You cannot charge a low means resident the agreed room price, even if their means increase. But their accommodation contribution may increase.

Read some examples of how fees and accommodation costs are worked out.

Charging interim accommodation costs

If a resident enters care before they have their means assessed, you can charge the agreed room price as a daily accommodation payment (DAP) as set out in the accommodation agreement. 

If Services Australia later assigns low means status to the resident, you must refund any overpaid amounts. The resident’s means status and accommodation costs can be backdated to the day they entered care.

Read about accommodation costs that apply to pre 1 July 2014 residents.

Accommodation payments

If a resident is not eligible for government support with their accommodation costs, they will pay the agreed room price. They can pay this as a:

  • lump sum
  • daily payment
  • combination of both.

Refundable accommodation deposit (RAD)

This is the lump sum room price that the resident agreed to. You must refund the balance of the RAD when the resident permanently leaves your care.

Daily accommodation payment (DAP)

You must calculate the resident's DAP based on their RAD.

To do this:

  1. note the maximum permissible interest rate (MPIR) that was current on the day the resident agreed to the room price
  2. use this formula:
    DAP = (RAD × MPIR) / 365.

The applicable MPIR won’t change while the resident accesses care in your home unless they voluntarily move rooms and negotiate a new room price. If this happens, use the MPIR current on the day they agree to a new room price.

Combination option

If a resident chooses to pay a part RAD, you must calculate their reduced DAP as follows:

Reduced DAP = (agreed full RAD − RAD paid) × MPIR / 365

Example of calculating DAP and reduced DAP

If the MPIR is 8.34% (as at 1 April 2024), an agreed room price of $450,000 would have an equivalent daily accommodation payment (DAP) of $102.82: 

DAP
= ($450,000 × 8.34%) / 365
= $102.82 per day

An example of a combination payment for a $450,000 room price is:

  • a refundable deposit of $250,000
  • a daily payment equivalent to the remaining $200,000, which is $45.70

Reduced DAP
= ($450,000 − $250,000) × 8.34% / 365
= $45.70

The resident can require you to draw this reduced DAP amount from their paid RAD.

Changes to accommodation payment amounts

Once a resident agrees to a room price, this price won’t change while they live in the same room. If the resident chooses to pay an additional amount as a RAD, you will need to recalculate their reduced DAP.

Accommodation contributions

A resident who is eligible for government assistance with their accommodation costs (low means status) may need to pay a contribution. They can pay this as a:

  • daily amount
  • lump sum 
  • combination of both.

Services Australia sets contribution amounts based on a resident’s income and assets. The contribution amounts can change over time and do not depend on the agreed room price.

Daily accommodation contribution (DAC)

Services Australia will tell you the maximum DAC that applies to each new resident, but this might be higher than the amount you can ask the resident to pay.

The DAC amount payable for a day cannot exceed:

The accommodation supplement applicable to your service can change. The maximum rate of accommodation supplement applicable for eligible residents in your service is based on both: 

Once a resident enters care, Services Australia will consider the refurbishment status and building requirements met by your service in the DAC amount they advise. Note that Services Australia will not consider whether the service meets the 40% supported resident ratio. It is your responsibility to take this into account when charging residents.

If your service has fewer than 40% supported residents over a calendar month as a whole (excluding respite care and residents in extra service places), the maximum rate of accommodation supplement payable is reduced by 25% for every day in that month. 

This means the maximum DAC you can charge will also reduce in calendar months where your service does not meet the 40% supported resident ratio. 

You may need to adjust the DAC for some of your residents if the ratio of low means or supported residents in your service changes.

It is your responsibility to ensure that you do not overcharge residents.

Adjusting a DAC based on your supported resident ratio

Example 1

Services Australia advises that a resident in your service is eligible to pay a DAC of $55 per day. The resident has chosen to pay this by daily amounts. You refurbished your service after 20 April 2012 and it is eligible for the higher accommodation supplement of $68.14 (20 March 2024 rate). 

If your service meets the 40% supported resident ratio in a calendar month as a whole, for each day in that month: 

  • you can ask the resident to pay a DAC of $55 
  • you will receive $13.14 in accommodation supplement for the resident ($55 + $13.14 = $68.14).

If your service does not meet the 40% supported resident ratio in a calendar month as a whole, the maximum rate of accommodation supplement payable to your service is reduced by 25% to $51.11 for each day in that month. Since your resident’s DAC is limited by the accommodation supplement applicable to your service:

  •  you can only ask them to pay $51.11 per day
  •  your service will receive $0 per day in accommodation supplement for the resident ($51.11 + $0 = $51.11).
Example 2

Services Australia advises that a resident in your service is eligible to pay a DAC of $40 per day. Your service was newly built after 20 April 2012 and is eligible for the higher accommodation supplement of $68.14 (20 March 2024 rate).

The resident’s DAC of $40 per day is less than the 25% reduction rate of your $68.14 higher accommodation supplement, which is $51.11 per day. This means that whether your service meets the 40% supported resident ratio does not affect the amount of DAC you can charge this resident.

If your service meets the 40% supported resident ratio in a calendar month as a whole, for each day in that month:

  • you can charge the resident a DAC of $40
  • you will receive $28.14 in accommodation supplement for the resident ($40 + $28.14 = $68.14).

If your service does not meet the 40% supported resident ratio in a calendar month as a whole, for each day in that month:

  • you can still charge the resident a DAC of $40 
  • you will receive $11.11 in accommodation supplement for the resident ($40 + $11.11 = $51.11).

Refundable accommodation contribution (RAC)

If a resident chooses to pay by lump sum, you must calculate the RAC that is equivalent to the DAC amount payable.

To do this:

  1. note the MPIR that was current on the day the resident entered care in your service
  2. use this formula:
    RAC = (DAC amount payable × 365) / MPIR.

You must refund the balance of the RAC when the resident permanently leaves your care.

The applicable MPIR will not change while the resident receives care in your service, even if they move rooms within the service.

Combination option

If a resident chooses to pay a part RAC, you must calculate their reduced daily payment as follows:

Reduced DAC = DAC amount payable − [(balance of RAC paid × MPIR) / 365]

Example of calculating a reduced DAC

Services Australia advises that your new resident is eligible to pay a DAC of $16 per day. The resident chooses to pay a part RAC of $20,000. You must calculate a reduced DAC amount for the resident.

If the MPIR is 8.34% (as at 1 April 2024) when the resident enters your service, the reduced DAC works out to be $11.43: 

Reduced DAC
= $16.00 – [($20,000 × 8.34%) / 365]
= $11.43 per day

The resident can require you to draw this reduced DAC amount from their paid RAC.

Changes to accommodation contribution amounts

The amount of accommodation contribution payable by a resident can change while the resident is in care. This may happen due to:

  • a change in the resident’s personal or financial circumstances
  • indexation of aged care fees and thresholds
  • your service becoming eligible for a different rate of accommodation supplement.

Services Australia will let you know if the maximum accommodation contribution amount changes. If the resident is paying by both DAC and RAC, you will need to recalculate the resident’s contribution amounts.

Full requirements

For full details, see the Aged Care Act 1997:

  • rules about accommodation payments and accommodation contributions – Division 52G
  • rules about daily payments – Division 52H
  • rules about refundable deposits – Division 52J.

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

  • rules for charging accommodation payments and contributions – Part 4
  • how to work out the maximum permissible interest rate (MPIR) – Section 6.

Contact

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Email us for policy information about fees and accommodation costs for residential aged care.
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