What are subsidy reductions?
A reduction is an amount that we subtract from the basic subsidy amount.
The types of reductions are:
- compensation payment reduction
- extra service reduction
- income tested fee reduction for residents on pre 1 July 2014 fee arrangements
- means tested care fee reduction for residents on 1 July 2014 fee arrangements
- Means tested contributions reduction for residents on 1 November 2025 fee arrangements
Services Australia will apply relevant reductions when you claim for subsidy payments.
Compensation payment reduction
A resident can get an entitlement to compensation through a:
- settlement
- judgement
- reimbursement arrangement.
This may be for situations like an injury or illness from a workplace or car accident.
If the compensation covers some of the cost of their care, a reduction applies. Services Australia will deduct the compensation amount from the subsidy for that person.
What you need to do:
- If an older person is entering your aged care home and has a compensation entitlement, fill out question 12 of the Aged Care Entry Record Form.
- If am existing resident gets an entitlement to compensation, contact Services Australia.
We (or Services Australia) will tell you and the compensation payer the amount of the reduction. You can invoice the compensation payer directly for the reduction amount.
If you have questions, contact Services Australia.
Extra service reduction
The residential aged care subsidy is reduced for residents in an extra service place who entered care before 1 July 2014.
The subsidy is reduced by 25% of the extra service fee for the place.
The maximum amount you can charge that resident is the fee for the extra service place plus the reduction amount.
Example
Sarah entered an extra service place on 20 March 2010. She pays an extra service fee of $20. The Government reduces the subsidy you get for Sarah by 25% of $20 — that’s $5. You can add that $5 onto Sarah’s fees. The maximum amount you can charge Sarah is $25.
If you have questions, contact us about extra service reduction.
Adjusted subsidy reduction
From 1 October 2022, the adjusted subsidy reduction that applied to places in some residential aged care services ceased.
Income tested fee reduction
Some residents on pre 1 July 2014 fee arrangements can be asked to pay you an income tested fee.
Services Australia calculates the maximum income tested fee based on an assessment of a person’s income.
The basic subsidy and primary supplements amount that the Government would normally pay for a person is reduced by the income tested fee.
You do not need to do anything. Services Australia will automatically deduct the means-tested care fee from the subsidy you receive for that resident.
If you have questions, contact the aged care fees team.
Means tested care fee reduction
Some residents on 1 July 2014 fee arrangements can be asked to pay you a means-tested care fee.
Services Australia calculates the maximum means tested care fee based on an assessment of a person’s financial information.
The basic subsidy and primary supplements for that resident is reduced by the equivalent value to their payable means tested care fee.
You do not need to do anything. Services Australia will automatically deduct the means-tested care fee from the subsidy you receive for that resident.
If you have questions, contact the aged care fees team.
Means tested contributions reduction
Some residents on 1 November 2025 fee arrangements can be asked to pay you a means-tested hotelling contribution and non clinical care contribution.
Services Australia calculates the contributions based on an assessment of a person’s financial information.
The hotelling supplement and base care tariff for that resident are reduced by the equivalent value of the means tested contributions.
Contacts
Services Australia compensation recovery for aged care contact
Department of Health, Disability and Ageing National Office