What are accommodation bonds and charges?
Accommodation bonds and charges are payable by some residents who entered care before 1 July 2014.
For residents who entered care after 1 July 2014, learn how to manage accommodation payments and contributions.
Based on an assessment of a resident’s assets when they first entered care, they:
- were eligible for government assistance
- need to contribute to their accommodation costs
- a combination of both.
If the resident was not eligible for government assistance for all of their accommodation costs, they would have paid, and may still be paying:
- an accommodation bond – a lump sum payment for low-care residents and residents in extra service places
- a daily accommodation charge – a rental-style payment for high-care residents.
Residents transferring into your care
Residents who entered care before 1 July 2014 and are transferring into your care will stay on their pre-1 July 2014 arrangements. They can choose to be assessed under the post-1 July 2014 arrangements before they enter your service.
If the resident has not chosen to change to the newer fee arrangements, you will collect an accommodation bond or charge from the resident. From 1 October 2022, you can only ask the resident to pay the same type of accommodation payment as they were paying in their previous service. They cannot switch from paying a bond to paying a charge or vice versa.
The bond cannot be larger than the bond refunded from the first service and the retention amounts do not reset.
Accommodation bonds
A resident’s bond amount was agreed when they first entered care. The amount of the bond could not have been more that the resident’s total assessed assets less the minimum asset amount that applied at the time the bond was first agreed.
Accommodation bond agreement
The details of managing the bond are recorded in an accommodation bond agreement and may be included in the resident agreement. The agreement must include:
- the resident’s date of entry to the service
- the accommodation bond amount, agreed between you and the resident
- the payment arrangements
- a calculation of interest payable for periodic payments
- amounts that will be deducted from the bond balance for retention amounts
- whether paying the bond entitles the resident to specific accommodation or additional services
- the interest equivalent payable if the resident does not pay their bond
- any financial hardship provisions that apply to the resident.
Provider responsibilities for accommodation bond agreements are in Chapter 4 of the Aged Care (Transitional Provisions) Principles 2014.
Bond payments
Residents can pay the bond as a lump sum or make monthly payments for some or all of their bond.
The resident pays interest on monthly payments. You must set the interest rate to be at or under the maximum permissible interest rate (MPIR) that applies on the day they enter your service.
You may either:
- deduct a retention amount from an accommodation bond balance
- include a retention amount in a bond periodic payment for each month, or part of a month.
The maximum amount of time for deducting monthly retention payments is 5 years. The 5-year period started on the day the resident entered the aged care home as a permanent resident, unless:
- the aged care home was not certified on that day – the 5-year period started the day the aged care home became certified
- a determination of financial hardship was in force – the 5-year period started the day after the determination ceased
- the resident transferred from respite care – the 5-year period started the day of the transfer.
Monthly retention amounts must be agreed between you and the resident. Monthly retention amounts are capped at a maximum set by the Government.
If a resident chooses to pay some of the bond as a lump sum, the maximum retention amount applies to the total bond.
Bond refunds
You must refund the accommodation bond balance held by your service when the resident permanently leaves your care.
Deducting fees from bonds
You can deduct from an accommodation bond balance:
- amounts owed to you under the resident’s accommodation bond agreement, resident agreement or extra services agreement
- interest on the amounts owed
- retention amounts.
Interest on amounts owed is calculated from 1 month and 1 day after the fee was payable.
A fee payable on 1 July 2020 will start attracting interest from 2 August 2020. Interest is charged until the fee is paid or the resident leaves, whichever comes first.
Interest equivalent on unpaid bonds
If you have provided care to a resident who agreed to pay an accommodation bond but did not pay it before they left your service, you can charge them an interest equivalent as detailed in section 74 and section 91(3) of the Aged Care (Transitional Provisions) Principles 2014.
Changing providers
A pre-1 July 2014 resident who paid an accommodation bond in their previous service and moves to a new aged care home on or after 1 October 2022 and:
- has not had an assets assessment – pays the maximum amount of accommodation bond
- has had an assets assessment – cannot be asked to pay a higher accommodation bond than before
- had a break in care for more than 28 days – will be reassessed under the post-1 July 2014 fee arrangements.
Your service may be eligible for an accommodation supplement for an incoming pre-1 July 2014 resident, depending on their assets.
You can ask the resident to call Services Australia's Aged Care Fee Assessments and Services line, who will advise the resident on how to update their assets, if they need to.
Accommodation charges
A resident’s accommodation charge amount was decided when they first entered care. The amount was based on the value of the resident’s assets at the date they entered care.
Residents who entered care before 2004 can pay an accommodation charge for up to 5 years. The 5-year limit does not apply to residents who entered care between 1 July 2004 and 1 July 2014.
The accommodation charge details must be agreed on within 21 days of the resident entering care.
You can ask residents to pay their accommodation charge no more than 1 month in advance.
Accommodation charge agreement
You must record certain details about managing the accommodation charge in the accommodation charge agreement. They are:
- the resident’s date of entry to the service
- the accommodation charge amount
- the interest to be charged on amounts owed
- that, after paying the accommodation charge, the resident will be left with assets to the value of at least their minimum permissible asset value
- if a resident has a financial hardship determination, they will be charged less than a specified daily amount
- whether paying the accommodation charge entitles the resident to specific accommodation or additional services
You can also add this information to the resident agreement.
Provider responsibilities for accommodation charge agreements are in Chapter 4 of the Aged Care (Transitional Provisions) Principles 2014.
Changing providers
A pre-1 July 2014 resident who paid an accommodation charge in their previous service and moves to a new aged care home on or after 1 October 2022 and:
- has not had an assets assessment – pays the maximum amount of accommodation charge
- has had an assets assessment – cannot be asked to pay a higher accommodation charge than before
- had a break in care for more than 28 days – will be reassessed under the post-1 July 2014 fee arrangements.
Your service may be eligible for an accommodation supplement for an incoming pre-1 July 2014 resident, depending on their assets.
You can ask the resident to call Services Australia's Aged Care Fee Assessments and Services line, who will advise the resident on how to update their assets, if they need to.
Late accommodation bonds and charges
You may charge interest on accommodation bonds that were not paid on the due date. You must include the due date and the rate of interest you will charge for late payments in the accommodation bond agreement. You cannot go above the MPIR.
You may charge interest on accommodation charges that have been outstanding for more than one month. You must include the rate of interest you will charge for late payments in the accommodation charge agreement. You cannot go above twice the lower deeming rate.
View these interest rates in the Schedule of fees and charges for pre-1 July 2014 residents.
When to update accommodation bonds and charges
Accommodation bonds and charges are set on the day a resident enters care, according to their assets test. The bond or charge amounts don’t change while they remain in the same place.
Maximum monthly bond retention amounts
The Government sets the maximum monthly retention amount. The capped amount depends on the size of the bond, and changes annually in line with the Consumer Price Index. However, once set, a resident’s retention amount does not change.
View maximum monthly bond retention amounts in the Schedule of Fees and Charges for Pre-1 July 2014 Residential and Home Care Recipients.
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