Last updated 31 October 2022
When a resident enters a facility, the provider must give the resident or their representative information about the resident’s rights as set out in the Charter of Aged Care Rights (sch 1 User Rights Principles 2014 (Cth)).
The charter is like a Bill of Rights for residents, but it also includes a list of the resident’s responsibilities as life in an aged-care facility requires residents to respect the rights of other residents and staff.
Calculating what and how much you have to pay for your aged care is complex. For people who are proposing to enter aged care, it is crucial to receive appropriate financial advice on the cost and the implications before committing themselves.
Broadly speaking, a person can be expected to pay three types of costs:
- basic daily fee
- means-tested care fee
- accommodation payment
- extra services fee
- additional services such as optional personal services (e.g. hairdressing, Foxtel).
The government regulates what can be charged for these costs except for the optional personal services.
Basic daily fee
This fee covers the cost of daily living expenses in the facility such as meals, power, cleaning and laundry.
At the time of writing, the current basic daily fee is $54.69. This fee is calculated at 85% of the single age pension and increases on 20 March and 20 September each year. A person entering aged care will be advised how much this fee will be by the Services Australia.
There are general rules in relation to daily care fees set out in s 52C of the Aged Care Act 1997 (Cth) (Aged Care Act):
- Fees cannot be charged more than one month in advance.
- A pre-admission fee, waiting list fee, booking fee (except for respite care) or any administrative fee cannot be charged.
- Any fees paid in advance must be refunded when the resident leaves.
- Overdue fees may be deducted from a resident’s accommodation bond balance.
- Interest may be charged on overdue fees.
The fees are calculated based on the financial information given by a resident to Centrelink at the time of entry. If a person does not wish to give such financial information, they will be charged the maximum fees that can be charged.
Means-tested care fees
People with sufficient financial means can be asked to pay this care fee as well as the basic daily fee.
Your financial circumstances will be assessed by Centrelink as a result of the Income and Assets form lodged by most people before they enter aged care. If you are over the threshold for the relevant tests, you will be required to pay a means-tested care fee.
Currently the maximum daily fee is between $0 and $264.81, but this will change over time either because of the increase in the maximum or because your financial circumstances improve.
It is important to understand, however, that the government has placed a yearly cap of $29 399.40 and a lifetime cap of $70 558.66 on the amount you may have to pay for this fee. Please note, these maximum amounts will increase at the same time as the aged-care fees on 20 March and 20 September each year.
You cannot be asked to pay more than the yearly amount or, ultimately the lifetime amount however long you may reside in the facility. Bear in mind that the caps themselves are indexed and will increase each year. Centrelink will tell you when you have reached the respective caps.
A person is not required to pay a means-tested fee if they:
- are a full means-tested pensioner
- are a respite resident
- are an Australian ex-prisoner of war
- were receiving permanent residential care before 1 March 1998
- have a dependent child.
As fees change every year, you should consult the My Aged Care and Services Australia websites for the latest maximum fees payable.
If a person is required to pay or contribute to their accommodation costs, they are able to choose to pay it in the following ways:
- an upfront lump sum payment, called a refundable accommodation deposit (RAD) if the person is paying for the cost of their accommodation or a refundable accommodation contribution (RAC) if they are contributing to the cost of their accommodation
- a daily accommodation payment (DAP) if the person is paying for their accommodation or a daily accommodation contribution (DAC) if they are contributing to their accommodation. These payments are paid up to a month in advance, as agreed with the service provider
- a combination of the above.
The lump sum payments are like an interest-free loan to the aged-care home. When a person leaves the home, the balance of the deposit is refunded less any amounts that they have agreed to having deducted. On the death of a resident in aged care, a provider must refund the RAD or RAC (and DAPs or DACs if paid in advance) within 14 days of being shown the Grant of Probate (or Letters of Administration) of a deceased resident’s estate.
Aged-care homes wishing to charge more than $550 000 as a lump sum or as rental-type payments based on a daily rate must have their prices approved by the Aged Care Pricing Commissioner.
Some other relevant legal rules to know about these accommodation payments:
- A person cannot be charged an accommodation payment that would leave them with less than $52 500 in assets (this amount increases from time to time).
- A provider has up to 28 days to enter into an accommodation agreement. This can be extended if a legal process has begun for a person to be appointed by a tribunal (e.g. the Queensland Civil and Administrative Tribunal) as the decision maker for a resident who has impaired capacity and, in that event, the agreement must be signed within seven days of any such appointment or if no appointment is made or the process comes to an end.
- A person may apply for a hardship determination so that, even if they are required to pay an accommodation payment, the obligation can be waived by the department (s 44.30 Aged Care Act).