Aged care fees and charges - accommodation payments 065-05020020

The type of accommodation payment a care recipient will pay depends on the rules in place:

• on the care recipient’s date of admission to permanent residential aged care, and
• the scheme their means assessment is assessed under

Note: this section also covers existing (continuing) care recipients who move to a different aged care provider on or after 1 July 2014 and who elect to opt in to the new arrangements.

The assessment of income and assets determines if a care recipient is required to pay any accommodation costs. This assessment may result in the care recipient being required to pay:

• no accommodation costs, or
• an accommodation contribution, or
• an agreed accommodation payment where the care recipient is liable to pay the full cost of their accommodation

Paying a combination of a lump sum payment and daily payment gives care recipients the option to have their daily payments deducted from their lump sum. This results in the total balance of a lump sum reducing over time as daily payments are deducted. Other amounts such as care fees or the costs of additional services can be deducted if agreed between the care recipient and the provider.

Accommodation contribution

A care recipient is assessed as a low means care recipient if the care recipient’s daily means tested amount on the day they enter care is less than the maximum accommodation supplement amount for that day. Care recipients assessed as low means may need to pay a contribution towards their accommodation costs. They can pay this as a:

• Lump sum - Refundable Accommodation Contribution (RAC), or
• Daily Accommodation Contribution (DAC), or
• a combination of both the RAC and DAC

The amount of accommodation contribution varies depending on:

• changes to care recipients income and assets
• if the services meets the 40% Supported Resident Ratio
• if a service is significantly refurbished or newly built

Care recipients have 28 days from the date (or proposed date) of entry to care to choose how the accommodation contribution is paid.

Payments must be made daily if a care recipient does not choose how to pay the accommodation payment within 28 days.

Interest may be charged on contributions that have been outstanding for more than one month. The rate of interest cannot exceed the maximum permissible interest rate (MPIR) effective on the day of entry.

The Resources page contains examples of means tested accommodation costs from 1 July 2014 and information on how a service calculates a RAC.

Accommodation payment

An accommodation payment is assessed on a care recipient’s daily means tested amount on the day they enter residential care.

If the means tested amount is equal to or more than the maximum accommodation supplement amount for that day the care recipient is assessed as not low means. Care recipients assessed as not low means, or with a means not disclosed status, are not eligible for assistance with their accommodation costs. They can pay the agreed accommodation cost as one of the following:

• Lump sum - Refundable Accommodation Deposit (RAD), or
• Daily Accommodation Payment (DAP), or
• a combination of both the RAD and the DAP

The amount of accommodation payment is negotiated directly with the aged care provider. Care recipients have 28 days from the date (or proposed date) of entry to care to choose how the accommodation payment is paid:

• in full by a Refundable Accommodation Deposit (RAD), or
• a combination of a smaller RAD and a Daily Accommodation Payment (DAP), or
• pay in full by DAP

Note:

• where a choice is not made within 28 days, the care recipient will have to pay by non-refundable daily payments
• if a choice is made to pay a RAD within 28 days, the care recipient will not be required to pay the RAD until 6 months after the date of entry, and will be charged daily payment until the RAD is paid
• a care recipient cannot be required to pay any accommodation payment before they enter a service

Interest may be charged on daily accommodation payments that have been outstanding for more than one month. The rate of interest cannot exceed the MPIR effective on the date of entry.

The Resources page contains examples of means tested care accommodation costs from 1 July 2014 and instructions on calculating the equivalent daily accommodation payment (DAP).

An amendment to the Aged Care Subsidy Principles in 2016 changed the calculation of an accommodation payment balance if there is an outstanding charge or encumbrance over the payment. For example, a Refundable Accommodation Deposit (RAD) paid after funds were obtained from a loan from a family member. This change ensures that the value of any accommodation payment included for means testing purposes is the total value regardless of the source of the funds such as a loan.

Care recipients who entered permanent residential aged care for the first time prior to 1 July 2014 can pay either an:

• Accommodation Bond, or
• Accommodation Charge

Care recipients who entered care prior to 1 July 2014 pay Accommodation Bonds in low level care and in extra service places. Accommodation Bonds are paid:

• in a lump sum, or
• by periodical payments, or
• by a combination of part lump sum and part periodical payments

Note: some care recipients may choose to pay only the interest on the unpaid bond amount.

Care recipients who entered care before 1 July 2014 pay an Accommodation Charge in high level care that is not in an extra service place. Accommodation Charges are only paid as a daily amount.

Exempt assets for income support payment purposes include the following lump sum payments:

• Refundable Accommodation Deposits (RAD)
• Refundable Accommodation Contributions (RAC)
• Accommodation Bonds

The current refundable balance of the lump sum payment (if any) is recorded in Customer First. Payments can be made in multiple lump sum amounts on different dates or may be reduced by daily payments and fees being deducted.

Note: lump sum accommodation payments are not exempt for aged care means assessment purposes. They are included as an assessable asset in an aged care cost of care calculation.

Care recipients can pay accommodation payments as a daily payment via:

• Daily Accommodation Payments (DAP)
• Daily Accommodation Contributions (DAC)
• Accommodation Charges (pre 1 July 2014)

These daily accommodation payments are not recorded in Customer First.

A care recipient and service provider sign an agreement setting out the amount and type of accommodation payment and how it is paid. Lump sum accommodation payments are not the same as entry contributions paid to retirement villages. A lump sum accommodation payment amount is not used to determine home ownership status for social security purposes. See Retirement villages for more information.

Where a care recipient enters care before a means assessment has been completed, the accommodation agreement may include details of an agreed interim accommodation payment/cost. If the care recipient’s means assessment determines the resident status is low means, the care recipient will need to discuss potential refund of the interim accommodation payments made with their aged care provider.