Reforming the aged care system
Changes to fees and charges from 1 July 2014
Information for residential aged care providers
Changes will be made from 1 July 2014 to the way certain care fees are calculated in
residential care and to how accommodation prices are charged.
The new arrangements will only apply to residents entering care on or after 1 July 2014.
Current residents will remain on their current arrangements. However, if the resident leaves
care for more than 28 days, they will be subject to the new provisions when they re-enter
care. The resident will also be given the option to change to the new system if they move to
a new aged care service.
The current differences between charging for accommodation in high care and low care will
be removed; instead, the same system will apply for both types of places. New residents will
have three choices on how they make any required accommodation payment: as a lump
sum refundable deposit (similar to an accommodation bond); a periodic payment; or a
combination of both.
New residents will have up to 28 days after they enter care to elect how they will pay.
Setting and publishing accommodation prices
You will able to set the accommodation prices you charge for different types of rooms. You
need to publish the prices in advance, showing the payment options of: the lump sum
payment; a periodic payment; and a combination of both. Any proposed accommodation
price above $550,000 will need to be approved by the Aged Care Pricing Commissioner,
before you charge that price.
You will also need to provide a description of the key features and standards of each
different type of room.
Information about your accommodation prices must be available on: the Government’s My
Aged Care website; your website if you have one; and in relevant written documents that you
provide to prospective residents and their families. You can update your prices and key
features statements at any time through the My Aged Care website.
My Aged Care 1800 200 422
Approval from the Aged Care Pricing Commissioner
To charge an accommodation price above a threshold (currently above a lump sum
refundable accommodation deposit of $550,000, or the daily payment equivalent) you will
need to seek approval from the Aged Care Pricing Commissioner.
More information can be found at the Pricing Commissioner’s website.
How will residents choose to pay for their accommodation?
New residents will have the choice of paying for their accommodation as: a refundable lump
sum (known as a ‘refundable accommodation deposit’ or ‘RAD’); an equivalent daily
payment (known as a ‘daily accommodation payment’ or ‘DAP’); or a combination of the two.
A new resident will have up to 28 days from entering care to choose whether to pay the
agreed accommodation price by a RAD or DAP or some combination of both. The daily
payment is paid unless and until a refundable deposit is paid. You must not require daily
payments more than one month in advance.
If the resident elects to pay a RAD and a DAP combination, DAPs can be paid by the
resident or drawn down from a RAD the resident has paid.
Drawing daily payments from the refundable deposit
Residents can choose to draw down daily payments from their refundable deposit if they
choose a combination payment. You must allow residents this choice. You may also agree to
have other amounts drawn down from the deposit.
If any amounts are drawn down you can, if you choose, increase the DAP by an amount that
compensates for the decreasing refundable deposit balance. This needs to be clearly
explained in writing to the resident.
You cannot withhold retention amounts from lump sum payments for new residents.
How do I calculate the equivalent daily accommodation
payment?
To calculate the equivalent daily payment of a refundable accommodation deposit, the
refundable deposit is multiplied by the maximum permissible interest rate (MPIR), currently
6.69 per cent (at 1 July), and divided by 365 days.
For example, a refundable deposit of $400,000 would have an equivalent daily payment of
$73.31 per day.
(Refundable deposit x MPIR)/365 = ($400,000 x 6.69%)/365 = $73.31 per day
An example of a combination payment for a $400,000 price may be a combination of a
refundable deposit of $200,000 and a daily payment of $36.65 per day, with the daily
payment calculated like this:
(Balance of price x MPIR)/365 = [($400,000 - $200,000) x 6.69%]/365 = $36.65 per
day
My Aged Care 1800 200 422
How will I know the maximum permissible interest rate (MPIR)?
The MPIR will be available on the Department of Social Services website and updated every
three months.
The MPIR at the date of publishing this fact sheet is 6.69 per cent (1 July 2014 to
30 September 2014).
Government accommodation supplement
The Government will continue to pay an accommodation supplement to providers for
residents assessed as eligible for the accommodation supplement. Eligibility for residents
who enter care after 1 July 2014 will be determined under new means testing arrangements
that involve a combined income and asset test. Either the Government will pay the maximum
rate of accommodation supplement applicable to the facility, or a part accommodation
supplement, depending on the financial circumstances of the residents assessed.
If a resident is assessed as eligible for the maximum rate of accommodation for the facility
supplement you cannot charge any additional amounts for their accommodation. If they are
assessed as eligible for a part supplement, you may charge the resident the difference
between the assessed supplement amount and the maximum supplement for your facility.
For example, if the resident was eligible for an accommodation supplement of $34 a day and
the maximum supplement for the facility was $54 a day then you can only charge the
resident $20 per day and the Government will pay you the $34 a day. The resident can then
choose to pay their contribution as: a periodic daily payment; refundable lump sum form; or a
payment combination.
From 1 July 2014 the Government accommodation supplement will be increased for new
facilities that are completed or significantly refurbished from 20 April 2012.
Care fees and means testing arrangements
From 1 July 2014 a new combined income and asset test will determine the amount of
means tested care fees that can be charged. Residents subject to the new arrangements will
be able to contact the My Aged Care call centre on 1800 200 422 for an estimate of their
fees or, from 1 July 2014, use the fee estimator at My Aged Care.
The fee estimator will provide: an estimate of the individual’s basic daily fee; means tested
care fee; the accommodation contribution they are required to make (in cases where they
receive Government assistance through the accommodation supplement); and advice on
whether the resident is required to make an accommodation payment at a price agreed with
the home.
From 19 May 2014, information on the accommodation prices being charged by homes is
available at My Aged Care on the Aged Care Homes tab.
No changes are being made to how the basic daily fee is calculated.
Administration arrangements
The current administrative process for determining care fees and advising providers and
consumers will continue. The Department of Human Services will determine the care fees
that are payable and whether a person is eligible for Government support with their
My Aged Care 1800 200 422
accommodation through the accommodation supplement. The Department of Human
Services will then advise both the resident and the provider of any fees payable.
Residents will need to have their combined incomes and assets assessed because both
care fees and the arrangements for paying for accommodation will now be determined by a
combined income and asset test.
This is similar to the current requirement for residents to provide income information for the
calculation of care fees and asset information for the determination of eligibility for the
accommodation supplement.
The Department of Human Services will, in most cases, finalise the assessment and notify
the resident and provider within 14 days of receiving the information.
Providers will be required to submit an aged care entry record to the Department of Human
Services if the resident enters care. A new entry record form will apply from 1 July 2014 and
will be available from the Department of Human Services’ website. The new form will include
the information required for the new arrangements.
If a resident has not supplied information on income and assets by the time the entry record
is provided to the Department of Human Services then DHS will contact the resident seeking
that information. Providers will still be encouraged to emphasise to residents the importance
of early provision of this information.
Care fees payable by residents will continue to be backdated to the date of entry to care.
The process for payment of care subsidy will continue unchanged. Actual payments for a
month will continue to be based on claims data from two months prior, with regular
reconciliations, if necessary.
The interim care subsidy will be paid until Aged Care Funding Instrument (ACFI) claims are
finalised and reconciliations made, as required.
An interim subsidy will now be paid until the Aged Care Funding Instrument (ACFI) claims
are finalised and reconciliations made. The interim subsidy will now be paid for all residents,
following the removal of the distinction between high care and low care for permanent
residents.
More information
More information on aged care reforms is available at the Department of Social Services
website.
Information is also available by calling My Aged Care on 1800 200 422 or visiting the My
Aged Care website.
Providers who need more detailed assistance to help them understand the impact of the
reforms on their business operations and managing the transition to the new arrangements
can also obtain free advice from the Transitional Business Advisory Service on
1800 122 092, or at the KPMG website.
My Aged Care 1800 200 422