Residential care

The aged care reforms recognise that while older Australians prefer to receive care at home for as long as possible there will also be an increasing demand for residential care.

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What is changing?

Means testing in residential care

In order to ensure the sustainability of the aged care system and so that all Australians get the care that they need, the Government will strengthen the means testing arrangements for people entering residential care from 1 July 2014. It will combine the current income and asset tests to ensure a consistent fees policy. This will address the issue of asset-rich, income-poor residents paying for all of their accommodation and nothing for care, and the income-rich, asset-poor residents paying for their care but not for accommodation.

The treatment of the family home will not change. It will continue to be exempt from the aged care assets test if occupied by a spouse or other protected person.

An annual cap of $25,000 will apply to a resident's means tested care fee, together with a lifetime cap of $60,000. These amounts will be indexed.

The changes will improve the fairness and sustainability of the aged care financing arrangements, with strong safeguards to ensure access to care for those who cannot afford to contribute to the cost of their care and accommodation. The new means testing arrangements for residential care will ensure greater fairness and consistency in how older Australians access the services they need.

Everyone entering an aged care home for the first time from 1 July 2014 will need to complete and lodge an income and assets assessment form.

The Australian Government will conduct your income and assets assessment. They will advise you and the aged care home of the fees that your service provider can ask you to pay.

You are able to request an assessment prior to entering aged care. The initial fee notification advice you receive will be valid for 120 days unless there is a significant change in your circumstances in which case you will be required to notify the Department of Human Services (or the Department of Veterans’ Affairs). To request an assessment prior to entering aged care, complete and lodge the Combined Assets and Income Assessment (SA457) form.

More information about means testing in residential care is available on the financial changes to residential care information sheet and on My Aged Care.

Accommodation payments for residential accommodation

The Government will also provide older Australians entering aged care homes with more flexibility and choice about how they pay for their accommodation costs. From 1 July 2014, all residents who can afford to will have the choice of paying for their accommodation through a Daily Accommodation Payment (DAP) or a Refundable Accommodation Deposit (RAD), or a combination of both. Aged care providers will not be able to choose between aged care recipients on the basis of how they elect to pay for their accommodation.

Residents will have 28 days from when they enter care to decide how to pay for their accommodation. More information about accommodation payments in residential care is available on the Changes to Fees and Charges information sheet.

Publication of accommodation prices

Since 19 May 2014, all aged care homes have been required to publish their maximum accommodation prices and descriptive information on the My Aged Care website, their own website and in other relevant materials they provide to prospective residents and their families.  This information is for new residents entering an aged care home on or after 1 July 2014, and means that prospective residents and their families are now able to compare accommodation prices and descriptive information for different aged care homes.

More information about the publication requirements and how to update pricing information on My Aged Care is available on the Publishing Accommodation Pricing Information page.

Providers must seek approval from the Aged Care Pricing Commissioner before publishing accommodation prices above a refundable deposit of $550,000. For more information please visit the Aged Care Pricing Commissioner’s  website.

Better support to build more residential care facilities

The Government is reforming aged care financing arrangements to give aged care providers the certainty they need so that more aged care homes can be built, and existing homes can be significantly refurbished.

From 1 July 2014, facilities that are newly built or significantly refurbished on or after 20 April 2012 will qualify for a higher level of Government accommodation supplement paid for residents with low means.

The maximum level of the accommodation supplement in these residential aged care facilities will increase to $52.49 (1July 2014 rate).

Construction activity will be encouraged and residential aged care providers who significantly refurbish or build new facilities will be rewarded. This is expected to lead to more aged care homes being built, and significant refurbishment of existing homes which will create additional capacity in the residential care sector and enhanced quality and amenity of accommodation for residents.

Newly built services completed on or after 20 April 2012 will automatically qualify for a higher level of accommodation supplement. No application is required for newly built services.

These newly built services will be identified using information obtained through existing processes.  Higher levels of the accommodation supplement will be payable from the later of either 1 July 2014 or the date on which the new facility was completed.

Services seeking a determination that they are significantly refurbished will need to apply to the Department.

More detailed information about the higher level of Government accommodation supplement and how to apply is available on the higher accommodation supplement page.

For eligible applications relating to completed refurbishments:

  • If the refurbishment was completed before 1 July 2014 and the application for the determination was received on or before 31 July 2014, the higher accommodation supplement will be paid from 1 July 2014; or
  • In any other case, the higher accommodation supplement will be paid from the day the application was received.

Information sheet to be given to residents in residential care on 30 June 2014 who are intending to transfer to a new facility 'New Arrangements for Aged Care from 1 July 2014- Residential Care’

On 1 July 2014, a new system of fees and charges came into place. If you are an aged care provider you must give the publication New Arrangements for Aged Care- from 1 July 2014 to a prospective new resident if they were in residential care on 30 June 2104 and are intending to transfer to your facility.

Some residents may be eligible and may wish to opt in to the new fee arrangements.  The ‘opt-in’ forms the resident must use to make their choice to be subject to the new arrangements can be found on the Department of Human Services website.

Additional changes for residential care

Changes to the Schedule of Specified Care and Services

The Australian Government has worked with governments, providers, consumers and stakeholders to reform the aged care system. This means some changes to your business strategies, to your prices, to your services, and to your workforce so that there is a sustainable, affordable and equitable aged care system for our future.

From 1 July 2014, there are changes in the care and services you must provide to residents, and which residents you can charge additional fees for providing those care and services. These changes apply to all new and continuing residents.

For further information, please see the Quality of Care Principles 2014.

More information about the changes is available on the Schedule of Specified Care and Services.

Removal of the high care and low care distinction

From 1 July 2014, the distinction between low care and high care is removed in permanent residential aged care.

This will result in flexible, simple and more transparent arrangements in permanent residential aged care, reducing red tape for consumers and providers without compromising the levels of care provided to residents.

The distinction has operated in conditions of allocation for residential aged care places, care recipient approvals, care recipient classifications, accommodation payments and other arrangements.

More information is available on the Removal of low care - high care distinction in permanent residential aged care from 1 July 2014 information sheet.

Aged Care Pricing Commissioner

New arrangements for the approval of new or changes to existing extra service fees commence from 1 July 2014.

From 1 July 2014, aged care providers will need to apply to the Aged Care Pricing Commissioner for approval of the extra service fees that a residential aged care provider may charge a person. The Secretary of the Department of Social Services will still be responsible for the decision to grant or not grant extra service status in respect of a residential care service, or distinct part of a service.

Further information will be available on the Aged Care Pricing Commissioner website. Alternatively, please contact the ACPC directly for further information.

Transitional Business Advisory Services

Residential aged care providers have access to support to help them transition smoothly to new accommodation payment arrangements that begin on 1 July, as part of reforms to the aged care system.

The Transitional Business Advisory Service aims to help minimise disruption for providers as the roll out of the new arrangements begins.

Through the advisory service, providers are able to receive general and tailored advice on the impact of accommodation payment reforms on their business, including analysis of their business models and financial position if required.

This support to providers will help ensure they are well prepared for the new payment arrangements. There is no fee for this service.

More information about the new service is available from Transitional Business Advisory Services information sheet.

Frequently Asked Questions

More information on residential care and home care is available on the Frequently Asked Questions page.

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