Residential Care and Home Care Frequently Asked Questions

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Existing residents and the aged care reforms

Q: How will the new fee arrangements affect existing care recipients?

A: The changes to fees only apply to people entering aged care on or after 1 July 2014. In residential care, continuing residents will remain under their current fee arrangements unless they leave care for more than 28 days or move to a new facility and elect to be covered by the new arrangements.

The fees that can apply to existing pre 1 July 2014 home care recipients are unchanged from current arrangements. They will be covered by the new arrangements if they enter residential aged care.

Q: What happens if a pre-1 July resident transfers to a new facility after 1 July 2014?

A: Residents who are already in residential aged care prior to 1 July 2014 will not be subject to the new financial arrangements unless they choose to opt in when they change facility. This means bonds can be rolled over in the same way as in the current arrangements.

As per the current arrangements, the maximum amount the resident can pay the new facility is the amount left over after the retention amount has been subtracted from the accommodation bond. Both parties must agree to continue to roll over the bond.

If a resident chooses to opt in to the post 1 July 2014 arrangements, they will need to be assessed by the Department of Human Services (Centrelink) as a new entrant.

Residents who are already in residential aged care prior to 1 July 2014 will not be subject to the new financial arrangements unless they choose to opt in or they re-enter care after a break of 28 days.

Q: Do the annual and lifetime caps apply to continuing care recipients?

A: No. The annual and lifetime caps only apply to care recipients who entered care on or after 1 July 2014.

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Refundable Accommodation Deposit (RADs) and Daily Accommodation Payment (DAPs)

Q: Can a consumer roll over their accommodation payment when they move facilities?

A: No. Under the Aged Care Act 1997, the accommodation payment must be refunded ‘if the care recipient is to enter another service to receive residential care’.

Prior to entry to a new service, a resident subject to the 1 July 2014 fee arrangements will need to negotiate and agree an accommodation price with their new provider. The new provider cannot charge an accommodation price that is greater than their advertised price.

Unlike the arrangements in place in respect of bonds paid before 1 July 2014, where residents who paid an accommodation bond could have the bond balance transferred to the second aged care home, accommodation payments are not ‘automatically’ rolled over where a resident moves to a new service.

Q: Does a resident’s DAP need to be re-calculated each time the maximum permissible interest rate (MPIR) changes?

A: No. The MPIR used to work out the equivalence between a refundable deposit and daily payment amounts for a resident is that which is current on the day the resident agreed an accommodation payment with the aged care home. The same MPIR continues to apply unless the person subsequently moves rooms within the aged care home.

Q: What can be deducted from a RAD?

A: If a resident has paid a refundable deposit, the provider must deduct DAPs at the resident’s request. Other amounts – such as care fees or the costs of additional services – may be deducted, if agreed between the resident and the provider. This must be set out in writing.

Q: Can a resident agree to an accommodation price that is greater than their net assets?

A: Yes. The new accommodation payments arrangements give residents and providers the flexibility to negotiate an accommodation price that is greater than a resident’s net assets. Residents can choose to pay for their accommodation by a lump-sum refundable deposit, rental-style daily payments, or a combination of both.

The combination method allows residents to pay a partial refundable deposit, ensuring that they are left with the minimum permissible asset level (currently $45,500), and then pay the balance of the agreed price by daily payments. Residents can elect to have the daily payments deducted from the refundable deposit.

Q: How long does a resident have to pay a RAD?

A: A resident has 28 days from the date they enter the facility to decide how to pay for their accommodation. If within those 28 days they make a decision to pay a RAD, they have 6 months to pay. If they make a decision after those 28 days to pay a RAD, it is due as agreed between the provider and the resident. A resident must pay a DAP until the RAD is paid.

Q: How often do we need to recalculate the RAD if someone is drawing down DAPs from it?

A: Service providers and residents will need to agree how often they will recalculate as part of their accommodation agreement. The service provider cannot request a resident pay a DAP more than one month in advance.

Q: How do I calculate the DAP?

A: The formula used to calculate a DAP is:

Equivalent daily payment = (refundable deposit × maximum permissible interest rate)/365

Q: Can a provider use an interest rate that is lower than the maximum permissible interest rate (MPIR) to calculate the DAP?

A: No. The MPIR is the interest rate that is used to calculate equivalence between refundable deposit and daily payment amounts.

Q: Can a resident agree to an accommodation price for a room that is greater than the price published for that room?

A: No. Residents cannot pay an accommodation price that is greater than the maximum price published for that room. The maximum price published is related to the room itself, not the wealth of the resident. Providers and residents may agree a price that is less than the published amount.

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Accommodation prices approved by the Aged Care Pricing Commissioner

Q: Do accommodation prices approved by the Aged Care Pricing Commissioner remain valid if the service transfers ownership?

A: Yes. If the Aged Care Pricing Commissioner has approved accommodation prices above a refundable deposit of $550,000 for a service, and the ownership of that service transfers to another Approved Provider, the approval remains valid provided that the conditions attached to the approval continue to be met.

An approval ceases to have effect if there is a change in the location at which residential care is provided through the service.

Q: Can accommodation prices approved by the Aged Care Pricing Commissioner be indexed?

A: Yes. Under section 29 of the Fees and Payments Principles 2014 (No. 2), providers are permitted to index an accommodation price approved by the Aged Care Pricing Commissioner. The approved amount may be indexed annually using the following formula:

Indexed amount = Approved amount x (Most recent index number / Previous index number)

The index number refers to the All Groups Consumer Price Index (CPI) number, which is published on the Australian Bureau of Statistics website. The relevant CPI number is the rate applicable for the quarter ending before the first day of the approval year. For example:

On 1 July 2014, a service receives approval from the Aged Care Pricing Commissioner to charge an accommodation price of $700,000 for a room. On 1 July 2015, the provider can apply indexation to the approved price. The most recent index number would be the CPI rate for the quarter ending 30 June 2015. The previous index number is the CPI rate for the quarter ending 30 June 2014.

The indexed amount is generally rounded to the nearest whole dollar. However, in cases where the indexed amount to be rounded is 50 cents, the amount is rounded down.

Q: Does indexation apply to accommodation prices agreed with existing residents?

A: No. Indexation cannot be applied to prices agreed with existing residents who have a current accommodation agreement in place. The indexed amount only applies in relation to a new resident who has not entered into an accommodation agreement or care prior to the day that the approved amount is indexed.

Q: Are accommodation prices approved by the Aged Care Pricing Commissioner automatically updated for indexation on the My Aged Care website?

A: No. Prices published on My Aged Care are not automatically indexed; providers are responsible for updating the published prices.

Q: If I publish an accommodation price that is less than the approved amount, which amount do I index?

A: It is the approved amount that is indexed, regardless of the accommodation price that is actually published. This is then the maximum amount that could be published.

Moving rooms within a facility

Q: Can a resident be moved if they entered into a facility on the assumption they would be paying an accommodation price agreed with the provider but were found to be low means or vice versa?

A: The User Rights Principles 2014 oversee the circumstances when a resident can be moved within the same facility. In order to meet the requirements in the Principles, the provider will need to have discussed with the consumer the information covered in the agreement at the time the resident is entering care. In particular the provider will need to be sure that the resident understands that the room he or she occupies may depend on the fee advice received from the Department of Human Services (DHS), and that the resident may be moved after entry once the fee advice has been received or if it is corrected.

Please see the following scenarios which seek to demonstrate how a provider would meet his or her obligations prior to the resident entering care in order to subsequently move the resident in response to an amended or corrected fee advice.

Example 1 – Amelia

Amelia has entered a residential aged care facility. She completed her combined income and asset assessment prior to entering care, and has an initial fee advice which indicates that the Government will pay her accommodation costs.

Prior to entering care, Amelia’s provider discussed with her and her family the two possibilities of which room she would occupy depending on whether the fee advice from DHS classified Amelia as a low means resident or an accommodation payment resident and the outcomes of each situation. Even though Amelia had a fee advice which indicated that she could not be asked to pay an accommodation payment, Amelia and her provider agreed a price and specified the room that would be provided at that price. The information was also included in the accommodation agreement between Amelia and her provider.

When Amelia first enters care, her provider accommodates her in a shared room. Two weeks after Amelia enters care she receives a revised initial fee advice and her provider receives an initial fee advice indicating that Anna is liable to pay an accommodation payment – that is the price agreed with the provider. The ‘protected person’ who had been living in Amelia’s house moved out before Amelia entered care which meant that Amelia’s former home was no longer an exempt asset.

Amelia begins to pay the agreed accommodation price and her provider moves her to the room specified in this agreement since the move had previously been discussed and agreed between Amelia and her provider at the time she entered into the accommodation agreement.

Example 2 - Sam

Sam has entered a residential care facility, but did not have the results of his combined income and asset assessment prior to entry. As Sam and his provider wait for the means test results, Sam’s provider considers him to be able to pay an accommodation payment and he is accommodated in a private room with an ensuite.

Before Sam entered care, Sam’s provider discussed with him and his family the two possibilities of which room Sam would occupy depending on whether the fee advice from DHS classified Sam as a low means resident or an accommodation payment resident and the outcomes of each situation. Sam and his provider agreed a price and specified the room that would be provided at that price. The information was also included in the accommodation agreement between Sam and his provider.

Until Sam’s means are known Sam’s provider charges him the agreed accommodation price.

DHS subsequently sends a fee advice letter to Sam and his provider advising that Sam is eligible for Government assistance with his accommodation costs and so he cannot be charged the price agreed with the provider.

Sam’s provider is able to move Sam to another room in the same facility equivalent to his classification as a low means resident since this move had previously been discussed and agreed between Sam and his provider. Sam’s provider is also required to refund the accommodation payment amounts that Sam had previously paid (net of any accommodation contributions he would instead be required to have paid in that period).

Example 3- Phil

Phil has moved into a residential care facility and has been assessed by DHS as a low means resident. However, due to renovations at the residential care facility, the only room available is a room with a published price of $350,000.

Phil’s provider had previously discussed with Phil and his family that Phil will be accommodated in the room priced at $350,000 while renovations take place and he will be moved to another room once renovation is complete. This was also included in the accommodation agreement and Phil had agreed with these conditions. Phil’s provider cannot charge him more than the lower of the maximum accommodation supplement for their facility or the accommodation contribution advised by DHS.

Phil’s provider can now move him into the new room once it becomes available as this move had previously been discussed and agreed to between Phil and his provider.

Q: If a resident who was in care on 30 June 2014 wants to move to a new room within the facility, can they be asked to pay a higher price than the accommodation bond that they have paid (i.e. up to the published price of the new room)?

A: Residents who were in care on 30 June 2014 continue to be covered by the arrangements in force on that date, unless they leave care for more than 28 days (other than on approved leave) or move to a new facility and elect to be covered by the new arrangements.

This means that if the resident was in care on 30 June 2014 and moves rooms within a facility, they continue to be covered by the rules about accommodation charges and bonds in force on that date, and cannot be asked to pay more than the bond that they previously agreed to. The published price of the room the resident wants to move into would be irrelevant, as the new rules about accommodation payments only apply to residents who entered care on or after 1 July 2014.

Q: Can a resident who entered care on or after 1 July 2014 be asked to pay a higher accommodation price if they want to move to a new room with a higher published price?

A: If a resident (who entered care on or after 1 July 2014) moves rooms within a facility, they may be charged an accommodation price that is higher or lower than the amount that they were paying, as long as the move is voluntary. The accommodation agreement must be varied to specify the new price and new room or part of room.

The new agreed price for the new room cannot be more than the maximum price that was published for that (new) room on the day that the agreement was varied. It is the maximum permissible interest rate (MPIR) current on the day that the accommodation agreement is varied that must be used to calculate the equivalence between the refundable deposit and daily payment amounts for the new room. If the accommodation payment for the new room is higher than the amount previously being paid, the resident may choose to pay the additional amount by daily payments, by a refundable deposit, or by a combination of both.

If the accommodation payment for the new room is lower than the amount previously being paid, and the resident has paid a refundable deposit, the provider must refund any excess balance to the resident.

Q: Can a resident be asked to pay a higher accommodation price if the move is not voluntary?

A: No. If a resident (who entered care on or after 1 July 2014) moves rooms, but the move is not voluntary, they cannot be asked to pay a higher accommodation payment than they were previously paying, even if the published price for the new room is higher.

If the price for the room (that was published on the day that the notice to move was given to the resident) is lower than the amount the resident was previously paying, then they cannot be asked to pay more than that published amount. It is the maximum permissible interest rate (MPIR) applicable on the day that the notice to move is given to the resident that must be used to calculate the equivalence between the refundable deposit and daily payment amounts for the new room.

A move is not voluntary if:

  1. the move is necessary on genuine medical grounds as assessed by:
    1. an aged care assessment team; or
    2. at least 2 medical or other health practitioners who meet the criteria below; or
  2. the place occupied by the person becomes an extra service place and the person elects not to pay the extra service fee; or
  3. the move is necessary to carry out repairs or improvements to the premises of the service.

The criteria for the medical or other health practitioners for (a)(ii) above are:

  1. one practitioner must be independent of the approved provider and the residential care service, and must be chosen by the person; and
  2. both practitioners must be competent to assess the aged care needs of the person.

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Method of payment and contracts

Q: Can the timeframe for entering into an accommodation agreement be extended beyond the 28 day period?

A: Yes. Under subsection 52F-2(2) of the Aged Care Act 1997, an approved provider can request an extension to the timeframe for entering into an accommodation agreement where a process to appoint a representative under Commonwealth, State or Territory law to act on the care recipient’s behalf has begun. 

An application for an approved provider to seek an extension to the timeframe in which an agreement may be signed can be made by completing the ‘Application for an extension to the timeframe for entering into an accommodation agreement’ form on the Department of Social Services website.

Q: Can a person other than an approved provider request an extension to the timeframe for entering into an accommodation agreement?

A: The Department requires a request for extension to be made by an approved provider. It is the approved provider’s responsibility under paragraph 52F-2(1)(a) of the Aged Care Act 1997 to enter into an accommodation agreement before the expiry of the legislated timeframe. If a person such as the care recipient’s legal representative requires additional time before entering into an accommodation agreement, they should advise the provider to seek an extension to the period for entering into the agreement.

Q: Does a resident have to be left with a minimum permissible amount of assets if they pay for accommodation by lump sum payment?

A: If a resident chooses to pay some or all of their accommodation costs by lump sum within 28 days of entering care and has provided information about their assets to the service provider, he/she must be left with the minimum permissible asset amount (currently $46,000 in July 2015 rates).

The requirement for a person to be left with the minimum amount of net assets only applies if the resident pays, or commits to paying, the lump sum amount within 28 days of entry and has supplied sufficient information to the service provider to determine his or her means. This may entail completing a means test assessment with the Department of Human Services (Centrelink) or the Department of Veterans’ Affairs.

If a resident refuses to provide information on their assets, a provider is not required to meet the minimum permissible asset rule.

An additional payment made after the 28 day period is not subject to the minimum permissible asset rule.

Q: How do I ensure that a resident is left with the minimum permissible asset amount?

A: The minimum permissible asset amount is listed as the ‘minimum amount of net assets’ in the resident’s initial means assessment and fee advice letter from the Department of Human Services (Centrelink). This letter can provide the asset information required to work out the maximum lump sum payment that a resident can make for their accommodation costs while being left with the minimum permissible asset amount.

However, the resident is not obligated to share their letter with you. If the resident does not share the letter with you or does not provide sufficient information on their assets, the minimum permissible asset rule does not apply.

Where a resident has shared their letter with you, the letter will include the following amounts:

  • Net asset total: this is the net value of all of the resident’s assets, including the full market value of the principal residence if relevant. This is the amount that is relevant in ensuring that a resident is left with the minimum amount of net assets.
  • Assessed assets: this is the assessed value of the resident’s assets for aged care purposes, which includes the capped value of the principal residence if relevant. This is the amount used to calculate the resident’s means tested care fee or accommodation contribution, but is not relevant to determining the minimum amount of net assets that a resident must be left with.

Where a resident has elected to make a lump sum payment for accommodation within 28 days of entering care, a provider cannot accept the lump sum payment if it leaves the resident with assets fewer than the minimum amount of net assets.

If a resident cannot pay the total accommodation price as a lump sum payment, a provider may require additional daily payments to be made to meet the total accommodation cost. The combination method will allow a resident to pay a partial refundable deposit to ensure that they are left with the minimum amount of net assets, and then pay the remaining accommodation costs by daily payments. Alternatively, a resident can also elect to have the daily payments deducted from the refundable deposit.

The examples below show how to work out the amount of lump sum payment someone can pay while still ensuring he/she is left with the minimum amount of net assets (examples based on July 2015 rates).

Example 1: Accommodation contribution

Joe’s fee advice states that he can be asked to pay the basic daily fee of $47.49 a day and a daily accommodation contribution of $40.00. The accommodation contribution can be paid as a lump sum, as a daily payment or a combination of lump sum and daily payment.

If Joe chose to pay part of his accommodation contribution in lump sum, the minimum amount of net assets that Joe must be left with after paying a lump sum amount is $46,000. Based on Joe’s fee advice, Joe has a net asset total of $100,000 so the maximum lump sum payment that he can make is $54,000.

If Joe chooses to make a lump sum payment of $54,000, the new daily payment would then be calculated as:

= $40.00 – [$54,000 x 6.15%/365]
= $40.00 – [$3321/365]
= $40.00 – $9.10
= $30.90

A lump sum payment of $54,000 would reduce Joe’s daily accommodation contribution to $30.90.

Note: 6.15% is the maximum permissible interest rate at July 2015.

Example 2: Accommodation payment

Wendy’s fee advice states that she can be asked to pay the basic daily fee of $47.49 and an accommodation payment at a price agreed with her aged care home. Wendy agreed an accommodation price of $500,000 prior to entry. This can be paid as a lump sum, in daily payments or a combination of lump sum and daily payment.

According to Wendy’s fee advice, her assets for aged care purposes are $200,000 (after capping the value of her home) and her net assets are $800,000 (which includes the full value of her home). If Wendy chose to pay her accommodation payment by lump sum, the minimum amount of net assets that Wendy must be left with after paying a lump sum amount is $46,000. The maximum lump sum payment that Wendy can make after the minimum amount of net assets is considered is $754,000 (i.e. $800,000 - $46,000).

Q: How should an accommodation agreement cater for situations when it is not clear if a person will be a low means resident or a person who is liable to pay an accommodation price agreed with the provider?

A: The Aged Care Act 1997 (the Act) requires that an accommodation agreement (which may be incorporated in the resident agreement) must cover both of the following situations:

  • Where the resident is required to pay an accommodation payment; and
  • Where the resident is eligible for government assistance with their accommodation costs.

Paragraph 52F-1(1)(b) of the Act states that the provider must agree in writing the amount of accommodation payment that would be payable if the person is liable to pay an accommodation payment to a service. This is regardless of whether the resident is likely to be a low means resident. The price agreed only holds if a resident is eligible to make an accommodation payment. Similarly, the type of accommodation (room type) specified in the accommodation payment agreement only applies if an accommodation payment is made.  While the means test results are unknown the provider may charge the resident the agreed accommodation price but there amounts or part of them will need to be refunded if the resident is later found to be a low means resident. The amount is payable by daily payments until the resident’s arrangements and choice of payment is settled.

Since the maximum accommodation contribution amount for a low means resident can change from time to time a fixed amount cannot be put in the accommodation agreement. Nevertheless, the legislation is not “silent” on the accommodation agreement setting down parameters for the maximum amount a low means resident could be asked to pay. Paragraph 52F-3(3)(a) requires the provider to put in the agreement that the accommodation contribution cannot exceed the person’s means tested amount and that this amount may change when either the person’s means are reassessed or when the accommodation supplement applicable to the service changes (52-3(3)(b)).

Please also see section on whether a resident can be moved if they entered into a facility on the assumption they would be paying an accommodation price agreed with the provider but were found to be low means or vice versa.

Q: Does the accommodation agreement need to cover both accommodation payments (for non-supported residents) and accommodation contributions (for supported or partially-supported residents)?

A: Yes, the accommodation agreement must cover both accommodation payments and accommodation contributions. This covers instances where a provider and resident have agreed an accommodation price prior to entry, but a subsequent means test shows that at entry the resident was only eligible to make an accommodation contribution.

The accommodation agreement must set out the amounts of refundable deposit or daily payment that would be payable if the person is eligible to pay an accommodation payment, as well as the accommodation and services that the resident will receive for that payment. It must also specify that if the person’s means test shows that they are eligible to make an accommodation contribution, the amount of accommodation contribution will not be more than the amount assessed for the person.

Q: Is a new resident allowed to agree to a payment option on admission or before admission, or MUST they wait 28 days?

A: Residents cannot elect their payment method before admission. Residents have up to 28 days to decide on a payment option and can make a decision at any time during this period – they do not have to wait the entire 28 days.

Q: If a resident chooses to wait 28 days before making a decision, do we charge the full applicable DAP until they make their choice?

A: Yes.

Q: After 28 days, can a resident change their mind on how the accommodation is paid? If so, how much notice do they have to give?

A: If a resident is paying a DAP, they can decide to pay a RAD at any time. The DAP is charged and payable until the RAD has been paid to the service provider.

The service provider will need to agree to any change in payment options if a resident has paid a RAD and wishes to pay a DAP.

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Means testing

Q: Is a care recipient required to complete a new income and assets assessment when they move to a new aged care facility?

A: Residents who first entered a residential aged care facility on or after 1 July 2014 must have a new means tested amount determined each time they move to a new aged care facility (as identified by a separate RACS ID). A previous assessment will not be valid unless it is within the initial 120 days validity period. However, if the client has kept the Department of Human Services (DHS) informed of changes to their means, they may not need to complete the full Permanent Residential Aged Care - Request for a Combined Assets and Income Assessment (SA457) form again. If unsure, the client should speak to DHS on 1800 227 475.

It is a resident’s means tested amount at the date of entry into a facility that determines whether they will be liable to pay an accommodation payment or accommodation contribution towards their accommodation costs in that facility, as outlined under the Aged Care Act 1997.

Residents in care before 1 July 2014, who are moving to a new facility and are considering opting into the new fee arrangements will need to complete a Permanent Residential Aged Care - Request for a Combined Assets and Income Assessment SA457 form.

Q. Can a prospective resident have a means assessment before entering aged care?

A. Yes. To request an assessment prior to entering aged care, the resident will need to complete and lodge the Combined Assets and Income Assessment (SA457) form. The form is available from the Department of Human Services website.

The Department of Human Services will issue initial fee notification advice which is valid for 120 days. If there is a change in the resident’s circumstances after the fee advice has been issued, the Department of Human Services (or Department of Veterans’ Affairs) will need to be notified and provided with updated information.

Q: How is the principal residence assessed under the new means assessment?

A: Consistent with current arrangements the principal residence will be exempt from the means assessment if occupied by a spouse or other protected person.

If the home is not occupied by a protected person the value of the home up to a capped amount will be included in the assets test.

Q: How frequently will assets and income be assessed?

A: Unlike current arrangements, changes in both income and assets will result in changes to the means-tested care fee and/or the accommodation contribution paid by residents who receive government support with their accommodation.

Centrelink and the Department of Veteran’s Affairs (DVA) will use the information they collect for income support payment purposes to update a resident’s income and assets for aged care purposes. Consistent with current arrangements this would include the resident advising when there are significant changes to assets.

A self-funded retiree should advise Centrelink of any changes in their circumstances.

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Refundable Accommodation Contributions (RACs) and Daily Accommodation Contributions (DACs)

Q: What is the daily amount of accommodation contribution where a pre-entry means test assessment was undertaken?

A: Where a consumer has completed a pre-entry means test assessment and has been assessed as being liable to pay an accommodation contribution, they will receive a fee advice letter issued by the Department of Human Services (DHS). The fee advice letter will notify them of the maximum accommodation contribution based on their income and assets.

An example of a fee advice from DHS is shown below.

Based on the information you provided, your service provider can ask you to pay:

  • the basic daily fee of $47.15 per day, and
  • an accommodation contribution of $35.82 per day.

There will be no additional means tested care fee for you to pay and we will also pay for the costs of your accommodation above your rate of contribution by way of an accomodation supplement to your service provider

In the example, a consumer can be asked to pay the basic daily fee and contribute up to $35.82 per day to the costs of accommodation. If the service is newly built or significantly refurbished, the Government will pay for the remaining amount of $17.22 through an accommodation supplement to bring the combined accommodation contribution and accommodation supplement to the maximum amount of $53.04 per day that applies for significantly refurbished facilities.

However, if the service is not significantly refurbished or newly built, the service can only charge up to the rate of accommodation supplement that it can receive ($34.56).

The fee advice notifies the maximum amount of basic daily fee and accommodation contribution payable. The amount of accommodation contribution advised can be more than the maximum accommodation supplement for the consumer’s chosen facility as the facility a consumer will enter will not be known to DHS when the pre-entry means test assessment is completed.

Once a consumer has chosen a facility and DHS is notified, the consumer and their facility will be advised in writing of the accommodation contribution payable for that facility. This is capped by the maximum accommodation supplement the facility receives.

Q: How do I calculate the Refundable Accommodation Contribution payable?  The letter from DHS only gives me the Daily Accommodation Contribution amount.

A: Where a resident is eligible for a part Government accommodation supplement the Department of Human Services (DHS) will write to the provider advising them of the additional accommodation contribution the resident is required to make. DHS’s advice is in the form of a periodic Daily Accommodation Contribution (DAC). Where a resident wishes to pay this in lump sum form, a Refundable Accommodation Contribution (RAC), the provider will need to calculate this amount.

To work out the equivalent RAC payable, follow the equation below:

RAC = (DAC advised by DHS x 365)/Maximum Permissible Interest Rate

Note: the Maximum Permissible Interest Rate (MPIR) that is used is the MPIR for the resident’s entry day. 

For example, DHS has advised a resident that their DAC payable is $28.15 and the resident wishes to pay their accommodation contribution by lump sum. The resident can be asked to pay the following RAC (assuming the Maximum Permissible Interest Rate (MPIR) is 6.75% as set at 1 January 2015):

RAC = ($28.15 x 365)/6.75%

RAC = 10274.75/6.75%

RAC = $152,218.52 (rounded to the nearest cent).

Based on the resident’s assessed means the equivalent RAC the provider could charge is $152,218.52.

Unless the person has had a change in circumstances since entering, they are unlikely to be able to fully fund their accommodation contribution by lump sum.  In these circumstances the provider would be able to seek a ‘top-up’ DAC so that the RAC and DAC equal the maximum amount as advised by DHS. The section on ‘How to calculate a top-up DAC’ will provide further information and a worked example.

Q: How to calculate a top-up DAC

A: Where a person has paid part of their accommodation contribution as a RAC, the provider will need to calculate the ‘top-up’ DAC that can be charged. 

The provider will also need to recalculate the top-up DAC whenever the Department of Human Services (DHS) issues a new fee advice letter. DHS does not hold current information on the balance of a RAC paid by a resident, so the amount of DAC that DHS advises in the fee advice letter will not take into account the amount held as a RAC.

To work out a ‘top-up’ DAC, follow the equation below:

DAC advised by DHS – [(Balance of RAC paid x Maximum Permissible Interest Rate)/365].

Note: the Maximum Permissible Interest Rate (MPIR) that is used is the MPIR for the resident’s entry day.

For example, a resident has paid part of their accommodation contribution by a RAC of $44,439.50 and DHS has advised that their DAC payable is $21.13.  In addition to the RAC, the resident can be asked to pay the following DAC (assuming the Maximum Permissible Interest Rate (MPIR) is 6.75% as set at 1 January 2015):

$21.13 – [($44,439.50 x 6.75%)/365]
= $21.13 – [3,000/365]
= $21.13 - 8.22
= $12.91 per day (rounded to the nearest cent).

The ‘top-up’ DAC the resident can be asked to pay is $12.91.

If the amount of DAC that is payable increases for a resident who has agreed to pay part or all of their accommodation costs as a RAC, a provider may require the resident to pay the increase.  The resident has the choice as to how to pay the increase.  That is, either as a RAC or DAC.

If the amount of DAC that is payable decreases, the provider will need to repay any overpaid RACs.

Q: How frequently is the accommodation supplement and DAC calculated?

A: The amount of accommodation supplement that is payable to a service is calculated on a daily basis and is paid as per the monthly claims calculation process. The amount of accommodation contribution is also based on a person’s circumstances on a day, but is generally set at the quarterly review for the upcoming period.

Any changes to the amount of accommodation contribution are reconciled through the quarterly review process. If, following the quarterly review, a resident’s accommodation contribution decreased through the last quarter, a refund will be due. A letter will be issued to both the resident and provider advising them of the amount of accommodation contribution which was payable through the quarter and the refund amount that may be owing.

Q: Will a resident lose their status as a ‘low means care recipient’ if their means change?

A: No. A resident’s status as a low means care recipient (that is, a resident who is eligible for government assistance with accommodation costs) is set at their date of entry.  A resident is assessed as a low means care recipient if their means tested amount is equal to or less than the Maximum Accommodation Supplement at the date of entering care.

If there are changes to a resident’s circumstances after entering care, this may affect the amount of accommodation contribution and/or means tested care fee that may be payable, but it will not affect the resident’s status as a low means care recipient. This resident cannot be asked to pay an accommodation payment while they remain in the same facility, irrespective of any changes in their means.

Similarly, changes to the circumstances of a resident who is assessed at entry as requiring to pay an accommodation payment may affect the amount of means tested care fee that may be payable, but it will not affect the accommodation price that was agreed between the resident and provider prior to entering care.

Q: Is the calculation of the means tested care fee based on the facility’s maximum rate of accommodation supplement?

A: No. To work out the amount of a resident’s means tested care fee (if any), compare the resident’s means tested amount to the Maximum Accommodation Supplement ($53.04 as at 20 September 2014).  This is the process irrespective of whether the residential care service receives a lower supplement because it has not been significantly refurbished or newly built.

Changes in the rate of accommodation supplement payable for a facility will not affect a resident’s means tested care fee.

Q: Do changes in the rate of accommodation supplement for a facility affect the amount of accommodation contribution that can be charged?

A: Yes. A resident’s accommodation contribution is not fixed at entry.  A resident’s contribution is capped at the lower of their means tested amount or the maximum rate of accommodation supplement applicable to the service, on any given day. It may vary over time if the resident’s income and assets vary or if the facility becomes eligible for the higher accommodation supplement.

Changes in the maximum rate of accommodation supplement payable to a facility may result in changes to the amount of accommodation contribution payable by a resident, and the accommodation supplement paid by the government on any given day.

Using an example of a person whose means tested amount is $40.00, the tables below illustrate the different rates of accommodation contribution payable depending on the status of a particular facility (figures based on September 2014 rates):

For a person whose means tested amount is $40.00, if the facility:
The maximum rate of accommodation supplement for the facility is:
The maximum daily accommodation contribution payable for the person will be:
The daily accommodation supplement that the Government will pay the facility will be:
Is significantly refurbished or newly built and has more than 40% low means, supported, concessional and assisted residents
$53.04
$40.00
$13.04
Is significantly refurbished or newly built and has 40% or fewer low means, supported, concessional and assisted residents
$39.78
$39.78
$0.00
Meets building requirements and has more than 40% low means, supported, concessional and assisted residents
$34.56
$34.56
$0.00
Meets building requirements and has 40% or fewer low means, supported, concessional and assisted residents
$25.92
$25.92
$0.00

Q: Do changes in the daily accommodation contribution affect the RAC amount?

A: Yes. If the amount of daily accommodation contribution that is payable increases for a resident who has agreed to pay part or all of their accommodation costs as a refundable accommodation contribution, a provider may require the resident to pay the increase.  The resident may choose to pay the increase by:

  • paying daily accommodation contributions or increased daily accommodation contributions, or
  • paying or topping up a refundable accommodation contribution, or
  • a combination of both.

These conditions must be set out in the accommodation agreement.

For a resident whose daily accommodation contribution has decreased, if the refundable accommodation contribution is found to be in excess of the amount they can be charged, a provider will be required to refund the overpaid amount to the resident.  A letter will be issued to the provider advising of the refund amount that may be owed.  If the overpaid amount is not paid to the resident within 28 days of the provider being made aware of the overpaid amount, interest will also be payable on the overpaid amount.

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Annual and lifetime caps

Q: What is the period the annual cap is measured over?

A: The annual caps are set over a start-date year. The start date is the date the care recipient first entered aged care, including pre-entry leave, either in home care or residential care. A start date year is the year between that date and the anniversary of that date. For example, if someone enters home care on 14 July 2014, that will be their start date, regardless of when they later enter an aged care home.

Q: Do the annual and lifetime caps move with a care recipient when they change to a different provider?

A: Yes.

The annual cap follows a care recipient as they move between providers, services and care types. Centrelink will monitor the caps and advise the person and their provider once a cap has been met.

Means tested resident care and income tested home care fees accrue against a person’s lifetime cap from the date of their first entry into home or residential care after 1 July 2014.

For more information on how the caps apply see the detailed Information Booklet: Fees for Home Care Packages and Residential Aged Care for people entering care from 1 July 2014.

Q: How will a provider know the balances of a care recipient’s annual and lifetime caps?

A: Centrelink will advise a consumer and their provider when the recipient has reached their annual or lifetime caps. Once the cap is reached, the Australian Government will pay the means-tested or income-tested care fees through subsidy payments to the provider and the consumer will pay the basic daily fee and/or any accommodation costs.

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Administrative arrangements

Q: What information should providers collect from care recipients? Who should the provider send that information to (either to Centrelink, the Australian Taxation Office, or the Department of Social Services)?

A: As is the case now, a provider does not need to collect financial information from the resident. Completed assessment application forms should be sent by the resident or person assisting them to Centrelink or DVA.

Q: What information will the providers need to supply with the RAD and DAP details to DSS in order to allow monitoring of impacts?

A: The Aged Care Financing Authority (ACFA) has been asked by Government to monitor the impact of the reforms. ACFA is engaging with the key industry associations to determine what information could be provided to assist the monitoring task. The Aged Care Entry Record that providers send to Centrelink will also include information on accommodation prices and RAD/DAP choices.

Q: Does a provider have to notify Centrelink about anything to do with a resident and the RAD/ DAP or care fee?

A: A provider will need to complete an Aged Care Entry Record for each new resident on entry. The Aged Care Entry Record includes details on the agreed price and the resident’s elected method of payment. If the resident has not chosen their method of payment at the time the Aged Care Entry Record is first due to be submitted, these details will need to be updated once known and re-submitted by the service provider.

Q: Will aged care providers be told what the maximum care contributions and accommodation contributions will be for care recipients?

A: Yes. Centrelink will calculate the fees and charges payable and notify the resident and provider of any fees that can be charged. Centrelink will also advise whether the resident is liable to pay an accommodation payment, agreed with the home, and if the resident is to receive a full or partial government accommodation supplement. Some people may need to make no or only a limited accommodation contribution.

Q: How does a provider ensure that the resident has the means to pay a RAD?

A: These arrangements do not change from what they currently are for payment of bonds.

Q: Will there be new forms from 1 July?

A: From 1 July 2014, there will be new Aged Care Entry Record forms. The new forms can be used for both residential and home care information. For residential care they will include details on the agreed price and the resident’s elected method of payment if known. If the resident has not chosen their method of payment at the time the Aged Care Entry Record is submitted, these details will be updated later by the service provider.

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Means Not Disclosed

Q: Can a resident refuse to have their means assessed by Centrelink?

A: Yes. A resident who refuses to have their income and assets assessed will not be eligible for government assistance with their fees and accommodation. Centrelink will write to residents seeking income and asset information. If information is not provided, the resident can be asked to pay the maximum mean tested care fees based on the cost of their care and an accommodation payment agreed with the home.

Q: Which government subsidies will be paid for a care recipient who enters aged care without a valid means assessment?

A: Residents will be allowed a set period of time after entry to request a combined asset and income assessment from Centrelink. Consistent with the current arrangements, prior to the finalisation of an ACFI appraisal, a pre-ACFI subsidy will be paid. Once an ACFI determination has been finalised this will be adjusted to reflect the ACFI determined subsidy. Where a person does not disclose their means after 2 requests from Centrelink they will be considered a Means Not Disclosed resident and liable to pay maximum means tested care fees and their subsidies will be adjusted accordingly. This is consistent with current processes.

Q: What means tested care fees does a resident pay  if they have a status of ‘means not disclosed?’

A: A resident who has not disclosed their income and assets to Centrelink, can be asked to pay the full cost of their care.  That is the amount determined by their basic subsidy and primary supplements.

The resident can also be asked to pay the accommodation payment agreed with the provider prior to entry.

Q: Does the annual cap apply to a resident with a means not disclosed status?

A: Yes. Once a resident has paid means tested care fees up to the annual cap of $25,000, they cannot be asked to pay anymore means tested care fees for the remainder of the year. The Government will pay the subsidy to the provider for the remainder of the year.

Q: What subsidy will a provider receive if the resident has not had an ACFI?

A: If the ACFI has not been completed, then the interim subsidy amount will apply.  The interim subsidy amount will be set by Ministerial Determination before July 2014.

Q: Can I charge a resident a means tested care fee if they have not received advice on the amount of means tested care fee payable from Centrelink?

A: While the means tested care fee is unknown, a provider may wish to consider charging an interim fee up to the resident’s care costs. The provider should discuss with the resident what would be a reasonable charge, taking into account the resident’s financial circumstances. Any overpaid amounts will need to be refunded to the resident once the formal assessment by Centrelink has been completed.

Q: What subsidies can a provider receive for a resident who does not yet have a status of ‘means not disclosed’ and how will it change once the resident’s status changes to ‘means not disclosed?’

A: If the resident has entered care without having their income and assets assessed, Centrelink will give a resident a period of time to submit their income and asset information to Centrelink.  Centrelink will notify the provider that the resident has not supplied their income and asset information.  Centrelink will also contact the care recipient asking him or her to supply this information.

During this time, the provider will receive an interim subsidy prior to the ACFI being completed. Once the ACFI is completed, the provider will be paid the full subsidy based on the person’s care costs.

If the resident does not provide income and asset information within the required timeframe, Centrelink will inform the resident and provider that the care recipient’s means tested care fee is the cost of their care.

Centrelink will deduct subsidy amounts already paid from future payments to the provider.

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Fees and Payments

Q: How will the amount of accommodation supplement be calculated for new entrants from 1 July 2014?

A: Centrelink will undertake a means test covering both income and assets to determine how much of a contribution to their accommodation a resident who is entitled to government support will be required to pay.

The resident’s accommodation contribution will either be the means tested amount or the maximum accommodation supplement for the facility, whichever is lower.

The amount of accommodation supplement payable will be the difference between the resident’s accommodation contribution and the maximum accommodation supplement payable to the facility.

Q: If a person's assets increase after they have entered care, can they be asked to pay an accommodation payment if they were previously eligible for government help with their accommodation costs?

A: No. A resident's income and assets at entry determines whether they can be asked to pay an accommodation payment agreed with the aged care home. A person who, at entry, was eligible for some government assistance with their accommodation costs can only be asked to make an accommodation contribution determined by Centrelink (supported by a government accommodation supplement). They cannot later be asked to pay an accommodation payment as agreed with the home in the same facility. If a person's assets or income change after entry it will only be the amount of means tested care fee and accommodation contribution payable which will change, and Centrelink will advise the resident and provider of any change.

Q: From 1 July 2014, what subsidy will a provider receive for a resident who was formally classified at the interim low level classification?

A: From 1 July 2014, the distinction between high care and low care in permanent residential aged care has been removed. The removal of this distinction applies to all residents, whether admitted to care before or after 1 July 2014.

Therefore, ‘interim low’ subsidies are no longer payable.  Subsidies to support a resident’s care needs are determined by the outcome of the resident’s Aged Care Funding Instrument assessment. This change is reflected in payments from 1 July 2014 onwards.  Residents and providers do not need to do anything for this to occur.

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Home Care

Q: Can the level of services under a Home Care Package be reduced when the full income-tested care fee is not received?

A: No, the level of services cannot be reduced. 

For a consumer who started receiving a Home Care Package on or after 1 July 2014, the subsidy and primary supplements payable by the Government are reduced by the maximum income-tested care fee payable by the consumer.  The overall value of the package remains the same; what varies is the source of the funds.

Example 1 – Adam

The Government subsidy and primary supplements of Adam’s home care package is valued at $30,000 (in addition to the basic daily fee) and Adam has been assessed by the Department of Human Services as being able to contribute $10,000 towards his income-tested care fee. The Government subsidy payable for Adam’s care to his provider is the value of the Home Care Package less Adam’s income-tested care fee (that is, $30,000 - $10,000 = $20,000).

Adam’s provider asks Adam to pay the income-tested care fee as advised by the Department of Human Services. Adam’s provider must provide him with services reflecting the full package valued at $30,000.

If Adam’s home care provider does not collect the full income-tested care fee (regardless of the reason) the home care provider is still required to provide Adam with services as if the fee had been paid in full.  That is, the home care provider and Adam cannot select a lower level of care and services to match the reduced value of the Australian Government subsidy paid.

The amount of basic daily fee charged has no impact on the amount of Government subsidy and primary supplements that are paid.

If Adam fails to meet his responsibilities, including the payment of fees, as described in Schedule 2 - Charter of care recipients’ rights and responsibilities – home care of the User Rights Principles 2014, his home care provider may cease to provide home care to that him under the security of tenure provisions in subsection 17–2(e) of the User Rights Principles 2014. Adam’s Home Care Agreement must contain information such as the maximum fees payable by him and the conditions under which either party may terminate the provision of home care.

Example 2 – Emily

The Government Subsidy and Primary Supplements of Emily’s Home Care Package is valued at $20,000 (in addition to the basic daily fee) and Emily has been assessed by Department of Human Services as being able to contribute $5,000 towards her income-tested care fee. The amount of Government subsidy payable for Emily’s care to her provider is the value of the Home Care Package less Emily’s income-tested care fee (that is, $20,000 - $5,000 = $15,000).

If Emily does not pay the income-tested care fee or Emily’s provider does not collect an income-tested care fee, Emily’s provider must still provide her with services reflecting the full package valued at $20,000 and not services reflecting the amount of Government subsidy paid ($15,000).

Administrative process

Q: What is the administrative process for assessing income?

A: In Home Care, the amount of income tested care fee payable is determined by the consumer’s income. Similar to the current process in residential care, Centrelink or DVA will assess a person’s income. Centrelink will calculate the amount of income tested fee payable and notify the care recipient and provider. The Government will reduce its subsidy based on the amount of income tested fee payable.

Consumers on an income support payment need not submit an income assessment form, as Centrelink and DVA will already have access to this information.

Self-funded retirees who do not receive income support from Centrelink or DVA will need to submit an income assessment form, or will be assessed to pay the maximum fee payable.

Q: Can a prospective consumer have an income assessment before commencing a Home Care Package?

A: Yes. To request an assessment prior to commencing a package:

  • If the consumer receives a means-tested income support payment, they can either complete their contact details and sign the Aged Care Fees Income Assessment (SA456) form or they can call the Department of Human Services on 1800 227 475 to trigger the pre-commencement assessment. The form is available from the Department of Human Services website.
  • If the consumer does not receive a means-tested income support payment, they will need to complete the entire Aged Care Fees Income Assessment (SA456) form

The Department of Human Services will issue initial fee notification advice which is valid for 120 days. If the consumer’s circumstances change after the fee advice has been issued, the Department of Human Services (or Department of Veterans’ Affairs) will need to be notified and provided with updated information.

Q: How will the collection of fees work in home care?

A: Providers can determine their own collection process as they currently do for basic daily fees. Providers cannot charge fees more than one month in advance.

Centrelink will notify the provider and care recipient of the maximum income tested care fee and basic daily fee payable, it is up to the provider whether they charge a care recipient the maximum amount or a lower amount.

Q: What happens if a consumer is having trouble paying their fees?

A: The consumer can apply for financial hardship assistance through Centrelink.

Q: Is financial hardship assistance available for consumers in home care?

A: Yes. The new arrangements introducing hardship provisions for home care are part of the 1 July 2014 reforms relating to the strengthening of the income tested fee arrangements for persons commencing a home care package from 1 July 2014. Under these arrangements a consumer will be able to apply for financial hardship assistance with both the basic daily fee and/or income tested care fee. The new hardship arrangements do not apply to persons already receiving a home care package on 30 June 2014.

Consumers receiving a home care package before 1 July 2014 will not be affected by the strengthened income tested fee arrangements unless:

  • they ceased their home care package and then enter into a new home care package more than 28 days later; or
  • upon moving to a new service provider opt-into the new arrangements.

Section 95 of the Subsidy Principles 2014 sets out a number of considerations which either must or may be considered when DHS is assessing someone’s application for financial hardship. For a financial hardship application to be considered, the consumer must have:

  • completed a means test; and
  • have unrealisable assets less than 1.5 times the annual age pension (plus supplements), approximately $33,317.70 (as at September 2014); and
  • not have gifted more than $10,000 in the last year or $30,000 in the last five years. 

DHS will also consider the amount of income a person has remaining after paying essential expenses.
If financial hardship is granted, the Government will pay a hardship supplement of an amount determined in each individual case.

The financial hardship assistance form and associated guidelines can be found on the DHS website.

Caps in home care

Q: How are the annual caps applied in home care?

A: There are two annual caps that may apply in home care. These are applied at a daily rate:

  • The income tested care fees for a consumer who is on income equivalent to a part pensioner ($47,882 and below) will be capped at $5,000 a year, which is equivalent to $13.74 per day (March 2014 rates).
  • The income tested care fee for a consumer who is on income equivalent to a self-funded retiree (more than $47,882) will be capped at $10,000 a year, which is equivalent to $27.47 per day (March 2014 rates).

Centrelink takes these caps into account when determining the daily fees that can be charged.

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Residential Care - Higher Accommodation Supplement

FAQs are available on the higher accommodation supplement Frequently Asked Questions page.

Residential Care – publication of accommodation prices on My Aged Care

Q: Do providers need to update the accommodation prices published on the My Aged Care website when the maximum permissible interest rate (MPIR) changes?

A: No. The daily payment amounts equivalent to a given refundable deposit are automatically updated on the My Aged Care website when the MPIR changes.

Q: When the Aged Care Pricing Commissioner approves a refundable deposit greater than $550,000, is the approved amount automatically updated on My Aged Care?

A: No. Providers will need to add or update accommodation prices approved by the Pricing Commissioner using the Aged Care Provider Portal.

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