Residential Care

Current Provisions for Residential Care Facilities Fees

Please see below a note prepared by Sue Field who is an Adjunct Fellow, Casual Academic and Casual General at the Dean’s Unit – School of Law, at the University of Western Sydney.

Client’s continue to be presented with issues relating to residential aged care facilities and the fees that are applicable or charged when family members need to avail themselves of such accommodation.

The article sets out the current provisions with relation to the fees that may be applicable and raises a couple of points which may be of use or relevance to some of our more mature clients and/or their families.

There is also reference to the relevant guarantor clauses which may be applicable in residential agreements.

If the funds are going to be provided by a third party or by another family member (i.e. a person who is not going to be residing in the residential care facility), then care should always be taken to make sure that there is a separate agreement in existence which will facilitate the refund of the deposit immediately when that family member shall vacate that accommodation.

Unless there is a separate third party agreement in existence, then the care facility may well delay making a refund of the payment and it may become an asset of an estate (or be deemed to be an asset of a surviving spouse) and be held up or delayed until a grant of probate has been obtained.

On the other hand, in some cases, notwithstanding careful structuring of assets and resources, it can be the only asset of the estate – and most care providers require a Grant of Probate before they will distribute or refund the amount.

If you have any further questions or if you wish to seek any further advice in this regard then do not hesitate to contact Rodney Lewis in this office.

Residential Care Facilities fees

  • Both Home Care (formerly known as “Community Care”) and Residential Care are governed by Commonwealth legislation – the Aged Care Act 1997 and the associated principles.
    Prior to July 1, 2014 Residential Aged Care Facilities (RACF) could, in effect, charge whatever Accommodation Bond (the entry fee into a RACF for Care Recipients (the resident) assessed as being “low care”) that they wanted to, as long as the Care Recipient was left with a certain amount of money – this amount of money was determined by the Government and was $46,000.00.
    Some facilities charged an Accommodation Bond in excess of one million dollars (this amount did not include the daily fee charges), however, the majority of facilities did not charge amounts as high as this. The interest on the bond was used by the Approved Provider (the person/body, approved by the Government (s8.1 Aged Care Act 1997)) to improve the care and services of the RACF. A retention amount (also determined by the Government) was retained by the Approved Provider. On the departure of the Care Recipient the remainder of the Accommodation Bond was returned (usually to the estate).
    From 1 July 2014 the Government changed the manner in which care recipients now pay for their care and services, however, those residents who were admitted prior to 1 July 2014 will continue their payments under the old system.
    Prior to entry into a RACF the incoming resident is required to complete an Assets and Income Assessment form which enables the Department of Human Services to determine the amount of daily fees that the resident may be charged. Should the incoming resident choose not to complete the form they will be charged the maximum amount of fees payable (without Government subsidy).
    In effect, the following fees may be charged:-
  • A basic daily fee – this fee covers costs such as meals, power and laundry and every incoming resident can be asked to pay this fee. This amount increases in March and September each year and is based on 85% of the single pension. Currently the maximum amount that can be charged is $47.49 per day.
  • A means tested care fee – based on the Assets and Income Assessment referred to above. There is an annual cap on this fee of $25,528.71 or a life time cap of $61,268.92.
  • Accommodation payments – these can be made as follows:-
  • A lump sum Refundable Accommodation Deposit (RAD), the maximum amount that can be charged by the Facility is $550,000 (unless approval has been given by the Aged Care Pricing Commissioner);
  • A daily accommodation payment (DAP); or
  • A combination of both.
  • Fees, known as Extra Service Fees can also be charged by a Facility if they offer extra services. Facilities with Extra Services are now required to publish their Extra Service Fees on the MyAgedCare Website @
    Hardship provisions are available for those people who have been assessed as not having sufficient funds to meet the above fees. It remains a requirement that a resident still be left with $46,000 in assets if they choose to pay at least part of their accommodation fees by way of a RAD.

Guarantor Clauses
s6 of the User Rights Principles 2014 sets out the grounds upon which an Approved Provider may ask, or require, the Care Recipient to leave the residential care facility, included in this section is if
the care recipient has not paid any agreed fee to the approved provider within 42 days after the day when it is payable, for a reason within the care recipient’s control; ss(d)
To avoid the risk of having to follow this process and/or incur the debts associated with non-payment of fees, some Approved Providers insert into the Resident Agreement (which is signed by the Care Recipient and/or their substitute decision maker/nominated representative) a Guarantor Clause – the Aged Care Act is silent on the insertion of such clauses.
Samples of the agreements, which have been prepared by solicitors experienced in aged care, or companies that specialise in providing advice to Approved Providers can be found on the internet and it can be seen that the inclusion of Guarantor clauses, which require the signature of the Guarantor, are common practice for Approved Providers.

Foulsham and Geddes notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Foulsham and Geddes are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.

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