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Aged care fee structure will change commencing 1st July 2014

Aged care fee structure will change commencing 1st July 2014

Aged care fee structure will change commencing 1st July 2014

The previous Government proposed sweeping changes to aged care fees, due to commence on the 1st July 2014, which the current Government is continuing.

The Government’s overall intention was to reduce the amount that the Government subsidised Aged care, due to an ageing population, & an improvement in life expectancies, meaning it would cost Government a great deal more over time.

The public have for some time been demanding better standards of accommodation & care in Aged care facilities, however the existing structure did not provide capital for the construction of new facilities in all quarters of aged care. The new rules for aged care will eliminate the distinction between high care and low care so that more capital will now be available for any aged care facility, allowing for all aged care facilities to be improved.

Anyone who has already entered care prior to the 1st July 2014, will be subject to the rules & fee structure which exists currently, unless the resident leaves aged care for more than 28 days, or elects to be treated under the new rules. Anyone entering care after the 1st July will be subject to the new rules and so if you are thinking about putting your loved one into Aged Care soon we recommend speaking to an Aged Care Advice Professional about which structure will best suit you. 

The major changes to the fees structure are:


1)      Accommodation cost


The accommodation cost will be required to be paid as a Daily Rate (called a DAP- Daily Accommodation Price) OR the resident can elect to pay a Lump Sum equivalent (Called a RAD- Refundable Accommodation Deposit) which was previously called an Accommodation Bond (for those in Hostels or Extra Service facilities). There will continue to be measures in place for financially disadvantaged people who cannot afford the cost of Accommodation. If a resident elects to pay a Lump Sum, then it will be Government guaranteed and refundable in full when the resident leaves the facility.


2)      Care costs

i)                    The Basic Daily Care Fee will continue as is.

ii)                   What is currently the Income Tested Fee will become a MEANS Tested Fee, therefore more people will be paying a further contribution to their aged care based on their assets as well as their income. The current system requires those with a bigger income to pay more towards their care, whereas the new rules require those with bigger incomes and assets to pay more towards their care. Further the amount of the Lump Sum RAD is counted as an asset, as is the 1st $144,500 of the value of the home is counted as an asset (as long as the spouse or another “protected person” is not living in the home). The new Means Tested Fee will have an annual cap on the amount that can be paid ($25,000) and a Lifetime cap of $60,000. The cap includes periods of time that a resident was receiving subsidised Aged Care Support at home.

iii)                 Extra Service Fees within an Extra Service Facility will no longer have 25% of that fee paid to the Government.

iv)                 Additional Services can be paid for on an opt-in opt-out basis, in facilities which are not designated as an extra service facility.


There may be some residents who have entered care prior to the 1st July 2014, who may be better off under the new rules. To see if this is you, contact us to run a comparison for you to see which scheme you will be better off under.

Posted: 20-Mar-2014. Author: Jordie Cox


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