Reforming aged care entry fees


Clients moving into residential aged care may find entry fees more transparent and easier to negotiate from 1 July 2014.

Following the Productivity Commission report on aged care, the government set up the Aged Care Financing Authority (ACFA) to provide advice on reforms and monitor pricing in the aged care industry. Recommendations for reforms to entry fees which have been endorsed by government are outlined in the table below.













The aim of the proposed pricing tiers is to allow clients to have greater transparency and confidence in the bond negotiation process. The entry fee will be quoted as a lump sum (Refundable Accommodation Deposit) and will also be converted into a Daily Accommodation Payment using the current interest rate that applies for interest payments on bonds. For the December 2012 quarter this is 7.62% pa.

Based on 2012 levels the prices for each Tier are proposed to be:

  • Tier 1 – up to $50 per day (equates to lump sums up to $238,845)
  • Tier 2 – between $51 and $85 per day (equates to lump sums between $238,846 and $406,036)
  • Tier 3 – over $85 per day (equates to lump sums of $406,037 or higher)

These thresholds will be indexed each year at a rate to be yet decided.

Residential care facilities that invest in significant upgrades will be eligible for higher government subsidies from the current rate of $32.76 per day up to $52.84 per day from 1 July 2014.

Advice tips

  • Facilities will need to publish the entry fee for all room types. They can continue to charge varying prices for various rooms. While this may allow greater transparency for clients, it means clients will not be able to negotiate bonds higher than the published rates to improve age pension entitlements.
  • Bonds paid from 1 July 2014 to secure a place in residential aged care will be fully refundable.
  • Clients should not shop around for a facility just based on price. They need to also consider the quality and level of staff resourcing, the convenience of the location, reputation of facility, facilities and quality of accommodation as well as the social atmosphere.

Warning: These proposals are based on media releases issued by the government. Legislation has not yet been introduced to implement the changes. The final legislation is likely to contain further details and may include amendments from these announcements.


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