Residential aged-care program


Entering a residential aged care program can be a confronting and confusing experience but the ultimate aim of such programs is to provide elderly Australians with high-quality care that truly meets their daily needs. This section outlines a potential resident’s rights and financial responsibilities, as well as the obligations of providers and the heavily regulated processes that must be followed before moving into an aged care facility.

Key responsibilities

Residential aged-care providers are approved, regulated and recurrently funded under the Aged Care Act, and are bound by the provisions of the Aged Care Act and the Principles. Under the legislation, approved providers have certain responsibilities related to:

the quality of the care they provide;

compliance with, and respect for, the rights of residents; and

accountability for the care that is provided, and the basic suitability of their key personnel (ch 4 Aged Care Act).

Residential care

Services providing residential care provide eligible people with accommodation, nursing and personal care. Accommodation will be a single or shared room. The room may have an ensuite or residents may need to use communal bathrooms. Other areas (e.g. lounges and dining rooms) are for communal use.

Many services provide a mix of higher and lower levels of care in one service. This will not change. The policy that a resident may “age in place” remains the same.

Some people require lower levels of residential care. They may only require some help, for example with bathing, dressing, medications and meals, but not require nursing care.

Accommodation is often a single bedroom with ensuite. As a lower care resident’s needs increase, the resident can continue to live in the same residential care service (“ageing in place”). See “Specified care and services for residential care services”, sch 1, Quality of Care Principles 1997 (Cth) (“Quality of Care Principles”); see alsoSpecified care and services”.

Extra service

Some residential care services offer “extra service” places. The entire residential care service, or just part of it, may offer these places. Residents occupying these places receive services in addition to the minimum required by the Aged Care Act. They generally include a significantly higher standard of accommodation, furnishings, food and activities. Extra service does not mean that a higher standard of care is provided, as all residential care services must meet the care standards set out in the Quality of Care Principles.

Residents occupying an extra service place may be charged a higher level of fees called an “extra service” (section 52C-3 Aged Care Act; Extra Service Principles 1997 (“Extra Service Principles”)). They may also be asked to pay accommodation charges.

Respite care

While there is no longer any distinction in fees by level of care for new permanent residents after 1 July 2014, respite care will still be classified as “high” or “low” care. It is provided on a short-term basis, for an eligible person to give a carer or a care recipient a break from their usual care arrangements.

Respite care places are also regulated and recurrently funded under the Aged Care Act.

The maximum number of days that a person can receive respite care in any financial year is 63. However, this may be increased one or more times by a further 21 days depending on the severity of the care recipient’s condition, carer stress or the absence of the carer (s 21.18 Residential Care Subsidy Principles 1997 (Cth) (“Residential Care Subsidy Principles”)).

Entering residential aged care


A person must have their care needs assessed by an Aged Care Assessment Service (ACAS) (also known as an Aged Care Assessment Team) before they are approved by the ACAS for subsidised aged care. This can be organised through the RAS or ACAS in Victoria.

The person must have physical, medical, social or psychological needs requiring the provision of care that cannot be met more appropriately through non-residential services (pt 2.3 Aged Care Act and Approval of Care Recipients Principles 1997).

An ACAS must notify the person or their relatives in writing of the decision to approve or not approve the application. If the person is approved for residential care, the notification will describe the assessed care needs. The applicant must also be informed of their appeal rights.

A number of outcomes of an application, such as rejection of the application or limitations on an approval, are reviewable decisions under part 6.1 of the Aged Care Act. In practice, where a person is dissatisfied with an outcome, they should first approach the ACAS again. For further information, see the Aged Care Assessment and Approval Guidelines (September 2006) available on the Department of Health’s website or contact the Aged Care Information Helpdesk.

Pre-entry check

Before deciding to enter residential care, a prospective resident or their relatives should visit a range of services and talk to both staff and residents about the quality of life, care and accommodation provided. For a person entering residential care it may be important to know if a service offers “ageing in place”, if their care needs increase to a higher level. Agency reports (accessible at will also give an indication of the standard of care and accommodation provided by a service, as at the date of the accreditation report.


A residential care service will be certified if the standard of care and the buildings and equipment used to provide the care meet certain requirements (pt 2.6 Aged Care Act; Certification Principles 1997). Only certified services may charge accommodation fees or contributions (seeFees and charges and bonds”). The Aged Care Information Helpdesk can tell consumers whether a service is certified.

Application for entry

Prospective residents need to complete an Application for Respite Care or Permanent Entry to an Aged Care Home, and send signed copies of it to the residential care services in which they are interested. The application form and an accompanying booklet called Five Steps to Entry into Residential Aged Care can be obtained from the ACAS when a person is being assessed, from the Aged Care Information Helpdesk or from the Department of Health’s website.

Income, assets assessment and resident status

All entrants to aged-care services who wish to receive subsidised care must provide information to enable Centrelink or the Department of Veterans’ Affairs (DVA) to assess their income and assets, including pensioners. Having an income and assets assessment is not compulsory. However, a person with income and assets below the relevant threshold will not be eligible for government assistance with their accommodation costs unless they have their assets assessed by Centrelink or DVA.

In addition, a person who does not have an assessment of their income and assets may be asked to pay a higher accommodation payment than would otherwise be the case.

The Aged Care Act contains provisions that govern how the income and assets tests are applied to an individual.

It also provides varying thresholds at which no additional contributions to the cost of a person’s care will be required.

Section 52C-3 sets out the steps necessary to calculate the maximum daily amount of residential fees.

Wherever possible, income and assets assessments take place before entry to a service. A “permanent residential aged care – request for an assets assessment” form and an accompanying information booklet can be obtained from the ACAS, or from the Aged Care Information Helpdesk or from the Department of Health’s website. Applicants are given written notification of the assessed net value of their assets and advised whether they are eligible to be a “fully supported”, “partially supported” or “non-supported” resident (seeSupported residents”).

What is “income”?

The Aged Care Act provides that a person’s income is assessed in accordance with the provisions of the Social Security Act 1991 (Cth).

Section 44-24 of the Aged Care Act also provides various formulae to determine a person’s total assessable income if they are in receipt of a pension, a service pension or other forms of income support paid to the person.

The Aged Care Act also provides for an income free area; an amount calculated in accordance with the provisions of the Social Security Act 1991 (Cth). Annual income up to these amounts is excluded from the income test component of the residential means test and the income test in home care (ss 44.26 Aged Care Act).

More information on the assessment of income can be found in the schedule of fees and charges for residential and home care published by the federal Department of Social Services on their website at, and other publicly available material on aged-care fees.

What is an asset?

The value of a person’s assets is the net value of all of their relevant property (seeIncome, assets assessment and resident status”).

If a resident chooses not to give a provider information about the value of their assets, then there is no limit to the size of the accommodation bond that may be negotiated with the provider, regardless of the actual value of the resident’s assets (s 57-12(2) Aged Care Act).

The value of a person’s assets for aged-care purposes is the net value of all of the person’s property, including property outside Australia. The net value of property is its gross value less debts, charges and encumbrances on the property. (For details on how to work out the value of a person’s assets, see s 44–26A Aged Care Act; pt 6 Residential Care Subsidy Principles.)

Where a person is a homeowner, the value of the home will not be counted as an asset if at the time the person enters a residential care service the home is occupied by:

the partner or a dependent child of the person; or

a carer of the person, who at the time is eligible for an income support payment and who has lived in the home for the past two years; or

a close relation of the person, who at the time is eligible for an income support payment and who has lived in the home for the past five years (s 44-26A(2) Aged Care Act).

The value of the assets of a person who is a member of a couple is taken to be 50 per cent of the sum of the value of the person’s assets and the value of their partner’s assets (s 44-10(3) Aged Care Act). Members of same-sex couples are treated in the same way as members of opposite-sex couples for the purpose of assets assessments.

If a person owns an asset jointly or in common with one or more other people, only the value of that person’s interest in the asset is taken into account (s 44-26A(8) Aged Care Act).

Supported residents

The Australian Government provides subsidies to providers for residents who cannot fully meet their accommodation costs. This assistance is provided to “supported residents” through the payment of an accommodation supplement to the service in which they live.

Provision of information

When a resident enters a residential care service, the provider must inform the resident (or their representative) about their rights and responsibilities under the Charter of Residents’ Rights and Responsibilities (seeCharter of Residents’ Rights and Responsibilities”) and under the User Rights Principles, amended in 2013 under the Aged Care Act.

If the resident has not entered into a resident agreement (seeAgreements”), the provider must also inform them about the matters mentioned in section 59-1(1)(b)–(h) of the Aged Care Act. The provider must assist the resident, or their representative, to understand the information (s 11.3 User Rights Principles 2014).

If asked, the provider must give a resident (or their representative) a copy of the most recent statement of the service’s audited accounts, or if the service is operated as part of a broader organisation, the most recent statement of the audited accounts of the organisation’s aged-care component.

Fees and charges and bonds

The Australian Government continues to pay for the bulk of aged care in Australia, but as with all aged-care services, a resident may be asked by their service provider to contribute to the cost of care.

The Department of Health provides a Residential Care Fee Estimator on its website to help in estimating the costs an aged-care home may ask for.

There are strong protections in place to ensure that care is affordable for everyone. The government regulates the maximum costs a person may have to pay. A person will not be denied the care they need because they cannot afford to pay.

Basic daily fee

A basic daily fee is used to contribute towards the day-to-day living costs such as meals, cleaning, laundry, heating and cooling. Everyone entering an aged-care home can be asked to pay this fee.

From 20 March 2014 to 19 September 2014, the maximum basic daily fee for new residents (including respite residents) is up to $46.50 per day. This rate increases on 20 March and 20 September each year in line with changes to the Age Pension.

How is the basic daily fee rate worked out?

For new residents, the maximum basic daily fee is 85 per cent of the single person rate of the basic Age Pension. Further information on the Age Pension and a full list of current rates is available on the Department of Human Services website.

If the person is a veteran, they may be eligible for assistance from the Department of Veterans’ Affairs. For more information, contact Department of Veterans’ Affairs on 133 254 or 1800 555 254 (for regional callers).

When a person enters an aged-care home they will receive a letter from the Department of Human Services confirming the appropriate maximum basic daily fee. The basic daily fee will be indexed on 20 March and 20 September each year in line with increases to the Age Pension.

Means-tested care fee

This is an additional contribution towards the cost of care that some people may be required to pay. The Department of Human Services will work out if the person is required to pay this fee based on an assessment of their income and assets, and will advise them of the amount.

There are annual and lifetime caps that apply to the means-tested care fee. Once these caps are reached, a person cannot be asked to pay any more means-tested care fees.

There are caps on fees depending on levels of income and assets. Information on the caps is listed in the Schedule of Fees and Charges for Residential and Home Care: From 1 July 2014, published by the Department of Social Services.

Any income-tested care fees that have been paid in a home care package prior to moving into an aged-care home will also contribute to the annual and lifetime caps.

Accommodation payments

This is for accommodation in the aged-care home. Some people will have their accommodation costs met in full or in part by the Commonwealth Government, while others will need to pay the accommodation price agreed with the aged-care home. The Department of Human Services will advise which applies based on an assessment of the person’s income and assets.

Care recipients may pay for, or contribute to the cost of, accommodation provided with residential care or eligible flexible care by paying an accommodation payment or an accommodation contribution.

The accommodation payment or contribution may be paid by:

daily payments; or

refundable deposit, or

a combination of refundable deposit and daily payments.

Refundable Accommodation Deposit

A refundable deposit, called a “Refundable Accommodation Deposit” (RAD), is a lump sum payment for accommodation in an aged-care home. This is the price of a room, in lump sum form, that residents may enter into an agreement with an aged-care home to pay. Residents can pay their accommodation price in full by RAD or they can pay via combination of a smaller RAD and Daily Accommodation Payment (DAP) or they can pay in full by DAP.

If the resident and the aged-care home agree, the resident can ask the provider to deduct certain amounts from the lump sum they already paid (e.g. for care fees). The RAD, minus any amounts deducted (as agreed), is refunded when the residents leaves the aged-care home.

Daily Accommodation Payment

The Daily Accommodation Payment (DAP) is the daily payment for accommodation in an aged-care home. The aged-care facility will work out the DAP based on a legislated formula that converts the RAD price to a DAP price. The resident makes this payment on a regular basis, up to a month in advance, similar to paying rent.

The DAP is not refunded when the resident leaves the aged-care home or decides to pay a RAD.

The resident can choose to pay a combination of a RAD and a DAP for their accommodation costs.

Refundable Accommodation Contribution

The Refundable Accommodation Contribution (RAC) is also a lump sum payment for accommodation in an aged-care home, just like a RAD. The difference between a RAC and a RAD is that a RAC is the term used when a person who is receiving Australian Government assistance with their accommodation costs makes a “contribution” towards their accommodation costs (with the Australian Government also making a contribution on their behalf).

RAD is the term used when the person making the lump sum payment is not eligible for Australian Government assistance and is meeting the full costs of their accommodation on their own. The RAC, minus any amounts deducted (as agreed) is refunded when the resident leaves the aged-care home – just like a RAD.

Daily Accommodation Contribution

The Daily Accommodation Contribution (DAC) is the daily contribution for accommodation in an aged-care home that residents would need to pay, if they also receive Australian Government assistance with their accommodation costs. Residents make this contribution on a regular basis, up to a month in advance, similar to contributing to rent.

The DAC is not refunded when the resident leaves the aged-care home or decides to pay a RAC.

Residents can choose to pay a combination of a RAC and a DAC for their accommodation costs.

Where a pre-1 July 2014 resident or a continuing care recipient has paid an accommodation bond, that refund of the accommodation bond is now governed by section 52P-1 and the Aged Care (Transitional Provisions) Act 1997 (Cth). The definition of a “refundable deposit” includes “an accommodation bond” and the definition of a “refundable deposit balance” includes “an accommodation bond balance.”

Fees for extra or additional optional services

Additional fees may apply if a higher standard of accommodation or additional services is chosen. These fees are charged for additional optional accommodation services not for a higher level of care. These fees vary from home to home. An aged-care provider can give details of these services, such as hairdressing and Foxtel, and the fees that apply.

From 1 July 2014, aged-care homes with dedicated extra service places are required to publish their extra service fees on the My Aged Care website, their own website and in other relevant materials they provide to prospective residents.

Financial hardship

If a person will face financial hardship in paying their aged-care costs, they can ask to be considered for financial hardship assistance.

The Department of Health may determine that a resident must not be charged an accommodation payment more than a specified maximum amount because such a payment would cause the person financial hardship (div 52K Aged Care Act).

An overview of the rules regarding the different payments is set out below. More information may be obtained from Elder Rights Advocacy, the Aged Care Information Helpdesk or the Department of Health’s website.

Extra service amount

Residents occupying an “extra service” place in a residential care service may be asked to pay an additional daily amount comprising an extra service fee approved by the Australian Government plus an amount equal to 25 per cent of that fee. This total payment is called an “extra service amount”. However, some services describe this total payment simply as an “extra service fee”. The amount of the extra service fee varies between services (divs 35, 58 Aged Care Act; pt 6 Extra Service Principles).

Respite fee

Residents who enter a residential care service for respite care may be asked to pay the standard rate of basic daily fee. Income-tested daily fees and accommodation payments do not apply. A person occupying an extra service place for respite care may also be charged an extra service amount.

A respite resident may be asked to pay a respite booking fee that is a pre-payment of part of the total respite fee, but this cannot exceed the lesser of the fee for one week of respite care, or 25 per cent of the total fee for the requested period of respite. The booking fee must be deducted from the total fee for the respite care.

Disclosure of information

If a provider charges an accommodation charge for a resident’s entry to a service, it must provide the resident (or their representative) with certain information before the resident enters the service. This information includes:

the requirement for the resident to be left with assets of at least the relevant minimum value after paying the charge;

the interest rate to be charged on amounts owed under the accommodation charge agreement or resident agreement; and

the amount of the accommodation charge (s 54-1 Aged Care Act; pt 4A div 3 User Rights Principles 2014).

Maximum accommodation charge

The maximum amount of accommodation charge depends on factors such as:

the date the resident first entered permanent residential care (whether for low or high level care);

the date the resident enters the service that is asking them to pay a charge;

the value of their assets at that time;

whether the resident is a supported, non-supported or assisted resident (seeIncome, assets assessment and resident status”); and whether the resident is a pensioner.

The Department of Health calculates the maximum accommodation charge that a resident may be asked to pay based on the value of their assessable assets. The value of a person’s assets is the net value of all of their relevant property and is assessed by Centrelink or DVA (seeIncome, assets assessment and resident status”).

If a resident chooses not to obtain an assets assessment, they may be asked to pay the relevant accommodation charge cap amount, regardless of the actual value of their assets.

Accommodation charges and pension eligibility tests

A resident who pays an accommodation charge is able to rent out their former home without the value of the home or the rental income affecting their pension or their aged-care fees.

Financial hardship

Residents who do not have the income or available assets to pay their daily fees or accommodation payments may apply to the Department of Health for financial assistance. Each application is considered on its merits and is based on the resident’s overall financial situation. For more information contact the Aged Care Information Line or go to the Department of Health’s website (


There are three types of agreements for post-1 July 2014 residents:

1 a resident agreement (for permanent or respite care);

2 an accommodation agreement; and

3 an extra service agreement.

Before 1 July 2014, there were four types of agreements relevant to residential care:

1 a resident agreement (for permanent or respite care);

2 an accommodation agreement;

3 an accommodation charge agreement; and

4 an extra service agreement.

A resident agreement may incorporate the terms of any of the other agreements.

Before signing any agreements, prospective residents should obtain independent advice about the agreements and any impact they may have on their financial position. Prospective residents should challenge any provisions that do not comply with the aged-care legislation or that attempt to minimise residents’ rights under that legislation.

Prospective residents or their representatives may seek assistance from Elder Rights Advocacy (seeAdvocacy services”) or complain to the Department of Health (seeExternal complaints mechanisms”) if they consider that in the process of negotiating any agreements they were treated unfairly or subjected to any pressure from the provider.

Resident agreement

A provider of residential care must offer to enter into a resident agreement with the resident and, if the resident wishes, enter into that agreement (s 56-1(g) Aged Care Act).

The agreement offered must comply with section 59-1 of the Aged Care Act, and contain certain provisions, including:

the levels of care and services that the provider has the capacity to provide;

the policies and practices that the provider will follow in setting the fees;

if the resident is entering on a respite basis the period for which the care and services will be provided, and (if applicable) any respite care booking fee;

the circumstances in which the resident may be asked to leave;

the complaints resolution mechanism that the provider will use; and

the resident’s responsibilities.

A resident agreement must also comply with division 4 of the User Rights Principles 2014A resident agreement must not contain any provision that would have the effect of the resident being treated less favourably in relation to any matter than the resident would otherwise be treated, under any federal law in relation to that matter (s 59-1(3) Aged Care Act). In addition, the provider must tell the resident (or their representative) about the terms of the agreement and assist them to understand those terms (pt 6 User Rights Principles).

Whether or not the resident enters into the offered resident agreement, their rights are still protected under the Aged Care Act and the Principles. The major advantage for a resident in entering into a resident agreement is the private right to enforce the agreement at law.

Signing agreements

If, by reason of physical incapacity or mental impairment, a resident is unable to enter into an agreement, another person (other than the provider) representing the resident may enter into the agreement on behalf of the resident (s 96-5 Aged Care Act).

The Aged Care Act provides for an extension of time for entering into an accommodation charge agreement where steps have been taken for the appointment of a legal representative, such as through VCAT (the Guardianship List). (For more information about the appointment process, see Understanding guardianship.)