Changes in aged care scheduled for 1 January 2017


Crackdown on additional care fees.


Residential care providers have increasingly been charging additional fees such as capital refurbishment or asset replacement fees. Many of these fees are calculated daily but deducted from RADs when a resident leaves.

However, the Department of Health recently issued guidance on what is allowed and what is not - and this may lead to changes in the practices of many providers. 

It has been clarified that additional fees cannot be charged for services that come under the provider's legislated obligations or where the client is unable to access the services (extra-service fees can be charged to residents in an extra-services facility).


In particular, the Department has clarified that residents cannot be charged additional fees for:


  • Maintenance inside and outside the residential service
  • Repairs and replacements for normal wear and tear
  • General refurbishment of the resident’s room after they have left the aged care home.


When clients are applying for admission they should ask for details on what is provided under any additional fees and ask for a detailed schedule of services and prices. Even if the client has signed an agreement to pay a fee, if they are not receiving a direct benefit or the fee is not allowed under legislation they will not be liable to pay this fee.

The search by aged care providers for ways to increase fees has resulted from reductions in the daily care subsidies (paid through the Aged Care Funding Instrument – ACFI). These reductions have put pressure on their financial viability. The new Departmental guidelines could lead to a change in policies and may also impact the level of RADs for many services.

Including rental income in pension income test

The Omnibus Bill presented into Parliament recently included the proposal to change how the former home is assessed for Centrelink/Veterans' Affairs purposes from 1 January 2017. 

The proposal is to bring the rules into line with the means-test amount (MTA) rules for aged care fees which changed on 1 January 2016. 

If passed, the impact on means-tested pension entitlements for clients who enter residential care on or after 1 January 2017 will be:

  • Rental income on the former home will count as assessable income
  • The home will only be an exempt asset for the first two years - at the end of this time the client will become a non-homeowner and the value of the home is fully assessable as an asset. 

These changes do not affect clients who enter residential care before 1 January 2017 and do not change the rules for calculating the MTA for aged care fees. 



We will provide further updates once these changes are passed.