We have been advising clients to ensure that they are not charging residents fees additional to those already contemplated under the Aged Care Act 1997 (Cth) (the Act).

The Department of Health (the Department) has recently confirmed this advice and issued information for approved providers of residential aged care facilities regarding the ability for providers to charge fees or additional services including 'capital refurbishment fees' or 'asset replacement contributions' (the Fees).

The Department has formed the view that these Fees are not supported by the Act in circumstances where:

  1. the Fees do not provide a direct benefit to the individual; or
  2. the resident cannot take up or make use of the services; or
  3. where the activities or services subject to the fee are part of the normal operation of an aged care facility and fall within the scope of specified care and services.

Legislative framework

The concept of a 'capital refurbishment fee' has become prevalent across a number of providers; whereby the resident is charged a daily amount which is deducted from a Refundable Accommodation Deposit (RAD).

Providers only seem to be charging this additional fee if residents are paying a RAD, as opposed to imposing the fee on a Daily Accommodation Payment (DAP). The legislation strictly mandates the maximum daily amount of resident fees payable by the care recipient.

Therefore, providers are charging this additional fee to RAD paying residents only, through which they are seeking to rely on an agreement with the resident whereby the resident pays an additional amount for the purpose of capital refurbishment.

However, in issuing the information to providers, the Department has confirmed that providers are not able to charge fees above the maximum amount calculated under Division 52C of the Act.

This additional amount has attracted several titles and is not limited to a 'capital refurbishment fee'.

Caution must be exercised by providers to ensure that any amount, however labelled, does not seek to charge for services that are already contemplated under another provision of the legislation.

A common example of this would be where a resident has paid a RAD, which the provider is using for the purpose of investing in residential aged care infrastructure. If the resident is also charged a capital refurbishment fee, for the same purpose, there is a risk that this may be seen as 'double charging', as the provider is already obtaining the benefit of capital refurbishment through charging a RAD.

Providers should review their agreements to ensure they are not charging residents fees which are not permitted by the Act.