The ability for aged care providers to charge certain types of additional fees known as ‘asset replacement charges’ or ‘capital refurbishment fees’ has been debated for some time as the fees did not appear to be supported by the legislation.
The Department of Health stated on 2 September 2016 “The department considers that ‘capital refurbishment fees’, ‘asset replacement contributions’ and similar fees would not be supported by the legislation where the fee does not provide a direct benefit to the individual or the resident cannot take up or make use of the services, or where the activities or services subject to the fee are part of the normal operation of an aged care home and fall within the scope of specified care and services.”
In a recent development on this issue, the Federal Court handed down a decision1 on 2 March 2018 disallowing an aged care provider (Regis Aged Care) from levying an “asset replacement charge” on aged care residents.
The Department of Health subsequently provided further clarification on this issue on 27 March 2018 stating that the Federal Court had confirmed its previous advice.
ASSET REPLACEMENT AND CAPITAL REFURBISHMENT TYPE FEES
The Department of Health states that asset replacement charges, capital refurbishment fees and similar fees are not permitted by aged care legislation. They also state that “Providers who have charged or are charging these fees should cease charging these fees and refund amounts already charged.”
Residents or their families who are being charged, or have been charged, ‘asset replacement charges’, ‘capital refurbishment fees’, ‘security deposits’ or similar fees should contact the aged care provider in the first instance.
If they are not satisfied with the provider’s response they should contact the Aged Care Complaints Commissioner on 1800 550 552 or at the Complaints Commissioner’s website (www.agedcarecomplaints.gov.au).
WHEN ARE ADDITIONAL FEES NOT PERMITTED?
Additional fees cannot be charged where they do not provide a direct benefit to the individual or the resident cannot take up or make use of the services, or where the activities or services subject to the fee are part of the normal operation of an aged care home and fall within the scope of specified care and services.
Examples where charging additional fees are not permitted include:
- maintenance inside and outside the aged care home
- any repairs or replacements necessary because of normal wear and tear
- general refurbishment of the resident’s room after they have left the aged care home
- services or activities that would form part of the general operation of the aged care home, or are required in order to deliver residential care to the individual
- employment of administration staff where the staff member is primarily undertaking activities related to the general operation of the aged care home; and
- capital costs, asset management or replacement.
WHEN ARE ADDITIONAL FEES PERMITTED?
In some circumstances aged care providers may charge additional fees for ‘other care or services’ where the resident receives a direct benefit or has the capacity to take up or make use of the services.
Fees charged for ‘other care or services’ must be agreed with the resident beforehand and the aged care provider must give the resident an itemised account of the other care or services for each period (e.g. month).
In addition, aged care providers may only continue to charge additional service fees while the resident is able to access or benefit from them. In practice, this means that they will not be able to continue charging additional fees if a change in the resident’s circumstances (e.g. a reduction in mobility) prevents them from being able to take up or make use of the service/s.
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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.