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What is the funding strategy for Australian Aged Care?

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The aged care system caters for Australians aged 65 and over (and Indigenous Australians aged 50 and over) who can no longer live without support in their own home. Care is provided in people’s homes, in the community, and in residential aged care facilities (nursing homes) by a wide variety of providers. The Australian Government is the primary funder and regulator of the system. Total government expenditure on aged care services was around $15.8 billion in 2014–15, with the Australian Government providing approximately 95 percent of this funding. The Aged Care Act 1997 (the Act) and associated Aged Care Principles set out the legislative framework for the funding and regulation of aged care, although services are also provided through contractual arrangements outside of the Act. The Australian Government Department of Health (DoH) is responsible for the operation of the Act.

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The Australian Government pays aged care service providers to deliver aged care. It does this through subsidies and supplements, capital grants, and funding through aged care programs.

Funding for aged care service providers

The Australian Government pays aged care service providers to deliver aged care. It does this through subsidies and supplements, capital grants, and funding through aged care programs.

The Australian Government pays aged care service providers to deliver aged care through:

  • subsidies and supplements
  • capital grants for residential aged care
  • program funding

People who receive government-subsidised aged care also help with the cost, if they can afford to. They do this by paying aged care fees and charges, as written below.

Charging fees for aged care services

The type of fees aged care services charge depends on:

  • the type of services they provide
  • assessments of the care recipient’s financial situation
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Commonwealth Home Support Programme (CHSP) fees

CHSP providers charge a client contribution to help cover the cost of their service. The Australian Government funds the bulk of CHSP services, so the fee will be less than the total cost of the service.

Home Care Package fees

HCP providers may be able to charge:

  • a basic daily fee
  • an income-tested care fee
  • amounts for additional care and services

Residential aged care fees and costs

Approved providers of residential aged care may charge:

  • a basic daily fee
  • a means-tested care fee
  • additional services fees
  • an extra service fee
  • an accommodation payment or contribution

Multi-Purpose Services (MPS) fees

MPS providers may be able to charge:

  • a daily care fee
  • an accommodation payment

Continuity of Support (CoS) Programme

CoS providers continue to receive the same client contributions as they did before moving to the CoS Programme.

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Short-Term Restorative Care (STRC) Programme fees

STRC service providers can ask clients to pay a care fee above the flexible care subsidy to meet any additional costs.

Pricing transparency

Approved aged care providers are required to publish information about their fees and pricing.

This helps people to better understand and compare costs across providers and make a more informed decision about which provider is best suited to deliver their care.

Who governs fees?

Setting fees is the responsibility of the provider. You can set fees up to the maximum allowed for your program.

The Department of Health sets rates and thresholds on behalf of the Australian Government.

The Aged Care Pricing Commissioner is responsible for approving:

  • extra service fees
  • proposed accommodation payments that are higher than the maximum amount

Sources:

  • https://www.health.gov.au/health-topics/aged-care/providing-aged-care-services/funding-for-aged-care-service-providers
  • https://www.health.gov.au/health-topics/aged-care/providing-aged-care-services/charging-fees-for-aged-care-services
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