Accommodation Agreements under the Aged Care Act: What will change?

• Key differences between the Acts

  While framed differently, the New Act generally picks up many of the existing requirements in the Current Act.

  A careful review of the rules (when available) will be required to determine whether the pre-entry disclosure requirements across the Current Act and the New Act align – or – whether there are different and/or more onerous requirements under the New Act.

  There are express requirements under the New Act to provide information and documents to ‘supporters’ of persons entering care.

  Arguably, the ‘transparency and agreements’ requirement in the Aged Care Quality Standards may require providers to give individuals entering care sufficient time to consider the agreements and seek advice (and to demonstrate that this has been done).

  Some requirements under the New Act are also framed as ‘conditions of registration’, meaning that a failure to comply may lead to civil penalties.

  A Resident Agreement (which often incorporates an accommodation agreement) will be called a ‘Service Agreement’ under the New Act.

• Comparison between the Current Act and the New Act

  Current Act

  New Act

  Before a person enters a residential care service or an eligible flexible care service, the approved provider is required to give the person an accommodation agreement (which must meet the requirements of the Current Act) and the following information in writing: a statement that, if the person pays part or all of the accommodation payment or accommodation contribution by refundable deposit, the approved provider will, within 7 days of receiving a request from the person, provide certain prescribed information including about the provider’s practices regarding refundable deposits and its finances; applicable interest rates for delayed daily accommodation payments; the method and timing for refund to the person of any overpaid accommodation payments or accommodation contributions; and the prudential arrangements applying to refundable accommodation deposits and refundable accommodation contributions. At the same time (before entry), a provider is required to agree with the person in writing the maximum amount that would be payable if the person paid an accommodation payment. There are also specific requirements about the way in which, and the process by which, a ‘resident agreement’ is to be entered under the Current Act. Accommodation agreements are generally incorporated into resident agreements (and not two separate agreements); this means that as part of the preliminary requirements the provider must inform, and help the person to understand, the terms of the agreement, in particular the terms about: rights and responsibilities, including the rights in the ‘Charter of Aged Care Rights’; services to be provided; and fees and other charges to be paid under the agreement.

  Before a registered provider starts delivering ongoing funded aged care services to an individual in an approved residential care home, the provider must enter into an accommodation agreement with an individual. Before a registered provider enters into an accommodation agreement with an individual, the provider must give the person: a copy of the proposed accommodation agreement (which must meet the requirements of the New Act); written information about the published accommodation payment amounts for the home, expressed as a RAD and as a DAP amount; and any additional information prescribed by the rules. It is a condition of registration that a registered provider must provide and explain records and information of a kind prescribed by the rules to individuals accessing, or seeking to access, funded aged care services, in accordance with any requirements prescribed in the rules. In addition, Standard 1 of the revised draft of the Aged Care Quality Standards (which are contained in the rules) imposes various requirements on providers about the information provided to individuals including regarding ‘transparency and agreements’. In particular, before entering into any agreements with individuals about the delivery of funded aged care services, the provider must provide individuals with: the opportunity to exercise autonomy; and the time they need to consider the agreement; and an opportunity to seek advice. Similar to the Current Act, the New Act contemplates that a single agreement may be entered for both accommodation and other services in a residential care home. The language has shifted: what we currently know as a ‘resident agreement’ will become a ‘service agreement’. Moreover, it will also be a condition of registration that registered providers “of a kind prescribed by the rules” must have an agreement with each individual accessing funded aged care services (a ‘service agreement’) in accordance with any applicable requirements prescribed by the rules. Providers may also need to provide documents and information to supporters of the individual.

When must an accommodation agreement be entered into?

• Key differences between the Acts

  Providers will need to enter into accommodation agreements before they start providing ongoing funded aged care services to the individual in the home. Unless the rules reintroduce flexibility around this timing, it seems that the ~28 day grace period after entry is gone. Again, we await release of the rules for more detail.

• Comparison between the Current Act and the New Act

  Current Act

  New Act

  An approved provider must enter into an accommodation agreement with a person before, or within 28 days after, the person enters the service. There is some flexibility for specified additional time in certain situations where in this 28 day period a process has begun for a legal representative to be appointed for the person.

  As foreshadowed above, a registered provider must enter into an accommodation agreement before the registered provider starts delivering “ongoing funded aged care services to the individual in the home”. So far, the New Act emphasises entering agreements before starting to deliver ongoing funded aged care services, ensuring that terms are clearly understood and agreed upon in advance, offering stronger consumer protection. It is not yet clear how this will work in circumstances which necessitate urgent entry to care. It is unclear whether this position may be moderated in the rules.

What must be in an accommodation agreement – general requirements?

• Key differences between the Acts

  Broadly similar general content for accommodation agreements; there are potentially different timeframes for individuals to elect accommodation payment method and requirements to include content regarding the deduction of retention amounts.

• Comparison between the Current Act and the New Act

  Current Act

  New Act

  The Current Act requires that an accommodation agreement must set out: the entry date (actual or proposed); that accommodation payments are required if a person’s means tested amount at the date of entry meets or exceeds the maximum accommodation supplement amount for that day or if insufficient means testing information is provided; that accommodation contributions are an option for persons with lower means tested amounts; an acknowledgement that financial hardship may reduce accommodation payments/contributions to nil; that individuals must choose a payment method (daily payments, refundable deposit, or a combination) within 28 days of entry; that if no choice is made within the 28 days, daily payments are required by default; that refundable deposits, if chosen, are payable six months post‑entry, with daily payments required in the interim; the permitted deductions from a refundable deposit; the circumstances in which a refundable deposit balance must be refunded; any other conditions relating to payment of a refundable deposit; and any related conditions specified in the Fees and Payments Principles – which specify a number of general matters regarding the accommodation and services to be provided as well as information about voluntary and non-voluntary moves within the service. As noted above, accommodation agreements are generally incorporated into resident agreements and the above requirements are in addition to the requirements for the content of resident agreements more generally.

  The requirements under the New Act are broadly similar to those under the Current Act, with additional requirements to expressly set out in an accommodation agreement: a statement that the individual must not pay the accommodation payment or accommodation contribution (if payable) by refundable deposit before the individual’s ‘start day’ (date of entry under the Current Act); and that retention amounts must be deducted from a refundable deposit balance within a certain period (consistent with the re-introduction of the deduction of a monthly retention amount from a RAD for up to 5 years). The New Act does not require inclusion in the accommodation agreement of the express 28-day window for choosing a payment method. It remains to be seen whether this will return in the rules. The rules may further prescribe what must be included or excluded from an agreement, the period in which an agreement must be reviewed, or different kinds of agreements depending on the nature and setting of the services being provided to an individual.

What must be in an accommodation agreement – specific requirements for accommodation payments?

• Key differences between the Acts

  There will be an express requirement to include the published accommodation payment amount and the agreed accommodation payment amount in the accommodation agreement. Many providers do this already but caution will need to be exercised to ensure all of the provider's sources of this information are consistent and kept up to date.

  Agreements will also need to include reference to indexation of daily accommodation payments.

• Comparison between the Current Act and the New Act

  Current Act

  New Act

  The Current Act requires that an accommodation agreement must set out the following with respect to accommodation payments: the DAP amount agreed between the provider and the individual; the RAD amount that would be payable if no DAPs were made; the method for calculating combined payment options (RAD and DAPs); and that, if the person pays a RAD, the provider must, at the person’s request, deduct daily accommodation payments from the RAD and may require the person to maintain the agreed accommodation payment if the RAD is reduced. And, if the person is required to maintain the agreed accommodation payment because the RAD has been reduced, the person may do so by paying daily accommodation payments or increased daily accommodation payments, topping up the RAD, or a combination of both.

  The requirements under the New Act are broadly similar to those under the Current Act, with additional requirements to set out in an accommodation agreement: the ‘published accommodation payment amounts’ for the approved residential care home on the day the agreement is entered into; and that daily accommodation payments are subject to indexation in accordance with the rules. To the extent that a RAD is reduced because of the deduction of a retention amount, individuals do not have to increase their daily payment or make a top-up to the RAD. The rules pertaining to accommodation payments have not yet been published and may include additional obligations regarding what must be in an accommodation agreement with respect to accommodation payments.

What must be in an accommodation agreement – specific requirements for accommodation contributions?

• Key differences between the Acts

  The requirements under the New Act are broadly similar to those under the Current Act, with the differences largely being amendments to provide greater clarity. We await release of the rules for more detail.

• Comparison between the Current Act and the New Act

  Current Act

  New Act

  The Current Act requires that an accommodation agreement must set out the following with respect to accommodation contributions: that the daily contribution will not exceed the amount assessed based on the individual's means-tested amount; that the contribution will vary from time to time based on the accommodation supplement applicable to the service and the person’s means tested amount; the method for working out amounts that would be payable by refundable accommodation contribution or a combination of refundable accommodation contribution and daily accommodation contributions; that, if the person pays a RAC, deduct daily accommodation contributions from the RAC and may require the person to maintain the agreed accommodation contribution if the RAC is reduced. And, if the person is required to maintain the accommodation contribution because the RAC has been reduced, the person may do so by paying daily accommodation contributions or increased daily accommodation contributions, topping up the RAC, or a combination of both. that if the accommodation contribution that is payable increases, the provider may require the individual to pay the increase and if so, the person may do so by paying daily accommodation contributions or increased daily accommodation contributions, paying or topping up a refundable contributions, or both.

  To the extent that a RAC is reduced because of the deduction of a retention amount, individuals do not have to increase their daily payment or make a top-up to the RAC. The rules regarding accommodation contributions have not yet been published and may include additional obligations regarding what must be in an accommodation agreement with respect to accommodation contributions.

Key Takeaways

• As is the case with the New Act generally, providers will need to evaluate the detail in the rules (when available) to determine whether there are additional or different disclosure, content and timing requirements for accommodation agreements (and service agreements).

• Providers will need to make sure they are aware of and are able to comply with the new, more detailed requirements for disclosure.

• Providers will need to re-align current processes and practices with the New Act (and rules) to ensure accommodation agreements are prepared and finalised before commencing service delivery to new entrants to an approved residential care home on or after 1 July 2025. Commencing services without a finalised agreement under the New Act could lead to compliance action/issues. Providers may mitigate this risk by ensuring processes and practices regarding accommodation agreements are robust and are in place ahead of 1 July 2025.

• The removal of the flexible 28-day window and specific provisions for legal representation processes may require providers to adopt stricter intake and admission processes. Providers may need to coordinate with families, legal representatives, and care recipients more proactively to meet the new timing requirements – and, where relevant, requirements to provide information and documents to a ‘supporter’ of an individual entering care.

• Providers should review their current accommodation agreements and disclosure practices to prepare for the new requirements. Do processes and practices include steps to ensure that all information is documented? If so, how well are they adhered to?

• Staff involved in admissions and finance functions will benefit from education and training on the new requirements to ensure all obligations are met before entering into accommodation agreements and that accommodation agreements are entered into before service provision starts.

• There are provisions in the New Act and the consultation draft of the Aged Care Rules 2025 that relate to agreements for the provision of higher everyday living services. Providers will need to consider how those requirements impact on existing and future processes including timing for offering and entering into such agreements.