Aged care providers hike fees by thousands
Estia Health has become the latest aged care company to introduce an additional layer of fees in a move that could increase the cost of nursing homes and make it harder to compare costs between providers.
On June 6, Estia introduced an $18 a day charge for residents who meet the cost of their accommodation upfront, rather than paying in instalments. Rival Regis Aged Care introduced a similar fee in April, while Aged Care Services Australia Group (ACSAG), part of Japara Healthcare, established a new fee last year. Estia's levy, known as an asset replacement contribution fee, is the highest of the three.
Senior Australians are concerned at the new fees, which appear to encourage seniors to pay for their rooms in instalments rather than through a lump sum. Aged care experts said they feared other providers would add similar payments.
The National Aged Care Alliance, which represents aged care providers, consumers and unions, is understood to have raised concerns about the new fees with the Department of Health.
In addition to the extra fee for residents who pay for their room through a so-called lump sum refundable accommodation deposit (RAD), experts have also reported that more aged care facilities are forcing clients to pay for additional services, such as hairdressing, wi-fi, excursions and wine with meals.
Estia's asset replacement contribution fee amounts to an additional $6500 a year that must be paid by residents who wish to pay for any part of their accommodation via a RAD.
Residents who choose to pay for their accommodation through a daily accommodation payment (DAP) will not be affected.
The asset replacement contribution fee, when combined with the basic daily care fee, exceeds the amount of the full age pension. For residents on a full age pension and who pay a RAD, the difference between the pension and the room charge will need to be met by deducting money from the RAD.
A RAD is normally repaid in full to the resident if they move to a different facility, or to their estate if they pass away.
Council of the Ageing chief executive Ian Yates questioned whether the new payments removed a degree of choice over whether residents paid for their accommodation through a lump sum or instalments.
Under rules introduced in July, 2014, residents are able to choose freely how they pay for their room. Under the old system, aged care providers were allowed to deduct $331 a month from an accommodation bond. When the resident left the facility, the accommodation bond was repaid, minus the "retention".
"This looks like a retention by another name," Mr Yates said.
"This certainly exerts substantial pressure to pay a DAP, but the law says people should have a choice between a RAD and a DAP," Mr Yates said.
Residents who pay a DAP are charged 6.28 per cent interest on the unpaid balance of the total accommodation fee.
Aged care financing is not considered to be a financial product and is not covered by the Australian Securities and Investments Commission.
Estia, which acquired 21 facilities during fiscal 2016, is one of the largest owners and operators of aged care facilities in Australia. Its share price has fallen sharply after investors raised questions about the treatment of its financing, such as its RAD, for acquisitions and how that has not shown up in some analysts' valuations of the company.
Estia, ACSAG and Regis have different supplementary charges for residents who elect to pay the RAD. They are levied in different ways and the amounts are not disclosed on their websites. In some
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