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Accommodation bond


If your aged care home asks you to pay an accommodation bond, the government regulates:
If you are entering low-level care (more information), or entering a home that offers extra service (more information), you may be asked to pay an accommodation bond. This only happens if you can afford to pay it, and in the case of extra service – if you choose to have it. An accommodation bond can be paid as a lump sum, or by periodical payments, or as a combination of the two methods.

How is the amount for an accommodation bond worked out?

The accommodation bond amount is agreed between you and the home.

There is no fixed amount for an accommodation bond. However, you cannot be charged an accommodation bond that would leave you with less than 2.5 times the annual single basic age pension (currently $34 500).

How is the accommodation payment assessed?

A home may ask you to pay an accommodation payment based on your assets. An assets assessment will determine whether you are eligible for subsidised accommodation costs, and whether you may be asked to pay accommodation payments.

Read more: About assets assessments

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How much of the bond is taken by the home?

The amount that the home can take from your bond each month is agreed with you when you enter the home. However, the government sets the maximum retention amount that the home can charge and keep. The home also keeps the interest received on the bond.

Current and previous maximum retention rates can be found on the Department of Health and Ageing website.

What is a 'big accommodation bond'?

A 'big bond' is more than 10 times the basic single age pension, currently $137 500 (as at 20 March 2008). If you agree to pay a big bond, you can also be asked to pay the higher, non-pensioner rate of the basic daily care fee, even if you are pensioner. For an aged care home to charge the higher non-pensioner basic daily care fee (more information), the rate must be included in the accommodation agreement.

When do I need to pay an accommodation bond?

After moving into low-level care, you have up to six months to pay your accommodation bond if you choose to pay as a lump sum.
You should agree on the amount of your accommodation bond when you move in. Remember, interest can be charged on that amount from the time you enter the home until it is fully paid.
If you are provided with care for two months or less, the aged care home can hold on to up to three months of retention amounts.

What happens when I leave the home?

When you leave, your accommodation bond (less allowable monthly retention amounts (more information) that have been deducted) should be refunded within 14 days. If the provider does not refund your bond on the day you leave the home, they must pay you interest on the amount refundable until they repay it in full.

What are my rights?

You cannot be asked to pay an accommodation bond unless you have entered an agreement setting out your rights and responsibilities. You have up to 21 days after entering a home before you need to enter such an agreement.

You can only agree to pay an accommodation bond when you enter the home, and you cannot be asked to pay more than you originally agreed to, even if your circumstances change.

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Example 1: Paying a bond as a periodic payment

Mrs Chan owns her home. She is a widow and about to go into low-level care.

Her house is worth about $150 000 and her unemployed daughter, who has cared for her for the last six years, is living in the family home. Therefore, her home is not considered as an asset in relation to payment of an accommodation bond.

Mrs Chan’s other assets amount to $106 000. Her total assets are $106 000.

She must be left with at least $34 500. Thus, the maximum bond Mrs Chan can pay is $71 500.

She is asked to pay $60 000.

Mrs Chan has read that she can pay a bond in periodic payments instead of as a lump sum, or as a mixture of both.

The periodic payment is made up of two components. Firstly, the amount that the service provider can deduct annually for up to five years, and also the interest that the service provider would normally earn on the lump sum.

The service provider explains that she can make this payment either monthly or fortnightly. She agrees to pay a periodic payment as this will not require her to change her financial arrangements.

At an interest rate of 10% per annum, (the maximum permissible interest rate which can be charged is announced quarterly by the Department of Health and Ageing. The current rate can be obtained by contacting the Aged Care Information Line, 1800 500 853), the cost of this payment would be:


Mrs Chan agrees to pay $773.50 every month to cover this cost. This is instead of paying $60 000 as a lump sum.

Mrs Chan’s payments will reduce by $273.50 a month after the maximum five-years retention period.

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Example 2: Paying the bond as a mixture of lump sum and periodic payment

Mrs Winter owns her home. She is a widow and about to go into and aged care home.

Her house is worth about $150 000. Mrs Winter’s other assets amount to $87 500. Her total assets are $237 500.

She must be left with at least $34 500. Thus, the maximum bond Mrs Winter can be charged is $203 000.

She is asked to pay $100 000.

Mrs Winter has read that she can pay a bond in periodic payments instead of as a lump sum, or as a combination of both. If she pays a combination of both and the lump sum is large enough to cover the amount the service provider can keep, she will only need to pay a periodic amount made up of the interest that the provider would normally earn on the balance of the lump sum.

The service provider explains that she can make this payment either monthly or fortnightly.

She agrees to pay a mixture of lump sum and periodic payment as this best suits her situation. Her lump sum payment is $70 000 leaving $30 000 on which she must pay interest.

At an interest rate of 10% (the maximum permissible interest rate which can be charged is announced quarterly by the Department of Health and Ageing. The current rate can be obtained by contacting the Aged Care Information Line, 1800 500 853), the cost of the periodic payment would be the interest of $3 000 a year or $250 a month.

So as well as paying $70 000 as a lump sum, Mrs Winter agrees to pay $250 every month. In this way she meets her agreement for a $100 000 total bond.

Mrs Winter also decides to rent out her former home and uses the rental income to pay the periodic payments. Her home is exempt from the pension assets test and the rental income is not counted for the pension income test while she is required to make the periodic payments.

The amount of the bond returned to Mrs Winter or her estate, after deducting the retention amounts, on leaving would be:

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This page was last updated on: 04 April 2008