An important change is coming to the way that aged care residents can pay their fees when first entering residential care. In particular, individuals will be provided with the flexibility to choose how they pay for their accommodation whilst they await the outcome of their means testing determination.
This upcoming change was introduced by the Aged Care Legislation Amendment (Aboriginal and Torres Strait Islander Aged Care Commissioner and Other Measures) Bill 2026 (Cth) (Bill), which passed on 15 October 2026 and is expected to receive royal assent in the following days.
How do interim payments work in residential aged care?
The Aged Care Act 2024 (Cth) (Act) governs the payments that can be made by a residential aged care resident to a provider during their “interim period”, which is the period after the individual’s start day but before the individual’s daily means tested amount is determined.
Currently, section 294(1)(ca)(ii) of the Act states that an individual whose daily means tested amount is still pending at their time of entry into a residential care home can only pay their accommodation payment during this interim period as daily payments. Accordingly, this prevents residents from paying their accommodation fee through other means, such as a lump-sum refundable accommodation deposit (RAD) or as a combination of a RAD and daily payments.
This has been a notable pain-point for providers and residents alike, due to the benefits associated with paying a RAD instead of daily accommodation payments. Significantly for residents, daily accommodation payments are non-refundable and forfeited entirely to the provider, unlike a RAD which has a large portion refunded when a resident leaves care. For providers, a RAD payment provides financial security to the organisation, such as through available capital and cash flow.
What has changed?
Part 7 of the Bill repeals section 294(1)(ca)(ii) of the Act in its entirety, giving residents the choice to pay their accommodation payment via daily payments, RADs, or as a combination of the two.
The remaining protections in the Act around interim payments will still apply, such as the refund of overpaid amounts and the relationship between accommodation fees charged and amounts agreed.
When does the change take effect?
The above changes will apply from the later of:
The day after the Bill receives Royal Assent; or
31 October 2026,
in relation to any accommodation agreement, whether it was made before, on or after the Bill’s commencement, including in relation to an individual’s start day that is set out in the accommodation agreement.
What actions should providers be taking?
Residential aged care providers should be revisiting their Residential Accommodation Agreement Templates to ensure this upcoming change is accurately reflected in its terms. Given the complexity and regulatory scrutiny associated with aged care agreement templates, we highly recommend that legal advice is sought when undertaking this task.
Providers should also consider whether internal policies and procedures surrounding the payment of accommodation fees during an interim period need to be updated, including any staff re-training.
Cowell Clarke’s dedicated Aged Care and Retirement Living Team continues to work closely with providers to ensure their best possible outcomes are achieved whilst ensuring compliance.
Cowell Clarke’s dedicated Aged Care and Retirement Living Team continues to work closely with providers to ensure their best possible outcomes are achieved whilst ensuring compliance. To ensure you stay compliant, contact Megan Jongebloed or Claudia Van Eckeren.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.