| Basic Daily Fee (respite and permanent resicare) | $66.80 |
| Hotelling Contribution (Maximum - to be advised by Services Australia) | $22.15 |
| Non-clinical Care Contribution (Maximum - to be advised by Services Australia) | $107.32 |
| Income Free Area - Residential Care | |
| Single person | $35,313 |
| Couple, illness separated (single rate) | $34,585 |
| Residential Care Means Test | |
| Asset Free Threshold | $64,500 |
| First Asset Threshold | $214,884 |
| Second Asset Threshold | $258,000 |
| Third Asset Threshold | $361,367 |
| Fourt Asset Threshold | $536,384 |
| Family Home Exemption Cap | $214,884 |
| Maximum Permissible Interest Rate - from 1/04/26 | 7.96% |
| Minimum Permissible Asset Level - the minimum amount of assets a resident must be left with if they pay at least part of their accommodation costs by Refundable Accommodation Deposit (RAD) | $64,500 |
| Maximum Refundable Accommodation Deposit - the maximum amount that can be charged for a room without prior approval from the Health and Aged Care Pricing Authority | $758,627 |
Understanding residential aged care fees and charges can initially feel overwhelming for many families. There are multiple fee categories, government means testing arrangements, accommodation payment options, and ongoing care costs that must all be considered before a person enters care.
Many families tell us that one of the most stressful aspects of arranging residential aged care is trying to understand exactly what they will need to pay, what the government may contribute, and whether they will need to sell the family home to afford care.
The good news is that Australia’s Commonwealth regulated aged care system is highly structured, and the majority of fees are governed by legislation and Commonwealth guidelines. Once families understand the different fee categories and how they are calculated, the process becomes far more manageable.
Residential aged care fees generally fall into four main categories:
Not every resident will pay all of these fees. Some residents may only pay the Basic Daily Care Fee, while others with greater financial capacity may contribute towards accommodation and care costs through means tested arrangements.
The Commonwealth Government subsidises a significant proportion of residential aged care costs on behalf of most Australians. The amount of support provided depends upon the resident’s care needs and financial circumstances.
The Basic Daily Care Fee is the standard contribution that almost all residents are required to pay when entering Commonwealth regulated residential aged care.
This fee helps contribute towards everyday living expenses within the aged care home, including:
The Basic Daily Care Fee is set by the Commonwealth Government and is linked to movements in the Age Pension. As pension rates increase, the Basic Daily Care Fee generally increases as well.
The fee is currently calculated at 85% of the single basic Age Pension and changes twice each year in March and September.
Importantly, this fee is generally payable by all permanent residents regardless of their financial position. Even residents with very limited assets or income will usually still contribute towards this standard daily fee.
For many families, the Basic Daily Care Fee becomes one of the most predictable and straightforward ongoing expenses associated with residential care.
The Means Tested Care Fee is an additional contribution that some residents may be required to pay towards the cost of their personal and clinical care.
This fee is determined following an assessment conducted by Services Australia (Centrelink) or the Department of Veterans’ Affairs (DVA).
The assessment considers:
The family home may also be assessed under certain circumstances, although important exemptions and caps may apply.
Residents with lower levels of assets and income may pay no Means Tested Care Fee at all. Others with higher financial capacity may contribute additional amounts towards the cost of care.
Importantly, annual and lifetime caps apply to Means Tested Care Fees. These caps are designed to ensure that residents are not exposed to unlimited care costs over time.
Once a resident reaches the annual or lifetime cap, they generally cease paying further Means Tested Care Fees.
Because the means testing process can become complex, many families seek professional assistance when completing Centrelink aged care forms such as the SA457 and SA485 forms.
Accommodation costs are often the area that causes the greatest confusion for families entering residential aged care.
Accommodation payments relate to the resident’s room and living environment within the aged care home.
Depending upon a resident’s financial circumstances, they may be classified as:
Residents assessed as fully supported may have their accommodation costs paid entirely by the Commonwealth Government.
Residents who are required to contribute towards their accommodation costs will generally be offered three payment choices:
A RAD is effectively a lump sum accommodation payment paid to the aged care home.
The RAD is government guaranteed and is generally refunded to the resident or their estate when they leave care, less any agreed deductions.
Many families use proceeds from the sale of a home or other investments to fund the RAD.
Importantly, RAD prices can vary significantly between aged care homes depending upon:
Some metropolitan aged care homes may request RADs exceeding several hundred thousand dollars.
If a resident chooses not to pay the full RAD, the unpaid amount can instead be converted into a Daily Accommodation Payment.
The DAP operates similarly to an interest payment and is calculated using the Maximum Permissible Interest Rate (MPIR) applicable on the day the resident enters care.
The DAP is not refundable because it is treated as a daily accommodation charge rather than a deposit.
Some families prefer to retain investments or the family home and instead pay accommodation costs through ongoing DAP payments.
Many residents choose a combination approach where part of the accommodation cost is paid as a RAD and the remaining balance is paid as a DAP.
This can provide flexibility and allow families to preserve some savings or investment assets while reducing ongoing daily accommodation costs.
Every family situation is different, and careful financial planning is often required before deciding upon the most suitable accommodation payment method.
One of the most common questions families ask is whether the family home must be sold when a loved one enters residential aged care.
The answer is often “not necessarily.”
In many situations, the home may be retained, particularly where:
However, retaining the home can affect:
Families should carefully consider both the emotional and financial implications before making decisions about the family home.
Professional aged care financial advice can be extremely valuable during this process.
Some aged care homes offer premium accommodation, hotel-style services, or enhanced lifestyle options that attract additional charges.
These additional fees may cover:
Additional service fees can vary considerably between providers.
It is important for families to clearly understand which services are optional and which are mandatory before signing a Residential Care Agreement.
Some providers package additional services into daily fees, while others charge separately for individual services.
The Australian Government contributes substantial funding towards residential aged care for eligible residents.
The amount of government subsidy paid to the aged care provider depends largely upon:
The Australian National Aged Care Classification (AN-ACC) funding model is used to determine provider funding levels.
This system aims to ensure that residents with higher care needs attract higher levels of government support.
Without Commonwealth subsidies, residential aged care costs would be unaffordable for many Australians.
When entering residential aged care, residents are generally asked to complete income and asset assessments through Services Australia or DVA.
Providing accurate financial information is extremely important because incorrect or incomplete information may result in:
Families should ensure that all relevant financial documents are gathered before commencing the means assessment process.
This may include:
Before entering care, the resident or their representative will generally be asked to sign a Residential Care Agreement.
This is a legally binding document outlining:
Families should never feel pressured to sign immediately without fully understanding the agreement.
It is important to carefully review:
Questions should always be asked if any part of the agreement is unclear.
Unfortunately, many families only begin investigating aged care financial arrangements during a health crisis or hospital admission.
This often creates unnecessary stress and pressure when important decisions need to be made quickly.
Early planning can provide significant benefits, including:
Understanding residential aged care fees before care becomes urgently required can make the transition smoother for everyone involved.
Residential aged care financials can be highly specialised and are regularly affected by legislative reforms, fee indexation, and changing government policy.
Many families benefit from seeking professional assistance when navigating:
Professional guidance may help families avoid costly mistakes and ensure that appropriate strategies are considered before important financial decisions are made.
Most importantly, understanding aged care fees and charges allows families to focus less on financial uncertainty and more on supporting their loved one during what is often a major life transition.
While the aged care system can initially appear complex, many families find that once the fee categories are explained clearly, the process becomes significantly easier to understand and manage.