The cost of residential aged care in Australia is made up of a few separate parts. Some are the same for everyone, and some depend on your individual financial situation. The good news is that fees are regulated by the Australian Government, so no home can simply charge whatever it likes - and there are annual and lifetime caps that protect you.
There are three main costs to understand.
1. The basic daily fee
Everyone in residential aged care pays a basic daily fee. It covers day-to-day living costs like meals, cleaning, laundry and heating. It is set by the Government as a percentage of the single age pension and is the same across every aged care home in the country, so it is never a reason to choose one home over another.
Because the amount is indexed twice a year (in March and September), we do not publish a figure here that could go out of date - you can always find the current basic daily fee on the My Aged Care website.
2. The means-tested care fee
Some people also contribute towards the cost of their personal and clinical care. Whether you pay this - and how much - depends on an assessment of your income and assets carried out by Services Australia. Many people pay nothing at all towards their care.
Importantly, this fee has an annual cap and a lifetime cap. Once you reach a cap, you stop paying the means-tested care fee, which protects you from open-ended costs over a long stay.
3. Your accommodation payment
This is the cost of your room. Depending on your means assessment, the Government may pay some or all of it, or you may contribute. Where you do contribute, you can choose how to pay:
- A refundable accommodation deposit (RAD) - a lump sum, fully refundable to you or your estate when you leave, minus any amounts you have agreed to have deducted.
- A daily accommodation payment (DAP) - a rental-style daily amount instead of a lump sum, calculated from the room price using a Government-set interest rate.
- A combination - part lump sum, part daily payment, in whatever split suits you.
There is no single right answer - the best choice depends on your finances, whether you want to keep a family home, and how you feel about paying a large sum up front. A financial adviser who specialises in aged care can be very helpful here.
How we do it at Paradise Lakes: we walk every family through their options in plain English, with no pressure. See our Fees & Accommodation page for how RAD, DAP and combination payments work with us.
Who works out what you pay
Two separate government bodies are involved, which is a common source of confusion:
- My Aged Care arranges your aged care assessment (ACAT), which confirms you are eligible for government-subsidised residential care.
- Services Australia completes the income and assets assessment that determines your means-tested care fee and how much of your accommodation cost you contribute.
It is worth starting both early, as they can take a little time and they shape what you will actually pay.
A note on recent changes
Aged care funding arrangements in Australia have been reformed under the new Aged Care Act. Some fee names and rules have changed, and arrangements can differ depending on when a person entered care. Because the detail matters and is regularly updated, we always recommend confirming current figures and rules through My Aged Care or a qualified aged care financial adviser.
Planning ahead? The clearest way to understand your own situation is to talk it through. Register your interest and we will help you make sense of the costs, with no cost and no obligation - or read our guide on how to get into aged care.