A clear, practical guide to what aged care actually costs
Choosing an aged care home is rarely just about finding the right place. For most families, it is also about working out whether they can afford it. Aged care fees in Australia are genuinely complex, and the rules changed on 1 November 2025 with the introduction of the Aged Care Act 2024, so even families who have been through this before may find the numbers look different this time.
This guide walks through what you can actually expect to pay, based on the current government fee arrangements. It focuses on residential aged care, the kind of full-time support provided in an aged care home. Every figure below comes from My Aged Care and the Department of Health, Disability and Ageing, is dated, and applies at a sector level. CraigCare does not set these fees, and your own costs will depend on your personal financial circumstances and the room you choose, so treat this as a guide to understanding the system rather than a quote.
Underneath the practical question of cost, there is often a bigger worry: whether this decision is financially manageable at all. That’s an understandable thing to be sitting with right now. The Australian aged care system is built around means testing precisely so that what you pay reflects what you can afford, with government support scaled to match, and understanding how that works is usually what turns the worry into a plan.
What determines how much you’ll pay
There is no single number that applies to everyone entering residential aged care. What you pay depends on a combination of things: which fee arrangements apply to you, your income and assets as assessed through a means assessment, and the room price you agree with your chosen aged care home.
Up to four types of fees can apply, though not everyone pays all of them:
- A Basic Daily Fee, which every resident pays
- A means-tested contribution towards your daily living and care costs, which depends on your income and assets
- Accommodation costs, which depend on the room you choose and whether you qualify for government assistance
- A Higher Everyday Living Fee, optional, and only if you choose additional services
That means-tested contribution now takes two forms for anyone entering care from 1 November 2025 onwards: a hotelling contribution and a non-clinical care contribution, both covered below. Most families find the cost picture far more manageable once they know which of these actually applies to them, rather than trying to plan around all of them at once.
Which fee rules apply to you
Three different sets of rules currently exist side by side, though most families only need to know about the first two. The first thing to establish is which one covers you.
If you are entering residential aged care for the first time on or after 1 November 2025, the new fee arrangements introduced under the Aged Care Act 2024 apply to you. These replaced the means-tested care fee with two new contributions: a hotelling contribution and a non-clinical care contribution.
If you entered care on or before 31 October 2025, your existing fees generally stay the same, including if you later move to another aged care home, unless you choose to opt in to the new arrangements. There is also a “no worse off” protection for anyone who was already receiving a Home Care Package, or approved and waiting for one, on or before 12 September 2024, so their move into residential care is assessed under the earlier rules.
If you are not sure which arrangement applies to your situation, that is completely normal at this stage. A means assessment, covered further down, will confirm it for you.
The Basic Daily Fee
Every resident pays a Basic Daily Fee, regardless of income or assets. It covers everyday living costs such as meals, cleaning, laundry and utilities, and is paid directly to the aged care home, usually fortnightly or monthly.
The Basic Daily Fee is set at 85% of the single person rate of the basic Age Pension and is indexed twice a year, on 20 March and 20 September. As at 20 March 2026, it is $66.80 per day, or around $24,382 per year.
Accommodation costs
Most people entering an aged care home agree a room price with their provider before moving in. What you pay towards that room depends on your means assessment.
Whether you pay the full room price depends on a single amount worked out from your income and assets combined, not on either one alone. If that amount sits above the low-means threshold, you are expected to pay the agreed room price yourself, known as an accommodation payment. If it sits below (the income free area is $35,313.20 a year and the asset free area $64,500, both as at 20 March 2026), the government pays some or all of your accommodation costs, and you may only need to pay a smaller accommodation contribution worked out by Services Australia.
There are three ways to pay an accommodation payment: as a lump sum, known as a Refundable Accommodation Deposit (RAD); as ongoing daily payments, known as a Daily Accommodation Payment (DAP); or as a combination of both. Each option works differently, and the right choice depends on your family’s financial situation as much as the numbers themselves. A RAD isn’t automatically refunded in full: for residents who first enter care on or after 1 November 2025, providers deduct a retention amount from the deposit at 2% a year for a maximum of five years, so up to 10% of the deposit in total. We’ve covered RAD and DAP in more detail, including how each option affects your family’s other finances, in a dedicated guide.
If you’re part of a couple, a means assessment looks at half of your combined income and assets, regardless of whose name they’re actually held in. It’s a detail worth factoring in early rather than discovering partway through the process.
The means-tested contribution
Alongside the Basic Daily Fee, some residents also contribute towards the cost of their daily living and care, based on what a means assessment finds about their income and assets.
Under the new 1 November 2025 arrangements, this can take the form of a hotelling contribution (towards daily living services, capped at $22.15 per day) and a non-clinical care contribution (towards personal care such as bathing and mobility support, capped at $107.32 per day, with a lifetime cap once total contributions reach $137,917.01 or four years, whichever comes first).
If you are on the earlier 1 July 2014 arrangements, this instead takes the form of a means-tested care fee, which can range from $0 up to $370.39 per day, with an annual cap of $35,910.43 and a lifetime cap of $86,185.23.
Neither of these figures is fixed once you enter care. Both can change if your financial circumstances change, and both are reviewed at the March and September indexation dates. We’ve written a fuller explanation of how the means-tested contribution is calculated, and how the family home is treated, in a separate guide.
Higher Everyday Living Fees
Some aged care homes offer a higher standard of everyday services, such as premium dining or expanded lifestyle programs, for an optional additional fee known as a Higher Everyday Living Fee (HELF). This replaced the older “extra service fee” arrangement.
A few protections apply. You cannot be asked to agree to a HELF before you have entered care, and it cannot be made a condition of entry or of securing a room. Every HELF agreement must set out exactly what is included and how it is charged, and comes with a 28-day cooling-off period during which you can cancel or change it without a cancellation fee.
What the government contributes
It is easy to focus only on what you will pay and lose sight of how much the system already covers. The Australian Government subsidises aged care homes directly, and the less capacity your means assessment finds you have to pay, the more the government contributes on your behalf.
For anyone on the 1 November 2025 fee arrangements, the government fully funds clinical care costs. Non-clinical care and hotelling contributions are then adjusted according to your means assessment, and accommodation support is available for anyone assessed as low means. Residents on the earlier arrangements have their clinical care subsidised through the provider’s government funding rather than charged to them.
A few situation-specific supports exist too. Eligible former prisoners of war and Victoria Cross recipients may have their Basic Daily Fee met on their behalf by the Department of Veterans’ Affairs, along with some exemptions from means-tested contributions. If this could apply to your family, raise it with DVA or during your means assessment.
If the fees are more than your family can manage
For many families this is the quiet worry underneath everything else: what happens if the money simply isn’t there. There is a formal answer to that, and it’s worth knowing about before you need it.
If paying your aged care costs would leave you unable to meet essential living expenses, financial hardship assistance may be available towards your Basic Daily Fee, your means-tested fees and your daily accommodation payments. It is claimed through Services Australia rather than through your aged care home.
Before you claim, three things need to be in place:
- Your income and assets have been assessed for aged care purposes, through a means assessment for residential aged care. Services Australia needs to know what you have been asked to pay before it can work out whether you can afford it.
- Your assets sit below the hardship threshold. The threshold is tied to the Age Pension rate, so it shifts at each indexation. Services Australia publishes the current figure. Assets you genuinely cannot sell or borrow against are excluded from the calculation.
- Your gifting is within the allowable limits. No more than $10,000 in the current financial year or in any of the previous four, and no more than $30,000 across the current and previous four financial years combined.
Then the claim itself is three steps:
- Gather your supporting documents. You’ll need evidence of your aged care costs, your essential living expenses, and any assets you’re unable to sell or borrow against.
- Complete the SA462 claim form, available from Services Australia.
- Send the form in. Include your supporting documents with it if you can. If any are still to come, they must reach Services Australia within 28 days of you lodging the claim, or it will be rejected.
If your claim is approved, your assistance letter will state the date the assistance ends, and you can reapply before then if you still need it.
Two limits are worth knowing about. For a respite stay, hardship assistance covers the Basic Daily Fee only. And hardship assistance does not cover Higher Everyday Living Fees or other additional service fees.
How to find out your actual cost
Apart from the Basic Daily Fee, every figure in this guide is a sector-wide maximum or threshold rather than a personal quote, so the next step is finding out where you actually sit.
The most reliable way is a means assessment, arranged through Services Australia (or the Department of Veterans’ Affairs, if you receive a means-tested DVA payment). This results in a fee advice letter setting out exactly what you’ll be asked to pay and what your provider is permitted to charge. My Aged Care also offers a fee estimator if you want a general sense of the numbers before you go further. Starting this process early has a real advantage: a means assessment completed before you enter care stays valid for 120 days, so there’s no downside to getting it underway while you’re still comparing homes.
From there, the conversation becomes a personal one. Room prices, service inclusions and what a particular home can offer your family are all things worth discussing directly.
Our caring Admissions team is here to walk alongside you and your family every step of the way. If you have any questions, you can call our Western Australian team on 0419 856 664 or our Victorian team on 0468 718 856, or submit an online enquiry.
Frequently asked questions
How much does aged care cost per year in Australia?
It varies significantly by individual circumstances, but as a guide, the Basic Daily Fee alone comes to around $24,382 a year as at 20 March 2026. Total costs depend on your means-tested contribution and the accommodation option you choose, which is why a means assessment is the most reliable way to get a figure specific to your situation.
Is the family home included in the means assessment?
It can be, depending on circumstances such as whether a spouse or dependent relative continues to live in it. Where it is included, only a capped portion of its value counts, never the full market value. Raise it during your means assessment or with a financial adviser rather than assuming either way.
What happens to a RAD if a resident leaves the home?
Any RAD balance is refunded, less any deductions that have been agreed or are required, such as RAD retention. This applies whether someone moves to a different type of care or no longer resides in the home.
Can fees change after I’ve moved in?
Yes. The Basic Daily Fee and various caps are indexed each March and September, and a means-tested contribution can change if your income or assets change. Your accommodation payment method can change too: you can pay part or all of a lump sum at any time after you move in, which reduces your daily payment from that point.
How do I apply for financial hardship assistance?
Through Services Australia, using the SA462 claim form. You’ll need a completed means assessment, assets below the hardship threshold (tied to the Age Pension rate, and excluding assets you can’t sell or borrow against), gifting within the allowable limits, and documents evidencing your aged care costs and essential living expenses. Supporting documents must reach Services Australia within 28 days of lodging your claim.
Should I get financial advice before deciding?
It’s a reasonable step to take, particularly around how you pay for accommodation, since the RAD, DAP or combination you choose can affect your pension and other fees. Services Australia’s Financial Information Service offers free, independent guidance if you would like a starting point before speaking with a private adviser.
Do all aged care homes charge the same fees?
The Basic Daily Fee and the government-set caps and thresholds are the same nationally, no matter which home you choose. What varies between homes is the room price, which sets your accommodation payment, and any optional Higher Everyday Living Fees on offer. That’s a good reason to compare room options directly with a home once you have a sense of your means assessment outcome.