Step 4.2

What are the main costs of an aged care home?

Main costs of aged care

The four types of fees and costs are explained in detail in this section:

  • Basic daily fee
  • Means-tested care fee
  • Accommodation cost


  • Fees for additional services

Handy Hint - Did you know that if you can click the CC at the bottom righthand side while the video is playing, captions will appear. To get rid of them, click CC again.

View transcript of video here
Basic Daily Fee

The basic daily fee covers day to day living costs such as meals, laundry, cleaning power and basic telecommunications. 

The basic daily fee is set by Services Australia at 85 per cent of the single Age Pension.  

The daily fee is the same for everyone, whether or not you receive the Age Pension.

remember, you can never be charged more than 85% of the single age pension for your basic daily fee at a government-subsidised aged care home.

As a guide, as of 20th September 2023, the maximum basic daily fee was:  $60.86.

Because it is tied to the Age Pension rate, the basic fee goes up twice a year on:

  • 20th March


  • 20th September

You can see the current schedule of Fees and Charges for Residential and Home Care.

For some people, the basic daily fee will be the only fee they pay.

For example, at 20th March 2024, a single person on an annual income below $32,819.80 (or $25,420.20 for each member of a couple) and whose assets are less than $59,500 will pay only the basic daily fee at an aged care home.

Means tested care fee

You might need to pay extra towards your day to day personal care and nursing costs, but this only applies to people who can afford it. The amount varies according to an assessment of your income and assets.  If you chose not to have an assessment you won't receive any government subsidy towards the costs of your aged care and you will be asked to pay the full amount yourself.

Services Australia will work out if you have to pay this fee and if so, how much you need to pay, based on an assessment of your income and assets.

Things to note about the means-tested care fee
  • If you are part of a couple, your fee will be based on half of your combined income and assets
  • There are annual and lifetime caps on the means-tested care fee. 
  • At 20th March 2024, the maximum means-tested care fee you can be asked to pay in a year is $33,309.29 and the maximum means-tested care fee you can be asked to pay in a lifetime is $79,942.44.


  • If you were receiving a Home Care Package before moving to an aged care home and have been paying an income-tested care fee it counts toward to your annual and lifetime caps
Accommodation Costs

The aged care home can charge a fee for the accommodation they provide. This covers the bricks and mortar and maintenance. 

The fee is set by individual aged care homes and all homes must clearly advertise their accommodation price.

The accommodation fee will vary according to factors such as local property prices and size of the room and amenities (eg. gym, swimming pool, gardens). 

While aged care homes can set the price they want to charge for accommodation, if they charge more than $550,000 as a Refundable Accommodation Deposit it needs to be approved by the Aged Care Pricing Commissioner.

How much do you have to pay?

You might have to pay the full price of your accommodation or the Australian Government might pay some – it depends on your finances.

Like the means-tested care fee, the Services Australia decides this, based on their assessment of your income and assets.

The government can subsidise your accommodation costs, to a maximum of $55 per day, meaning you may need to pay part of the cost. 

You will be advised by Services Australia what you will be expected to pay, which will be one of the following:

  • Subsidised accommodation costs: if your income and assets are below a certain amount, the Australian Government will subsidise your accommodation costs.  The amount that is subsidised will be based on how recently the aged care home was refurbished.  The maximum accommodation supplement amount is $55 per day. If the Daily Accommodation Payment of the room is more than the maximum accommodation supplement, then the resident will be liable to pay the shortfall.
  • An accommodation contribution: you might be required to pay part of the cost of your accommodation and the Australian Government will pay the rest.
  • An accommodation payment: if you are required to pay the full cost of your accommodation.
How do you pay accommodation costs?

There are three ways you can pay:

  • a lump-sum refundable accommodation deposit – known as a RAD 
  • a rental-type daily accommodation payment – known as a DAP 


  • a combination of both

You can move into an aged care home before deciding how you want to pay.  You then have 28 days to decide.

Remember :

  • If you have moved to the aged care home at short notice and haven’t been means-tested, you can be asked to pay the Daily Accommodation Payment (DAP) as an interim measure. This will be refunded if it later emerges you do not need to pay it.
  • If you are liable to pay the full accommodation price, then the entry price is fixed for the duration of your stay.
  • If you are making a contribution to the accommodation cost it may fluctuate over time depending on your income and assets or if the facility becomes eligible for the higher accommodation supplement.
  • You can’t be charged for your accommodation if you are receiving respite care.
Fees for additional services

There are extra costs depending on the choices you make.  For example, some aged care homes offer larger rooms than others and extras such as:

  • Cable television
  • Internet
  • Onsite hairdresser, beautician
  • Therapies such as massage, hydrotherapy
  • Facilities like a pool, workshop, library etc.


  • A bigger choice of beverages such as beer, wine and spirits

Aged care homes must clearly advertise the cost of extra services.

There might also be extra 'fee for service' charges for things like dry cleaning or special outings.  Such charges are not regulated by the government.

When you are choosing an aged care home, you will be given choices about 'fee for service' options.  They will be agreed between you and the home.

To understand more about the different fees and costs and how they might affect you, see 4.7-Doing the sums.

Have a question? Open our discussion forum

Popular Articles

View All Articles
Article Img
What makes a great retirement village manager?

As anyone who lives in a retirement village will tell you, the village manager is a central figure who is critical to the success of the village and the happiness and wellbeing of village residents. But there’s no doubt the village manager plays an essential role. So, what is the role of a retirement village manager?

Article Img
Retirement villages without exit fees? They’re happening!

Retirement villages without exit fees? They’re happening! Now, some of Australia’s largest retirement village operators are looking at new ways to pay for retirement villages that don’t include exit fees – indeed, there are calls for some exit fees to be banned.

Article Img
What sort of profits do retirement village owners make?

The number of Australians over the age of 75 is expected to increase by 70% over the next six years. The number of Australians over the age of 80 is expected to triple to more than 3.5 million over the next 40 years. As the number of older people in Australia surges, so too does demand for age-appropriate housing – such as retirement villages, which offer an affordable lifestyle, community, and ongoing health and wellness support.

Article Img
73% of Australians willing to sacrifice inheritance for aged care

Nearly three-quarters of all Australians are willing to sacrifice their own inheritance so their parents and grandparents can enjoy the retirement they deserve, according to a new report by B2B aged care service CompliSpace.

Article Img
Volunteers are the backbone of the aged care sector, and more are needed

Tens of thousands of people, of all ages, such as 90-year-old Lily Burns and 20-year-old Charlise Hannagan, volunteer in aged care homes. The Change Makers is the theme for this year’s National Volunteer Week, 15 to 21st May, which celebrates the vital work of volunteers.

Article Img
What is the Future of Rental Retirement Villages?

Across Australia there are approximately 300 rental retirement villages – but few more are likely to be built, which is an unfortunate situation for older Australians. Rental retirement villages operate much like normal rentals, but they offer older Australian with limited financial means the opportunity of housing security, health and lifestyle support, and a welcoming and safe community.

Article Img
This is the food that you can get in residential aged care

Uniting NSW.ACT is aware of the criticism that is often levelled at the food served in residential aged care homes. The Not For Profit is passionate about the food served to residents and determined that as well meeting residents’ nutrition needs, their food looks and tastes delicious and as well as catering to their individual desires as much as possible.

A special thanks to our contributors

Caroline Egan

DCM Media, agedcare101

Caroline has a wealth of experience writing within the retirement and aged care sector and is a contributing journalist for the and agedcare101 blog and accompanying newsletters.

Ian Horswill


Ian is a journalist, writer and sub-editor for the aged care sector, working at The DCM Group. He writes for The Weekly Source, agedcare101, and the DCM Institute fortnightly newsletter Friday. Ian is in daily contact with CEOs of retirement living, land lease and the aged care operations and makes a new contact every week. He investigates media releases, LinkedIn and Facebook for a good source for ideas for stories.

Lauren Broomham

Retirement and Aged Care Journalist

Lauren is a journalist for, agedcare101 and The Donaldson Sisters. Growing up in a big family in small town communities, she has always had a love for the written word, joining her local library at the age of six months. With over eight years' experience in writing and editing, she is a keen follower of news and current affairs with a nose for a good story.

Jill Donaldson


Jill has been practicing as a clinical physiotherapist for 30 years. For the last 13 years she has worked solely in the Aged Care sector in more than 50 metropolitan and regional facilities. Jill has also toured care facilities in the US and Africa and is a passionate advocate for both the residents in aged care and the staff who care for them. She researches and writes for DCM Media.

Chris Baynes

DCM Media, agedcare101

Chris has been a journalist and publisher in the retirement village and aged care sectors for 11 years. He has visited over 250 retirement villages and 50 aged care facilities both within Australia and internationally. Chris is a regular speaker at industry conferences plus is a frequent radio commentator.

Annie Donaldson

Nurse and Carer

Annie has a long career in both nursing and the media. She has planned and co-ordinated the medical support from both international TV productions and major stadium events. In recent years she has been a primary family carer plus involved in structured carer support.