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

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Basic Daily Fee

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

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

Because the Age Pension is increased or ‘indexed’ twice a year to keep up with rising costs of living, the basic daily fee increases twice a year too.

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, this amount goes up twice a year on the following dates each year and you will be notified of the new fee each time:

  • 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 will need to pay.

For example, at 20th September 2023, a single person on an annual income below $32,331.00 (or $25,053.60 for each member of a couple) and whose assets are less than $58,500 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 - and 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.

The amount will vary depending on your financial situation. 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.  Then they will let you know.

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, regardless of who earns the income or owns the assets....
  • There are annual and lifetime caps on the means-tested care fee. Once you have reached these caps, you can’t be asked to pay any more means-tested care fees.
  • At 20th September 2023, the maximum means-tested care fee you can be asked to pay in a year is $32,718.57 and the maximum means-tested care fee you can be asked to pay in a lifetime is $78,524.69.


  • If you were receiving a Home Care Package before moving to an aged care home and have been paying an income-tested care fee related to that, it counts toward to your annual and lifetime caps of 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 costs. 

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, the type and size of the room and amenities provided (eg. gym, swimming pool, gardens). 

While Commonwealth subsidised aged care homes can set the price they want to charge for accommodation, if they want to charge more than $550,000 as a Refundable Accommodation Deposit or its equivalent (see How do you pay accommodation costs below), 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 or most of it – 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 room is not newly built or significantly refurbished then the subsidised cost will be less.  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 for 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 for short
  • a regular rental-type payment called a daily accommodation payment – known as a DAP for short


  • 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.  Until that point, you will make a daily accommodation payment.

Remember :

  • If you have moved to the aged care home at short notice and you haven’t been means-tested, then you can be asked to pay the Daily Accommodation Payment (DAP) as an interim measure. This will be refunded if it later emerges that you do not need to pay it.
  • If the means test means you are liable to pay the full accommodation price, then the entry price you pay is fixed for the duration of your stay.
  • If you are making a contribution to the accommodation cost then this may fluctuate over time depending on changes to 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 rooms that are a higher standard or larger than others and come with extras such as:

  • Cable/ satellite television
  • Phone, internet
  • Onsite hairdresser, beautician
  • Special therapies such as massage, aromatherapy, hydrotherapy
  • Facilities like a gym, pool, cinema, workshop, library etc.


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

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

There might also be extra 'fee for service' charges for things like dry cleaning or special outings and events.  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 and the process will be agreed between you and the home.

Even if you don't choose an extra service room, you can still choose to pay for any additional extras on a fee-for-service basis.

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

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A special thanks to our contributors

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.