What are the main costs of an aged care home?

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

  • Basic daily fee
  • Means tested care fee
  • Accommodation costs
  • 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 the Department of Human Services 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 per cent of the single age pension for your basic daily fee at a government subsidised aged care home. 

As a guide, as of 20 March 2018 - 19th September 2018, the maximum basic daily fee was:  $50.16.

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 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 20 March 2018 - 19th September 2018, a single person on an annual income below $26,660.40 (or $26,192.40 for each member of a couple) and whose assets are less than $48,500 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. The Department of Human Services 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.


Often wealthier people decide the completion of the 132 question income and asset assessment document is not worth the effort because they expect the pay top rates.  This can be an expensive mistake with unexpected ramifications, including which care homes you have access to.

Kate Golder, Director,
Affinity Aged Care Financial Services

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 combine 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 20 March 2018 - 19th September 2018, the maximum means tested care fee you can be asked to pay in a year is $26,964.71 and the maximum means tested care fee you can be asked to pay in a lifetime is $64,715.36
  • 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.


Across 52,134 residents covered in our Quarterly Financial Performance Survey (March 2016), the average profit (or surplus) the operators made on providing care services was just $10.43 a day or $3,806 a year.

Stuart Hutcheon, Managing Partner,

 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). 

Aged care homes require constant maintenance given high health standards plus the heavy wear and tear.  They must also renovate every 15 years or so to comply with standards and stay fresh.  The cost to build a new aged care 'bed' today is around $250,000 plus the cost of the land.  Its making provision for these costs that the 'administration cost' is charged to today's residents.

Stuart Hutcheon, Managing Partner,


While the aged care home cannot ask you to pay more than the maximum accommodation price advertised on their website, they can charge you less than that amount if you negotiate.

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 Department of Human Services decides this, based on their  assessment of your income and assets.

The government can subsidise your accommodation costs, to a maximum $56.14 per day, meaning you may need to pay part of the cost. 

You will be advised by the Department of Human Services 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 $56.14 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.


One of the first questions you will be asked when searching for an aged care home is whether you can afford the accommodation costs.  It is important to know your budget before you start searching to avoid wasted time and frustration.

Kate Golder, Director,
Affinity Aged Care Financial Services

 How do you pay accommodation costs?

There are three ways you can pay:

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.  


  • 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.


The average amount collected in 'administration costs' was $26.99 a day by the nearly 700 aged care homes (nursing homes) in our Quarterly Financial Performance Survey (March 2016).  After maintenance, depreciation and other direct costs they were left with just $2.35 a day for future investment.

Stuart Hutcheon, Managing Partner,

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 services 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


It is important to clearly understand your cash position before taking up additional services.  Later you may need essential medical services such as physiotherapy and may not have the funds left to make these payments.

Kate Golder, Director,
Affinity Aged Care Financial Services


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