FAQs About Residential Aged Care

There are two main residential aged care fee arrangements in Australia:

• 1 November 2025 fee arrangements (newer arrangements for many new residents)
• 1 July 2014 fee arrangements (earlier arrangements that some residents remain on)

In many cases, your fee arrangement depends on when you enter permanent residential care and whether you are eligible (or choose) to remain on earlier arrangements. If you are considering changing/“opting in” to a different arrangement, get advice first — it can be hard to undo and can change your long-term costs.

Helpful starting points:

• My Aged Care – Aged care home costs and fees
• Services Australia – Aged care (means assessments)

If you have lower income and assets, you may qualify for government assistance with accommodation costs (often referred to as being a supported or low-means resident). In these cases, the amount you pay can be reduced and the government may contribute more toward your accommodation.

You will generally need a means assessment to confirm what help applies to you.

Start here:

• Services Australia – Means assessment
• My Aged Care – Aged care home costs and fees

Accommodation costs are usually agreed as a room price with the aged care home, and you generally have options on how to pay:

• RAD (Refundable Accommodation Deposit) – a refundable lump sum held by the provider and generally repaid when you leave care (subject to any permitted deductions/retentions and any amounts you have agreed to have deducted).
• DAP (Daily Accommodation Payment) – an ongoing daily payment (like “rent”) on any accommodation amount you don’t pay as a lump sum. DAP payments are not refunded.
• Combination – part RAD and part DAP.

The “best” option depends on your cashflow, whether you keep or sell the home, and how to minimise stress for your family later.

More detail here: Understanding aged care home accommodation costs

RADs are heavily regulated. Providers must meet strict rules around refundable deposits, and there are protections in place for residents. As with any large financial decision, it’s still important to confirm you are dealing with an approved aged care provider and that the RAD and refund terms are clearly stated in your accommodation agreement.

Your total cost is usually a combination of:

• Everyday living costs (e.g. meals, cleaning, laundry, utilities)
• Care-related costs (how much you contribute depends on your means assessment and which fee arrangement applies)
• Accommodation costs (the room price and how you choose to pay it)
• Optional extras (if you choose additional lifestyle/services)

Some fees are standard for most residents, while others are means-tested and only apply if your income and assets are above certain thresholds.

What is the basic daily fee?

The basic daily fee is a standard contribution toward everyday living expenses such as meals, laundry, cleaning, and utilities. It is set by the government and indexed over time.

My Aged Care keeps the current rates up to date here: Aged care home costs and fees.

Possibly — but it can change. Moving into aged care often changes your assessed situation (assets, income, homeowner status, and whether a partner remains in the home). This can increase or decrease your payment depending on your circumstances.

Make sure you update Centrelink or DVA promptly after any major change and confirm your assessment is correct.

Start here:

• Services Australia – Age Pension
• Services Australia – Aged care

Accommodation costs can vary widely between providers and rooms (just like property prices).

But most means-tested contributions are driven by your income and assets, not by which home you choose.

You can compare providers (including accommodation pricing information) here: My Aged Care – Find a provider

This is one of the biggest fears families have — and it’s exactly why planning matters.

If your assets and income reduce over time, your means-tested contributions can reduce too. In genuine hardship situations, there are processes to request assistance or fee relief.

The goal is to structure things early so you have enough cashflow to pay ongoing fees and still fund a decent standard of living.

For general information, start with:

• My Aged Care
• Services Australia – Aged care

For advice that turns the rules into a practical plan (RAD/DAP decisions, home sale vs keep, Centrelink strategy, cashflow modelling, and estate impact), speak with a specialist aged care financial adviser before you sign accommodation agreements.

If you are on the 1 November 2025 fee arrangements, you may be asked to pay:

• Hotelling contribution – a means-tested contribution towards day-to-day living costs in the home.
• Non-clinical care contribution – a further means-tested contribution that may apply for some residents (generally those assessed to pay the maximum hotelling contribution).

These amounts are determined from your means assessment. Services Australia (or DVA) will tell you what applies to you and how much you are required to pay.

Useful links:

• How aged care costs work
• Means assessment for aged care

If you are on the 1 July 2014 fee arrangements, you may pay a means-tested care fee (in addition to the basic daily fee). This is calculated from your income and assets and is subject to government caps.

Services Australia (or DVA) calculates this after you complete a means assessment. Learn more here:

• How aged care costs work
• Means assessment for aged care