How Much Does Aged Care Cost in Australia?

🏡 Two main types of aged care🔗

Staying at home: Support at Home (formerly Home Care Packages). Many older Australians want to stay in their own home for as long as possible. The Support at Home program, which launched on 1 November 2025, funds services like personal care, nursing, domestic help and home modifications to make that possible. New entrants from 1 November 2025 are assessed under Support at Home. People who were already receiving a Home Care Package (HCP) on or before 31 October 2025 continue under their existing arrangements until at least July 2027.

Moving into a nursing home: residential aged care. When care needs become too high to manage at home, residential aged care provides 24-hour support. This is where the fee structure gets more complex, with up to four separate cost components. Understanding each one makes the total much less alarming.

🧾 Residential aged care fees🔗

There are four main components. Not everyone pays all four. How much you pay depends on your income, assets, and the room you choose.

1. Basic daily fee. Everyone pays this, no exceptions. It is set at 85% of the single person rate of the basic Age Pension, which is $66.80 per day(approximately $24,382 per year as of the article date). It covers meals, cleaning, laundry and utilities. The government indexes it on 20 March and 20 September each year, so the figure will change. Always check the current rate at myagedcare.gov.au.

2. Means-tested care fee. This is not universal. It applies to residents under the 1 July 2014 fee arrangements (broadly, those who entered care before 1 November 2025, or those protected by the "no worse off" principle). The amount is different for everyone and is set by a means assessment. Key caps (current as of the article date, indexed in March and September) are below.

Once you hit the annual or lifetime cap, the government covers the rest. For residents entering from 1 November 2025, the new arrangements replace the means-tested care fee with a hotelling contribution (up to $22.15/day) and a non-clinical care contribution (up to $107.32/day, with a lifetime cap of $137,917.01). The structure differs but the principle is the same: your contribution is based on your means.

3. Accommodation payment: RAD versus DAP. You negotiate a room price with the provider before moving in, then choose how to pay for it. A RAD (Refundable Accommodation Deposit) is a lump sum paid upfront, most of which is refunded when the resident leaves or passes away. Typical RADs range from a few hundred thousand dollars to over $1 million in major cities. A DAP (Daily Accommodation Payment) is a daily rental-style payment instead of a lump sum, and it is not refunded. The formula is:

DAP = (agreed room price x MPIR) / 365

The MPIR (Maximum Permissible Interest Rate) is set by the government and updated quarterly. The My Aged Care website uses 8.43% in its worked examples, but check the current MPIR at the Department of Health, Disability and Ageing website before calculating. You can also pay part as a RAD and part as a DAP.

4. Extra services fees (higher everyday living fee). Some providers offer premium services for an additional fee. From 1 November 2025 this is called the higher everyday living fee, covering things like a private room upgrade, premium meals or extra activities. It is optional and not means-tested. Providers cannot require it as a condition of entry, and there is a 28-day cooling-off period.

🏠 Home care and the Support at Home program🔗

The old Home Care Package structure. HCPs had four levels, each with a different government subsidy. Many families are still in this system, so here is the breakdown. These figures are the government subsidy amounts, current as of the article date and indexed annually.

On top of the subsidy, HCP recipients could also be charged a basic daily fee (provider-set, government-capped) and an income-tested care fee (based on a means assessment). Check current maximums at myagedcare.gov.au and current caps with Services Australia.

The new Support at Home program (from 1 November 2025). New entrants are assessed under Support at Home, which has eight ongoing funding classifications rather than four levels. Annual funding ranges from approximately $11,010 (Classification 1) to $80,137 (Classification 8), indexed on 1 July each year. People who transitioned from HCPs receive equivalent classifications. For example, a former Level 4 HCP recipient now sits in a transitioned classification with an annual budget of approximately $65,416 (as of 1 July 2026).

Under Support at Home, your contribution depends on the type of service (clinical, independence or everyday living) and your financial circumstances. Clinical services like nursing are fully funded by the government. Everyday living services like domestic help attract the highest participant contributions. Use the Support at Home fee estimator on myagedcare.gov.au for a personalised estimate.

📊 How the means assessment works🔗

The means assessment is how Services Australia works out your contribution. It looks at both income and assets. The result determines your means-tested care fee (or equivalent contributions under the new arrangements) and whether the government helps with accommodation costs. Key thresholds, current as of the article date and indexed regularly, are below.

• Income free area: $35,313.20 per year (single). Below this, no income-tested fee applies.
• Asset free area: $64,500. Below this, no asset-tested fee applies.
• Full government accommodation support: if your income is below $35,521.20 and assets below $64,500, the government covers your full accommodation costs.

What about the family home? This is the question we hear most often. The family home is generally exempt from the assets test while a protected person lives there. A protected person is a spouse, a dependent child, or an eligible carer who has lived in the home for at least two years. If no protected person lives in the home, it is included in the assets test, but only a capped value of $206,663.20 per person is counted (the low-means home exemption cap). All of these thresholds are indexed and subject to change. Services Australia administers the assessment and sends a fee advice letter once it is complete.

If your parent may also be eligible for the pension, our guides to the Age Pension and the Age Pension assets test explain how income and assets are treated more broadly.

🧮 A realistic worked example🔗

🎯 The essential: This is a simplified illustration only. It is not financial advice and not a personalised estimate. Your situation will be different.

Meet Margaret. She is 82, single, and owns her home. She is moving into residential aged care. No protected person lives in her home. Her means assessment places her in a moderate-means category.

At roughly 30 days, that is about $4,554 a month, or approximately $54,648 a year. Caveat: this is a simplified illustration. Margaret's actual fees depend on her income, assets, and the room she chooses. Get a personalised fee estimate from My Aged Care or Services Australia before making any decisions. The figures above use illustrative amounts, not real quotes.

💳 How people pay for aged care🔗

The cost of a nursing home is significant. Here is how most families approach it. Selling the family home to pay the RAD is the most common approach when no protected person lives there. Keeping the home and paying the DAP works if a protected person lives there or the family wants to retain the asset, and some families rent out the home to cover the daily payment. A combination RAD and DAP reduces the daily payment while preserving some liquidity.

Getting specialist financial advice genuinely matters here. The RAD counts as an asset in the means assessment, which can affect other fees, and pension entitlements may shift. Look for an Accredited Aged Care Professional or a financial adviser with specific aged care expertise. You can search the financial advisers register on Moneysmart.

🚦 Where to start🔗

The system can feel overwhelming. Here is a simple order of operations.

• Step 1: Contact My Aged Care. Call 1800 200 422 to request an ACAT (Aged Care Assessment Team) assessment. It is free and determines eligibility and care level. You cannot access government-funded aged care without it.
• Step 2: Get a fee estimate. Once assessed, Services Australia can provide a personalised estimate. Use the aged care home fee estimator on myagedcare.gov.au for a rough guide first.
• Step 3: Choose a provider and negotiate accommodation costs. Providers must publish room prices, and you can negotiate down from the listed price.
• Step 4: Consider specialist financial advice before committing to a RAD. The decision has flow-on effects for pension entitlements, means-tested fees and estate planning.

❓ Frequently asked questions🔗