What Does Residential Aged Care Cost?
A Clear Guide to Fees and Accommodation
One of the most common questions families ask me is, “What will residential aged care actually cost?”
It is an important question, and one that deserves a clear and honest answer.
Residential aged care fees are made up of a few different components. Once you understand what each one covers and how they are assessed, the picture becomes much easier to manage. I am going to walk you through this the same way I explain it to families in my consultations.
Daily Fees You May Pay in Residential Care
Basic Daily Fee (Living Expenses)
Everyone who moves into residential aged care pays a basic daily fee. This contributes to everyday living costs such as meals and utilities, much like what we pay when living at home.
You pay this fee directly to the aged care home, usually fortnightly or monthly. It applies for every day you are a resident, including days you might be away overnight, such as during a hospital stay or holiday.
The basic daily fee is set at 85 per cent of the single basic Age Pension rate. It is reviewed by the government on 20 March and 20 September each year in line with pension increases.
As at 1 November 2025, the maximum basic daily fee is $65.55 per day, which works out to $23,925 per year.
Hotelling Contribution (HC)
Some people may also be asked to pay a Hotelling Contribution. This is a contribution towards daily living services, similar to accommodation running costs.
Whether you pay this fee is determined by Services Australia as part of your means assessment.
As of 1 November 2025, the maximum daily Hotelling Contribution is $22.15 per day.
Not everyone pays this fee, and many people pay less than the maximum.
Non-Clinical Care Contribution (NCCC)
If you are assessed as paying the maximum Hotelling Contribution, you may also be asked to pay a Non-Clinical Care Contribution. This contributes to personal care services such as assistance with bathing, dressing, and mobility.
Again, Services Australia determines whether this applies based on your means assessment.
As at 1 November 2025, the maximum daily Non-Clinical Care Contribution is $105.30 per day.
There is a lifetime cap on this contribution. Once you reach the cap, you cannot be asked to pay any more in non-clinical care fees.
The lifetime cap as of 1 November 2025 is $135,318.69 or four years, whichever comes first. These caps are indexed on 20 March and 20 September each year, and the cap that applies to you is the one current at the time you reach it, not when you enter care.
Paying for Your Room in Residential Aged Care
I often describe accommodation costs as a bit like buying or renting a home, although with some aged care-specific rules.
How you pay for your room depends on your income and assets, which determine whether the government helps with accommodation costs.
Accommodation Thresholds
There are three main categories that determine how you enter care:
- Government-supported Assets under $63,000 and income under $34,762
- The government pays your full accommodation costs.
- Refundable Accommodation Contribution / Daily Accommodation Contribution (RAC / DAC) Assets between $63,000 and $210,555.20, with income also included in the calculation.
The government helps with your room cost, and you contribute part of it. - Refundable Accommodation Deposit / Daily Accommodation Payment (RAD / DAP). Assets above $210,555.20, with income also included You pay the full accommodation cost yourself.
RAD and DAP Explained
Paying a RAD
- A Refundable Accommodation Deposit (RAD) is a lump sum payment for your room.
- For example, a room price may be $750,000.
- From 1 November 2025, the provider retains 2 per cent per year of the RAD.
- This is capped at 10 per cent or five years, whichever comes first.
- This retained amount is not refunded when a person leaves care.
RAD and DAP Combination
You do not have to pay the full amount as a lump sum. You can choose a combination of RAD and DAP.
For example, if the agreed room price is $600,000, you might pay:
- $400,000 as a RAD, and
- The remaining balance as a reduced Daily Accommodation Payment (DAP).
Any RAD amount you pay is refunded when you leave care, minus the 2 per cent annual retention and any amounts drawn down to pay other aged care costs.
You have 28 days from the day you move in to decide how you would like to structure your accommodation payments. Until that decision is made, you will pay a DAP.
How a DAP Is Calculated
DAP is calculated using the Maximum Permissible Interest Rate (MPIR).
DAP formula:
(room price × MPIR) ÷ 365
Example using the MPIR of 7.65% (1 January 2026):
($500,000 × 7.65%) ÷ 365 = $104.79 per day
DAP amounts increase with indexation on 20 March and 20 September each year.
If you pay part of the room price as a RAD, the reduced DAP is calculated on the remaining balance.
RAD and DAP Explained
If you are eligible for government assistance with accommodation, you may pay a Daily Accommodation Contribution (DAC) instead.
You also have the option to pay part of this as a Refundable Accommodation Contribution (RAC).
RACs are also subject to a 2 per cent annual retention for up to five years.
Your provider calculates the reduced DAC if you choose to pay part of it as a RAC.
Why Understanding Costs Early Matters
In my experience, families feel far more settled once they understand how aged care fees work in real terms. Knowing what applies to you helps you compare facilities properly and make decisions without unnecessary pressure.
If this feels overwhelming, that is completely normal. These are not decisions most people make often.
How I Can Help
I work with families across Perth to explain residential aged care costs clearly, review accommodation options, and help interpret means assessments. My role is to make sure you understand what you are agreeing to and feel confident moving forward.
If you would like personalised guidance around residential aged care fees or support choosing the right aged care home, I am here to help.