What will aged care cost?

Cashflow planning is the key to ensure you can pay your fees and personal expenses as well as protect the value of your estate - aged care personal advice helps you make the right decisions for your family.

Residential care.

When planning for residential aged care, you should consider:

  • How to pay for your room

  • How to manage cashflow to pay ongoing expenses while you live there

  • What happens when you leave.

Because fees can change over time or when your circumstances change, aged care personal advice to review all implications is important. Good strategic planning requires the skills and knowledge – as well as the as well as compassion and experience to understand your personal goals. We also have access to industry leading software to accurately evaluate and compare the financial options for your situation.

Accommodation costs

If moving into residential care you are moving to a new home, so you might be asked to pay for your room and the right to live there. This is generally a personal expense but the government may pay some of the cost if you are classified as low-means. The fee structure is a bit complex and several sets of rules apply depending on which of these categories you fall into:

  • Low-means resident
    If you have low levels of income and assets, the Government will set a room price (usually) lower than the published rate, and may also pay part of the cost on your behalf. You can choose to pay your share as a lump sum or daily fee.

  • Pre 1 November 2025 resident (not low-means)
    The rules are changing on 1 November 2025. If you move into care before this date, you will have agreed to a room price and can choose to pay as a fully refundable lump sum (RAD) or a daily fee (DAP). The government does not help to pay these costs.

  • New resident from 1 November 2025 (not low-means)
    You will need to pay the full cost of your accommodation, at the rate published and agreed with the care provider. You can choose a lump sum RAD (with a retention amount up to 2% pa for five years) or a daily fee (DAP) which is indexed every six months.

We can help you work out which category applies to you and what it means for your financial situation. When you move into care, Services Australia will do a means-test assessment (MTA) to confirm whether you qualify as low-means or not. Room prices are published on the MyAgedCare website, so you can check details to compare prices at different residential care services. The provider can’t charge you more than the published price, but some providers may agree to accept a lower amount.

Regardless of which category you call into, you can choose to pay for your room as:

  • A lump-sum ‘refundable accommodation deposit’ (RAD), or if low-means a ‘refundable accommodation contribution' (RAC), or

  • Rental-style daily fees called a 'daily accommodation payment’ (DAP), or if low-means a ‘daily accommodation contribution' (DAC), or

  • A combination of both.

When you move into residential care you will start to pay the daily DAP/DAC but can choose to pay the lump sum RAD/RAC at any time. From 1 November 2025 you do not need to tell the provider which choice you want to make until you are ready to pay the RAD/RAC.

Living expenses and care costs

You will also be asked to pay contributions towards your day-to-day living expenses and care costs. These costs are broken into four categories and depend on whether you moved into care before 1 July 2025 or on/after that date (or classified as a grandfathered client).

  • Essential living expenses
    Everyone pays a flat basic daily fee (BDF) to cover day-to-day living costs such as meals, cleaning, laundry, electricity and heating. The fee is set at 85% of the basic rate of single person Age Pension.

    If you move into care on or after 1 November 2025, you might also be asked to pay a Hotelling Contribution (HC) based on your means-test assessment.

  • Care services & your contribution
    The cost of care services are heavily funded by the Government. The contribution you are asked to pay will depend on your means-test assessment and can change every month.

    If you move into care before 1 November 2025 this will be called a means-tested fee (MTF) and is subject to annual and lifetime caps.

    If you move into care on or after 1 November 2025 this will be called a non-clinical care contribution (NCCC) and is subject to a lifetime cap.

  • Higher everyday living fees
    Your care provider might offer additional or higher quality services for residents who want more choice. Services may include entertainment options, meal choices, social activities or personal services such as manicures and hairdressing.

    It is a good idea to talk to the staff about what is available and the costs. These are optional (from 1 November 2025) and you can choose to cancel at the review point if you change your mind.

Note: If you were receiving a Home Care Package at 12 September 2024, or at that date had approval for a package or were waiting in the national queue for a package to be allocated, you will be classified as a grandfathered client if you then move into residential care on or after 1 November 2025. This will allow you to pay fees for living expenses and care costs under the pre 1 November 2025 rules (ie. you will not be liable for the Hotelling Contribution and will pay the means-tested fee instead of the Non-Clinical Care Contribution).

Support at Home packages.

If you stay at home and receive a support at home package (known as Home Care Package until 1 November 2025), the amount of money available to spend depends on the package level - there are eight levels of packages from 1 November 2025.

You will need to select a care provider, and work with the care manager to develop a package of services that work for you across:

  • Everyday living

  • Independence supports

  • Clinical care

The Government will pay the full cost of clinical care services, but you will be asked to pay a contribution towards the other costs depending on the services you choose, the prices your provider charges and your financial situation. You will pay more for everyday living services than you do for independence supports.

If you received a package (or were approved or waiting for allocation) as at 12 September 2024, you are a grandfathered client and will pay lower contribution rates to ensure you are ‘no worse off’ under the new rules from 1 November 2025.

All support at home care providers receive 10% of the available budget as a care management fee. These fees might be higher until the new rules start on 1 November 2025. It is important to check what services they can offer you and ask what they charge for delivery of these services. You can start your comparisons on the MyAgedCare website. The higher are their fees, the less money you will have available to pay for care.

If the budget allocated to your package is not enough to cover your care needs, you might be able to afford to pay extra fees to access the extra services you need.

 

Find out more.

For more information, download our Covering the cost of residential aged care brochure.