Why Aged Care Costs Confuse So Many Australian Families
If you’ve recently started researching aged care costs in Australia, you’re not alone in feeling overwhelmed. The aged care system involves multiple types of fees, means-testing processes, and government programs that can be genuinely difficult to untangle — even for people who work in the industry.
This guide breaks down the main components of aged care costs in Australia so you can approach the process with clarity and confidence, rather than guesswork.
The Four Main Types of Aged Care Fees
Residential aged care in Australia typically involves four distinct fee categories. Understanding each one is the first step toward making an informed decision for your family.
1. Basic Daily Fee
This fee covers day-to-day living expenses such as meals, laundry, and utilities. It is paid by almost all residents and is set at 85% of the single Age Pension rate. As of 2025, this is approximately $63–$65 per day. This fee is not means-tested, meaning it applies regardless of your financial situation.
2. Means-Tested Care Fee
This additional fee is assessed based on your income and assets. Services Australia calculates it after you complete an aged care means assessment. The maximum annual amount is capped, and there is also a lifetime cap — so if you have been paying this fee for several years, you may reach a point where you no longer owe it.
3. Accommodation Costs (RAD or DAP)
This is where many families encounter the most complexity. Accommodation in a residential aged care facility can be paid in three ways:
- Refundable Accommodation Deposit (RAD): A lump sum payment, similar to a bond, which is fully refunded when you leave the facility or pass away.
- Daily Accommodation Payment (DAP): A daily rental-style fee calculated on the RAD price using a set interest rate.
- A combination of both: Many families choose to pay a partial lump sum and cover the remainder as a daily fee.
RAD prices vary considerably between facilities and locations. In metro areas, prices can range from $300,000 to well over $1 million, while regional facilities tend to be more affordable.
4. Extra Services Fees
Some facilities offer premium services — such as a higher standard of room, additional activities, or specialised dining options — for an additional fee. These are entirely optional and are negotiated directly with the facility.
How the Means Assessment Works
The aged care means assessment is conducted by Services Australia and looks at two things: your income and your assets. For the means-tested care fee, both are considered together. For accommodation costs, the assessment focuses primarily on your assets.
Importantly, the family home is treated differently depending on circumstances. If a spouse, dependent child, or carer is living in the home, it is generally exempt from the assets assessment. If not, it may be counted — but only up to a capped value.
Completing the means assessment early is strongly recommended. It gives you clarity on what you are likely to pay before you sign any contracts with a facility.
Home Care Costs: A Different Structure
If you or your family member is receiving care at home through the Support at Home program, the fee structure is different from residential care. As of 2025, the Support at Home program replaced the previous Home Care Packages system.
Under Support at Home, a co-contribution applies based on your income and the type of support you receive. Clinical care (such as nursing) is generally fully subsidised, while independence and everyday living supports attract a higher co-contribution. The government publishes income-tested fee schedules, but a personalised assessment is the most reliable way to understand your specific costs.
Getting a Personalised Picture of Your Aged Care Costs
Generic figures only tell part of the story. Every family’s situation is different — your income, assets, preferred location, care needs, and family structure all affect what you will actually pay.
That is exactly why My Aged Care Navigator was built. Rather than leaving you to piece together information from government websites and brochures, it provides a personalised aged care cost summary based on your specific situation — no jargon, no obligation, and no financial advice fees.
If you are ready to get a clear picture of what aged care costs will actually look like for your family, start your free assessment on the My Aged Care Navigator homepage. You will receive a concise summary you can take to providers, advisers, or family meetings.
Common Questions About Aged Care Costs in Australia
Is the RAD refundable?
Yes. A Refundable Accommodation Deposit is fully refunded when a resident leaves the facility or passes away, minus any agreed deductions. It is not a fee — it is a deposit.
Will I have to sell my home?
Not necessarily. Many people choose to rent out the family home and use the rental income to fund the DAP instead of paying a lump sum RAD. Whether this makes financial sense depends on your overall situation.
Are aged care costs tax deductible?
Generally speaking, aged care costs are not tax deductible. However, this is a question best answered by a registered tax adviser who understands your specific circumstances.
Take the Confusion Out of Aged Care Costs
Navigating aged care costs in Australia does not have to feel like decoding a foreign language. With the right information and a personalised summary of your situation, you can make confident decisions for yourself or your loved one.
Visit myagedcarenavigator.com.au to start your free 10-minute assessment and get a clear, jargon-free picture of what aged care will actually cost your family.