Residential aged care fees and charges

Basic daily fee

Aged care homes charge residents a basic daily fee as a contribution towards day-to-day living expenses such as meals, cleaning, laundry, heating and cooling. This fee is not means tested. For new residents, the maximum basic daily fee that can be charged is set at 85 per cent of the single basic aged pension rate. The current fee is $60.86 per day. The basic daily fee increases on 20 March and 20 September each year in line with increases in the age pension rate.

Cost of accommodation 

If a new resident is required to pay for their accommodation under the means test, they have up to 28 days after entering an aged care home to decide whether to pay a lump sum refundable accommodation deposit (RAD), a daily accommodation payment (‘DAP’), or a combination of both. If a RAD is chosen, the resident has up to six months after entry to pay it. This gives the resident time to sell assets (if required) in order to help fund the payment. In the interim, a DAP is paid. The DAP equivalent of the quoted RAD will be calculated using a rate up to the maximum permissible interest rate (currently 8.34 percent from 1 April 2024). These payment options apply regardless of whether the level of care provided is high or low.

The example below shows how accommodation priced at $80 per day could be paid.

A DAP of $20 per day and the balance of the cost ($80 - $20 = $60 per day) paid as a lump sum RAD, would be calculated as follows:

Balance of price per day x 365 / interest rate
$60 x 365 /8.34% = $262,590

The resident will have the option of funding any DAP payable, from the RAD that they have paid to the provider. In this case, the provider will likely increase the DAP by an amount that compensates for the impact of the decreasing RAD balance.

The maximum amount of the RAD a resident can be asked to pay must leave the resident with at least the minimum permissible asset level (currently $59,500), which is calculated as 2.25 times (rounded to the nearest $500) the basic single age pension rate at the time of entry.

As the name suggests, the RAD is fully refundable (except to the extent where any DAP amounts have been deducted from the RAD at the request of the resident) upon exit from the home, either payable to the individual or their estate upon death.

Setting and publishing prices

Approved aged care home providers must publish their current level of accommodation payments for the different types of rooms available. They need to show the DAP, the equivalent RAD and one example of a combination of both payments. A description of the key features of each different type of room must also be provided.

This information should be readily available on providers’ websites and in documentation provided to prospective residents and their families. It’s also published on the government’s My Aged Care website to facilitate comparison of prices.

Accommodation prices above the level set by the government (currently $125.67 per day or the equivalent RAD of $550,000), need to be approved by the Aged Care Pricing Commissioner. The government subsidises the cost of accommodation by paying the aged care provider a means tested accommodation supplement. For new residential aged care facilities completed on or after 20 April 2012, or existing facilities that have been significantly refurbished on or after that date, the maximum accommodation supplement (MAS) is $68.14 (from 20 March 2024). For older facilities, a lower MAS is paid.

If a resident is assessed as being eligible to pay a MAS to the facility, and the cost of accommodation charged by the home is set at the MAS, the provider cannot charge the resident any additional amount for their accommodation. Where the resident is required to pay less than the MAS, the amount they pay towards their accommodation is referred to as an accommodation contribution. Where the full amount is required to be paid by the entrant, it is referred to as an accommodation payment. The amount of accommodation contribution payable is not fixed. It will vary as the care recipient’s means vary. As such, the care recipient may need to top-up a RAD or increase the amount of a DAP if the quarterly means testing results in a higher means tested amount. However, whilst the care recipient remains in a service where the cost of accommodation is set at the MAS, they cannot be asked to pay an accommodation payment, even if their means improve substantially. This means they will never be asked to pay more than the MAS.

Approved aged care home providers and residents may agree on an amount that is less than the published price.

Cost of health care

As with the cost of accommodation, a resident’s obligation to contribute towards the cost of their ongoing health care is determined by the combined means testing of assets and income. However, the daily means tested amount is first applied towards the cost of accommodation with any remainder after deducting the maximum accommodation supplement applied towards a resident’s health care. Accordingly, if the means tested amount is less than or equal to the maximum accommodation supplement, no care fee is payable.

Where a fee is payable, the resident pays the lower of the means tested amount and the amount the government would otherwise pay for his or her care in subsidy and primary supplements (i.e. the cost of their care). Care fee payments are capped at $33,309.29 per annum with a lifetime cap of $79,942.44 to protect care recipients who receive care for longer than the average period of time.

No means tested care fee is payable by residents receiving respite care, or where the resident is in a class of care recipients as specified from time to time in the subsidy principles.

No means tested care fee is payable by residents receiving respite care, or where the resident is in a class of care recipients as specified from time to time in the subsidy principles.

Extra service fees

All aged care home providers are able to offer additional amenities such as the provision of pay TV, wine with meals and daily newspapers, on an opt-in/opt-out basis and charge a fee to be agreed with the resident.

Some aged care providers have applied for and been granted, dedicated extra service status. This extra service status can be either for the whole facility or for a certain number of rooms only. For residents residing in these dedicated extra service facilities, the extra service fee is compulsory rather than optional.

Means tests

Whether a resident is required to contribute towards the cost of either their accommodation or ongoing health care needs, is determined by a means test assessment of both their assets and income.

Illness separated couple

When one or both members of a couple are residing in a residential aged care facility, they qualify as an ‘illness separated’ couple for Centrelink purposes. They are assessed under the joint means test, but payment is made based on the single rate of pension. This is because all of the charges for aged care are directed to the individual. Even if a couple share a room, they will each need to pay the basic daily fee, as well as be subject to means testing to determine if they need to contribute towards their accommodation and care costs.

Blind pensioners

Whilst eligibility for the blind pension is not means tested, the proceeds of this pension form part of the assessable income for aged care means testing.

DVA pensions

Generally, individuals in receipt of DVA income support pensions are means tested in a similar manner to that of Centrelink pension recipients. This excludes the War Widows/Widowers Pension and DVA Disability Pension, which are both classed as compensation rather than income support and are not subject to a means test. However, the amounts received from these pensions are assessable income for aged care means testing.

Means tested care fee calculator

The calculator available on the My Aged Care website provides an estimate of the means tested care fee payable by an individual entering an aged care facility.

If the home is assessable, the amount assessed is restricted to the value at which the government‘s subsidy of the daily accommodation payment would reduce to zero. As at 20 March 2024 this amount is $201,231.20. Any amounts gifted above $10,000 in a single financial year, or $30,000 over a five financial year rolling period will also generally be included as an asset for five years from the date of disposal.

Where the cost of accommodation to reside in the aged care home is paid as a lump sum (referred to as a refundable accommodation deposit, or RAD) this payment is also an assessable asset for aged care purposes but remains an exempt asset for Centrelink purposes.

The amount of assessable assets that are means tested is calculated on a sliding scale as shown in the table below.  

Assessable income

Income covered by this means test is based on the client’s total assessable income, which is defined as Centrelink/DVA pension income (net of the minimum pension supplement and energy supplement) plus ordinary income. The client’s ordinary income is primarily assessed in the same manner as the Centrelink income test – except for new entrants to aged care homes, where from 1 January 2016 rental income on retained family homes is now included, regardless of whether a RAD or DAP is paid. For each member of a couple, the total assessable income is 50 per cent of the combined ordinary income, plus any Centrelink/DVA payments the person receives.

The amount of assessable income that is means tested is calculated below.

Income-tested amount = 50% x (total assessable income - income free area) / 364 days

The current income-tested free areas, which are adjusted half yearly in line with changes to the age pension rates are:

These are calculated as the maximum Centrelink pension payments (single or member of a couple) less the minimum pension and energy supplement, plus the allowed level of income that does not impact pension payments.

Means tested amount

The means tested asset and income amounts are then combined to give an overall means tested amount, as shown below.

Means tested amount = (income-tested amount + asset tested amount) / 364 days

This means tested amount is then used to determine the amount of accommodation and aged care costs payable by the resident (if any). This is explained in more detail in ‘Your guide to aged care’.

Centrelink assessment of the family home

The decision whether to sell or retain the family home when entering an aged care facility should be carefully considered well in advance. The below table summarises the Centrelink assessment of the various scenarios. 

For couples, where one spouse entered aged care before 1 January 2017 and the other on or after that date, the exemption for the former home and the rental income exemption may apply to both. If the couple rent out the home, the home will be an exempt asset indefinitely for both while they pay a DAP, and the rental income will be exempt for social security purposes. However, if the spouse who entered aged care before 1 January 2017 passes away, the exemption on the rental income will cease and the home will only be exempt under the assets test for two years from when the second person entered aged care.

Minimising means tested fees

Commencing an income stream

Purchasing a lifetime or term-certain annuity generally provides a better outcome under the income test when compared to financial investments (for example bank account, managed fund or share portfolio) that are subject to deeming.


The concessional treatment of these annuities arises from the calculation of a deductible amount for Centrelink purposes, which reduces the assessable income under the income test for term annuities or lifetime annuities purchased before 1 July 2019, or whereby only 60% of regular payments are assessed from lifetime annuities purchased after 1 July 2019. Deeming rates do not generally apply to these income streams (apart from some annuities with a term of five years or less).

Account-based pensions commenced on or after 1 January 2015 are subject to deeming. For account-based pensions commenced prior to that date, the concessional treatment will apply (i.e. Annual Payment − [{Purchase Price – commutations} ÷ Relevant Number]), provided the recipient has continuously received a Centrelink income support payment since before 1 January 2015.

When assessing the merits of this strategy for annuities, consideration should be given to the attractiveness of prevailing interest rates and the term of the annuity.

Purchasing land or a holiday home as an investment

If the land or holiday home is not producing an income, they are simply treated as lifestyle assets from Centrelink’s perspective, as opposed to financial investments. Although included in the assets test they are not subject to the income test, hence no assessable income results.

Any amount gifted above either of the concurrent tests will be treated as a financial asset for Centrelink purposes for five years from the date of disposal (known as ‘Deprivation’).

Create a family trust and buy an insurance bond

The client can consider gifting to a family trust. Deprivation does not apply if the trust is 100 per cent attributed to the client. Therefore, under the assets test there is no change. Under the income test, when a private trust is involved, Centrelink/DVA only assess the actual distributions from the trust.

As insurance bonds do not distribute income, there is no income generated by the trust to distribute to the beneficiaries. If there is no income distributed by the trust, there is no assessable income. However, care needs to be taken if the insurance bond is withdrawn when it becomes assessable income.

Insurance bonds are taxed internally at 30 per cent, which may be higher than the client’s marginal tax rate. Additional costs should be taken into account to set up a new trust for this purpose.

More information

Next: Your guide to aged care