It’s usually the first question families ask, often at the worst possible moment: how much will an aged care home actually cost? The honest answer is that it depends on your parent’s income and assets and the room you choose, but the structure is knowable, and the numbers can be worked out. Here’s the plain-language breakdown using the rates that apply from 20 September and 1 October 2026.
The Four Parts of the Bill
For people who entered an aged care home from 1 November 2025, costs fall into four parts.
The basic daily fee is paid by every resident, whatever their means. It’s set at 85 per cent of the single basic Age Pension and is currently $68.93 a day, or about $25,159 a year.
The hotelling contribution is a means-tested contribution toward everyday living costs like meals, cleaning and laundry, up to $22.15 a day.
The non-clinical care contribution is a means-tested contribution toward care such as help with bathing and mobility, up to $109.45 a day. It stops after four years, or once a lifetime cap is reached, whichever comes first. Contributions paid under Support at Home count toward that same cap.
Accommodation is the cost of the room itself, which works quite differently, and is covered below.
Services Australia works out the two means-tested contributions from your parent’s income and assets assessment. Clinical care, such as nursing, is funded by the government.
What It Adds Up To
The spread is wide. A resident with low income and assets may pay little more than the basic daily fee, around $25,000 a year. A resident paying the maximum contributions on a $500,000 room could pay around $73,000 a year if they pay a lump sum for the room, or around $116,000 if they pay for it daily.
Paying for the Room, RAD or DAP
Each home publishes its room prices. You can pay the agreed room price in three ways.
A refundable accommodation deposit, or RAD, is a lump sum. It’s refunded when your parent leaves the home, less any amounts you’ve agreed to have deducted. For people entering from 1 November 2025, the home also keeps 2 per cent a year for up to five years.
A daily accommodation payment, or DAP, works more like rent. It’s calculated by applying the government’s maximum permissible interest rate to the room price. For agreements made between 1 October and 31 December 2026, that rate is 8.51 per cent, so a $500,000 room works out at about $116.58 a day. DAPs are also indexed over time and aren’t refunded.
Or you can combine the two, paying part as a lump sum and the rest daily. People with low income and assets may have some or all of their accommodation cost met by the government.
One more thing worth knowing: a RAD still counts as an asset in the means assessment, so paying one doesn’t make it disappear from the calculation.
Optional Extras
Some homes offer a higher everyday living fee for extra services above the standard, such as premium meals or a larger room outlook. These are optional and need a separate agreement. You shouldn’t be pressured into them as a condition of getting a place.
How to Get Your Real Number
Get a formal means assessment from Services Australia before you commit to a home, so you know your parent’s actual contributions rather than guessing. My Aged Care has a fee estimator, and a free Aged Care Specialist Officer can talk you through it on 1800 227 475. The government’s free Financial Information Service can help with the bigger financial questions, including how to fund a RAD.
Don’t rush the payment decision either. You generally have time after moving in to decide how to pay for the room, so you don’t need to sell the family home in a panic. People who entered care before 1 November 2025 stay on the older fee arrangements. Current rates are on My Aged Care’s costs page.
The Bottom Line
An aged care home costs a basic daily fee of $68.93 for everyone, plus means-tested contributions of up to $22.15 and $109.45 a day, plus the room. Depending on means and how you pay for the room, that can range from around $25,000 to more than $115,000 a year. Get a means assessment early, compare RAD and DAP carefully, ignore pressure to buy extras, and get free advice before committing. This is general information, not aged care, financial or legal advice.
Epik Wire covers aged care in plain language for older Australians and their families. Subscribe to our newsletter to stay informed.
