Aged Care Fees & Charges

Aged Care Fees & Charges

Stepping into aged care brings many changes, and one of the biggest is understanding the costs. In Australia, government-subsidised aged care is offered under a clear fee structure set by the Commonwealth.

But knowing what each fee covers, how they’re calculated, and how to plan smartly can feel overwhelming.

This guide is here to unpack everything: daily fees, means-tested fees, accommodation payments, and practical ways to manage affordability without compromising care or comfort.

How Commonwealth Subsidies Work in Aged Care

The government subsidises most residential aged care through direct payments to providers on behalf of eligible residents. The payment system is known as the Aged Care Funding Instrument (ACFI). These subsidies cover care staff and nursing services.

Residents contribute through a combination of basic daily fees, means-tested fees, and accommodation payments (if applicable).

Importantly, only care-related costs are subsidised. Extra services—such as a private room, extra therapies, haircuts, or premium Wi‑Fi might attract additional fees charged by the aged care home.

The Basic Daily Fee (BDF)

Every resident in a government–funded residential aged care facility pays the BDF. This fee covers daily living care, nursing, meals, cleaning, utilities, and support services. In July 2025, the BDF is $63.82 per day (indexed twice a year - 20 March and 20 September).

The good news? The BDF is capped at 85% of the pension rate for full pensioners, which means most people pay less than the full amount. Centrelink automatically calculates any concession or reduction based on your eligibility.

Means-Tested Care Fee (MTCF)

This fee comes into play if your income or assets exceed the thresholds set by Centrelink. It's calculated annually or when your income changes significantly.

A simplified breakdown:

• Centrelink adds your assessable income and deemed income from investments.
• If assets are above the limits, Centrelink calculates an asset-tested income amount.
• Your excess payment combines these calculations, capped at about $36,000 per year—though most people pay far less.
• If you’re a couple, mechanisms exist to protect part-pension income splits.

Your care provider will let you know your MTCF monthly or quarterly; typically it’s collected by deduction from the BDF payment or billed separately.

Accommodation Costs and Refundable Accommodation Deposits (RADs)

What Are RADs and DAPs?

Accommodation costs in aged care depend on your room type. Some facilities charge high-end-style fees, while others provide modest shared rooms without extra cost.

• Refundable Accommodation Deposit (RAD): A lump-sum payment, refunded (less permitted deductions) when you leave or pass away.
• Daily Accommodation Payment (DAP): For those who choose not to pay RAD, the same amount is charged daily instead.

You decide which suits you—either a large upfront RAD or spread payments via a daily accommodation payment. A hybrid option lets you pay part RAD and part DAP.

How Room Pricing Is Determined

Facilities must declare room prices and show what features or amenities justify the cost. For example, a private ensuite in a garden wing will cost more than a standard shared room.

• Maximum RADs and DAPs vary across locations, but recent caps place upper limits of $750,000 before seeking prior approval from the pricing regulator.

Summary of Fees in Residential Aged Care

Fee Type	Who Pays?	Amount	How It’s Paid
Daily Care Fee	All residents	$63.82 pd	Mthly Direct Debit
Means-Tested Care Fee	If income/assets exceed thresholds	Capped at ~$36,000/year	Mthly Direct Debit
Accommodation Payment	Based on room selection	RAD up to ~$750,000; DAP ~$150/day	Upfront RAD or Mthly DAP
Additional Service Fees	Optional extras	Varies by service	Monthly billing

How To Choose a Payment Option

When deciding RAD vs DAP, consider:

• Your available cash or equity.
• Whether you’ll stay long‑term or consider keeping funds for estate planning.
• If you qualify for Government loans or part-pension assistance.

Many families use advisers or accountants to run comparisons—based on life expectancy, investment returns, estate goals and comfort with daily charges.

Can You Get Help Paying These Fees?

• Part-pensioners or those with low income/assets: May pay only the capped BDF and no MTCF.
• Veterans and DVA recipients: May receive additional subsidies.
• Means-tested care fee reductions: Apply when assets fall or income decreases.
• Pension Loans Scheme: Option to borrow against your home to cover accommodation costs; repayable from sale or estate.
• Interest-free short-term loans: May be available from Veterans’ Affairs.

Tips for Keeping Aged Care Costs Manageable

• Review your Centrelink income and asset assessment regularly.
• Consider ways to protect assessable assets (within gifting limits and legal advice).
• Explore rooms across multiple facilities to compare RAD/DAP pricing.
• Look into provider-funded place waitlists or booking parks with reduced cost options.
• Negotiate optional fees, services like phone, salon, or private therapy can often be optional.

What Happens on Exit

If you leave care due to recovery or move for other reasons, refundable RAD amounts are returned minus any legal deductions for outstanding accommodation charges or utility adjustments. If the resident passes away, payment is made to their estate or nominated beneficiaries, via the probate process.

Spotting Hidden Costs

While Commonwealth systems aim to be transparent, some costs may surprise:

• Grace periods for accommodation: Delays before RAD/DAP begins.
• Asset management fees: Charged when RAD is held by provider or trustee.
• Extra therapies or services: Remedial massage, hairdressing, physiotherapy, laundry.
• Excess hotel-style convenience charges: Meals to families, guest rooms, visitor parking.

Always request a written schedule of fees and compare multiple providers before deciding.

Steps to Make a Smart Decision

• Have your eligibility assessed by My Aged Care.
• Obtain a copy of the facility's fee schedule and refund timelines.
• Ask about fee caps, loan acceptance, entry criteria and waitlists.
• Review your financial and family situation—seek independent advice if necessary.
• Check your pension status and ask Centrelink to pre-fill relevant forms.

When You Move or Upgrade Rooms

Moving to a new room, different facility or upgrading to private amenities can change your fees significantly. Ask:

• If your new room sends you over the subsidised RAD or DAP cap.
• Whether your MTCF is recalculated with the move.
• If you’re locked into earlier pricing or entitled to concessions.

Explaining Fees to Concerned Families

Often families worry about “what’s happening to our loved one’s money” especially if they’re paying large RADs. Transparency is key:

• Keep copies of signed agreements, consent documents, and invoices.
• Ask for regular statements showing how deposited RADs are being managed.
• Encourage open family discussion about long-term affordability and wishes.

Benefitting from Aged Care Fee Reviews

You can request Centrelink reviews if your income or assets change significantly. You could also appeal provider decisions such as in cases of overcharging.

Common Questions Answered

Am I forced to sell my home to pay RAD?

No, not necessarily. Many families use the Pension Loans Scheme or sell later to pay RAD. Part-payment options allow flexibility.

Can I move if I don’t have the RAD ready?

Yes - you can move in and pay DAP temporarily while you wait or save to make a RAD payment.

Will the MTCF ever stop?

Yes - if your income or asset levels drop below thresholds, or if you transfer into full pension status.

Are RAD refunds delayed?

By law, refunds must be made within 14 days, though many providers meet that requirement faster.

Real-Life Stories

Meet Marg and Bill, aged-care residents who navigated these options independently:

• Marg opted for part‑RAD, part‑DAP because she didn’t want all savings tied up at once.
• Bill received a concessional rate for means-tested fees after donating part of his assets to immediate family in line with gifting rules.

These decisions gave them peace of mind both in care support and in financial planning.

Where to Get More Help

• My Aged Care – to start the assessment process.
• Department of Veterans’ Affairs – additional subsidies for eligible individuals.
• Financial Information Service (FIS) – free advice on aged care finances.
• Community legal centres – for elder law or exit disputes.

Final Thoughts

Commonwealth aged care fees are designed to be transparent and fair—but sorting through care fees, means tests, accommodation charges and calculation methods takes time and support.

By understanding your fee obligations, using the support options available, and seeking advice when needed, you can make confident decisions that balance quality care, independence and sensible financial planning.

At Silver Lifestyle, we aim to offer seniors and families clarity, tools and reassurance—so the move into aged care is based on choice, not uncertainty.