What am I paying for in aged care?


aged care fees

When you’re thinking of accepting residential aged care, you need to understand what it will cost and what your money is paying for.


What are the different types of aged care fees?

There are four different types of fees and while they might not all apply to you, it’s important that you understand what they are. You need to know you’re paying the right amount for your needs and your circumstances.

Let’s take a closer look at each of the fees.


Basic daily fee

This is a flat fee that all aged care residents pay. It’s a contribution towards your daily living expenses. The basic daily fee covers the cost of your meals, room cleaning and laundry. It also goes towards paying the regular utility charges such as water, heating and cooling, power and telephone.

The flat rate fee is set by the government and the most you will be asked to pay is 85 percent of the annual single basic Age Pension. The pension is indexed twice a year, in March and September, to match increases in living costs. That means your basic daily fee may also change twice a year although it will never be more than 85% of your pension.

As of 1 January 2024, the most you will pay for your daily fee is $60.86.

So, the daily fee covers the same kind of expenses you would have if you were living in your own home.


Means-tested care fee

This fee is an extra contribution towards the cost of your care, and it’s only paid by the people who can afford it. To work out if you need to pay this fee, the Department of Human Services will do a financial assessment considering your income and the value of your assets.

The most you will have to pay is $32,718.57 per year. This is an annual cap which has been set by the government. If you need to pay this extra contribution, you don’t have to pay anything more once the cap has been reached.

Remember, the level of care you get from your aged care provider is not dependent on this fee, so don’t worry if you can’t afford the extra contribution. The quality of care will be the same for everyone.


Accommodation fee

So far, the fees have covered your daily living costs and the cost of personal and nursing care. But what about your bed or room?

This is where the accommodation fee comes in.

The accommodation fee covers the cost of your accommodation in the aged care residence and its maintenance. The fee is set by the aged care facility so each provider will charge differently. Some providers offer special facilities such as special gardens, outdoor spaces or exercise centres, so they may ask for higher fees. It’s a good idea to compare prices before you choose your aged care residence to see what you get for your money.

This fee will be means-tested so you only pay what you can afford. If you have assets and income of less than $58,500, you won’t have to pay anything. The higher your income and asset value, the higher the fee you will need to pay.

You have a choice about how to pay this fee (called a RAD or a DAP), but we won’t go into that here. For more information on these two types of fees please see this article. What we want you to understand here is what the fee covers and how it’s calculated.


Fees for additional services

Sometimes you may want access to services which aren’t covered by the standard fee structure. For example, if you enjoy satellite TV at home and would like to continue watching it, the aged care provider may ask you to pay an additional fee.

Some aged care residences offer you a range of extra services you can choose from to make your life more enjoyable. Conveniences such as an in-house hairdresser, library or special entertainment are available and would need you to pay an extra fee.

If you love to go on outings, you might need to pay a small fee for travel or entrance to an exhibition.

Most aged care residences give you the option of including a glass of wine with your evening meal and perhaps even offer a wider choice of meal, too. A small fee gives you more choice.

Living in an aged care residence does not have to mean giving up the services and conveniences you enjoyed at home. You can maintain your lifestyle and it will be covered by the additional fees you pay, just as you did before your move.


Making your choice

We’ve covered the four fees you may need to pay when you choose residential aged care.

  • You pay for your daily living expenses with the Daily living fee.
  • If you can afford to contribute more toward the cost of your care, you pay the Means-tested fee.
  • You pay for your room with the Accommodation fee.
  • If you’d like more choice and access to extra services, you pay a small fee to cover that cost.

Aged care providers are required to publish all their fees, from accommodation fees right through to the extra service fees. This means you can compare the cost of each provider and the quality of the facility before you make your choice.

Choosing the right accommodation can be confusing so take your time before you make your choice. If you’d like some help to find the ideal place for you, give us a call on 1300 775 870 or fill out this form and we will get in touch with you.

All amounts nominated above are current as of 1 January 2024 but are revised twice a year.

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