Aged Care Fees Explained 2026
If you are starting to think about residential aged care for yourself or someone you love, one of the first questions you are likely to have is: How much does aged care cost?
Understanding aged care fees can seem complicated at first. There are several different costs to consider, and the amount you pay depends on your financial circumstances, the aged care home you choose and the accommodation price.
This guide explains the main aged care fees in Australia in 2026 for people who are considering entering permanent residential aged care under the new fee arrangements introduced on 1 November 2025. It covers what you need to know before moving into care and how accommodation payments such as a RAD or DAP work.
Have questions about aged care costs?
How much does aged care cost in Australia?
There is no single price for residential aged care. Your total costs will depend on your income and assets, your means assessment, the aged care home you choose and the price of your room.
Generally, the costs you may need to consider include:
- Basic Daily Fee for everyday living services.
- Hotelling Contribution, depending on your financial circumstances.
- Non-Clinical Care Contribution, depending on your financial circumstances.
- Accommodation Costs, Refundable Accommodation Deposit or Daily Accommodation Payments, or a combination of both.
- Higher Everyday Living Fees, if you choose optional additional services.
Most people pay a combination of fees, while the Australian Government contributes towards the cost of care for eligible residents.
What does the government pay towards aged care?
The Australian Government subsidises residential aged care,helping to cover the cost of care and services provided by approved aged care homes.
How much you may need to contribute is determined through an aged care means assessment, which looks at your income and assets.
Your means assessment can help determine whether you receive government assistance with your accommodation and whether you need to contribute towards services such as daily living and non-clinical care.
It is worth completing a means assessment early in the process so you have a clearer idea of the costs you may face.
What is the Basic Daily Fee?
The Basic Daily Fee is paid by all permanent residential aged care residents. It contributes towards everyday living services such as meals, cleaning, laundry, facilities management and utilities.
The fee is set at 85% of the single basic Age Pension rate and is indexed on 20 March and 20 September each year.
What other ongoing fees might I pay?
Depending on the outcome of your means assessment, you may also need to pay an amount of the Hotelling Contribution towards everyday living services.
Those who pay the maximum hotelling contribution may also need to pay a Non-Clinical Care Contribution (NCCC) towards services such as personal care, bathing, mobility assistance and lifestyle activities. This fee is capped with a total lifetime value or at 4 years of contributions, whichever comes first.
These contributions are based on your individual financial circumstances, so the amount each person pays will vary.
How does the family home affect aged care fees?
A common question for families is: “Do I have to sell my home if I move into aged care?”
Moving into residential aged care does not automatically mean you need to sell your family home.
The value of the home may be included in the assessment up to a capped amount. However, the home is generally not counted if it is occupied by a protected person, such as a partner, dependent child or eligible carer.
Because the treatment of the family home can be complex, it is a good idea to obtain an individual means assessment and seek independent financial advice before making decisions about selling or keeping your home.
What is a Refundable Accommodation Deposit (RAD)?
Accommodation is an important part of the overall cost of residential aged care. The accommodation cost is the price of the room that you choose in an aged care facility, you can pay this amount as a RAD. A Refundable Accommodation Deposit (RAD) is a lump sum paid upfront towards the agreed price of your room. For partially supported residents this charge is the Refundable accommodation contribution (RAC) and the government determines how much you pay. It is worked out by your provider based on the DAC (explained in the next section).
Aged care home room prices varying according to factors such as room size, features, location and amenities. The accommodation price is agreed with the provider before you enter care.
For people entering care after 1 November 2025, providers can retain 2% of the RAD balance per year, for up to five years. The RAD will be refunded when you leave, less any retention amount and any fees that you agree to draw down from it.
Can I pay a Daily Accommodation Payment instead?
You do not necessarily have to pay your accommodation as a large lump sum.
A Daily Accommodation Payment (DAP) allows you to pay your accommodation costs through regular daily payments instead, in a rental-type payment. This fee is non-refundable and is indexed twice a year. The DAP is calculated using the agreed room price, the Maximum Permissible Interest Rate (MPIR) and the number of days in the year. If you are partially supported this charge is the Daily Accommodation Contribution (DAC) and Services Australia determines how much you pay.
You do not have to choose between paying your entire accommodation amount as a Refundable Accommodation Deposit (RAD) or paying the entire amount through a Daily Accommodation Payment (DAP). With a combination payment, you pay part of the agreed accommodation price as a RAD, with the remaining amount paid as a DAP. The DAP is calculated on the amount of the accommodation price that remains after your RAD has been paid.
RAD vs DAP: Which should I choose?
There is no single option that is right for everyone.
Your decision may depend on your savings, investments, pension arrangements, whether you are selling your home and your wider financial plans.
A RAD may reduce your ongoing accommodation payments because you have paid the room price upfront. A DAP can allow you to retain more of your money rather than paying a large lump sum, but it creates an ongoing daily cost.
A combination RAD/DAP can provide flexibility for people who have some savings available but would prefer to retain some of their money for other expenses, investments or financial commitments.
My Aged Care recommends seeking independent financial advice when deciding which accommodation payment option is appropriate for your circumstances.
What are Higher Everyday Living Fees?
Aged care homes offer optional services above the standard services that must be provided as part of residential aged care.
These are called Higher Everyday Living Fees (HELF). HELF was introduced from 1 November 2025 to replace the previous Extra Service Fee and Additional Service Fee arrangements. Transitional arrangements apply to some existing agreements until 31 October 2026.
Higher everyday living services may include additional lifestyle or dining services and are usually offered as part of a bundle.
There are important consumer protections. A HELF cannot be a condition of entering aged care, and the agreement must be separate from your accommodation and care agreements. The agreement must explain the services,costs and frequency of the services provided.
There is also a 28-day cooling-off period, allowing you to cancel or vary your higher everyday living services.
What are the total costs of residential aged care?
When planning for aged care, it is helpful to consider the whole cost, rather than looking at the room price alone. Every resident pays the Basic Daily fee, the government will assess if you need to pay means tested contributions.The room price varies across facilities, and can be paid in a lump sum upfront or in rental type payments, or as a combination of both. Finally, there are optional higher everyday living fees, for those who have the means and the desire for some extras to enhance everyday life.
How can I find out what I will actually pay?
The exact amount you pay for care will depend on your financial assessment and the aged care home you choose.
One of the best first steps is to complete the My Aged Care residential aged care fee estimator. It can provide an estimate based on your income, assets and circumstances.
You can also arrange an aged care means assessment through Services Australia. Once completed, you will receive a fee advice letter outlining the fees and contributions that may apply to you, including your accommodation arrangements.
Understanding aged care costs with confidence
Starting to explore residential aged care does not mean you need to make every financial decision immediately.
Taking the time to understand your potential costs, complete a means assessment, compare accommodation options and seek independent financial advice can help you make informed choices about your future.
At Mayflower, we understand that aged care fees can raise many questions. Our team can explain accommodation prices and payment options and help you understand what to expect when considering residential aged care in Brighton, Reservoir or Pascoe Vale.
This guide is intended for people considering entering permanent residential aged care under the fee arrangements introduced on 1November 2025. Different fee arrangements may apply in some circumstances. The fees you pay will depend on your individual financial circumstances and means assessment. For advice about your circumstances, contact My Aged Care or Services Australia, or seek independent financial advice.
