Residential Care
Fees Explained

The Different Fees and Charges in Commonwealth-Regulated Residential Aged Care in Australia

Residential aged care provides vital support for older Australians who can no longer live independently at home. While the Australian Government helps subsidise the cost of residential care through funding paid directly to approved providers, residents may still need to pay various fees and charges depending on their income, assets, and the level of services chosen.

Understanding these fees is crucial when planning to move into residential aged care — it can affect your pension, savings, family home, and peace of mind. This comprehensive guide explains how the different fees and charges work, who pays what, and how to make confident financial decisions about residential aged care in Australia.





Quick Links to the Fees and Charges

Why Are There Fees in Residential Aged Care?

Residential aged care funding is a partnership between the Australian Government, residents, and aged care providers. The government subsidises care for eligible people, but residents are expected to contribute where they can afford to do so. This helps ensure that the system remains fair and sustainable for everyone.

The fees you pay depend on:

  • Your income and assets.
  • The type of accommodation you choose.
  • Whether you opt for any extra services.
  • Any negotiated agreements with your chosen aged care provider.

The Main Fees and Charges

In Commonwealth-regulated residential aged care, there are four main types of fees:

  • Basic Daily Fee
  • Hotelling Contribution
  • Accommodation Payments
  • Non-clinical care contribution

Let’s break down what each one means, how they’re calculated, and what to expect.

Basic Daily Fee

The Basic Daily Fee is a standard fee every resident pays. It helps cover the costs of daily living such as meals, laundry, cleaning, heating, and basic services.

It is set at 85% of the full single Age Pension. The fee is indexed on 20th March and 20th September each year in line with the Age Pension.

All residents pay this fee, regardless of their income or assets, unless they are receiving respite care (where it may be different). It is paid directly to the residential aged care provider.

Key points about the Basic Daily Fee:

  • It is the same in every residential aged care home.
  • It does not depend on your financial situation.
  • It covers standard services only — not extra services or special features.
Tip: If you receive the full Age Pension, the Basic Daily Fee will take up 85% of it, leaving you with the remainder for personal expenses like toiletries, clothes, or outings.





Non-clinical Care Contribution

In addition to the Basic Daily Fee, some residents may also have to pay a Non-Clinical Care Contribution. This fee is an extra contribution toward the cost of your care, based on your income and assets.

Services Australia (Centrelink) or the Department of Veterans’ Affairs (DVA) conducts an Income and Assets Assessment to decide how much you can afford to contribute. This fee is not fixed — it is tailored to your financial circumstances.

Key features of the Non-clinical Care Contribution:

  • It is reviewed quarterly to account for changes in your income or assets.
  • It is capped to protect residents from paying too much over time.

How the Non-clinical Care Contribution Fee is calculated:

The formula can be complex, but in simple terms:

  • Your income above a certain threshold is assessed.
  • Your assets above a certain threshold are assessed.
  • These amounts are combined to determine what you can afford.
  • The government subsidy paid to your care provider is reduced by this amount, and you pay that shortfall directly as your Means-Tested Care Fee.
Tip: Not everyone pays this fee. If you are a full Age Pensioner with minimal assets, you will not have to pay any Non-clinical Care Contribution.

Accommodation Payments

The Accommodation Payment covers the cost of your room and the use of shared facilities like dining rooms, gardens, and lounges. Depending on your assets and income, you may:

  • Pay nothing — the government fully subsidises it.
  • Pay part of the cost — with the government paying the balance.
  • Pay the full cost yourself.

How Accommodation Payments are structured:

If you have to pay for your accommodation, you have a choice in how to do so:

  • Refundable Accommodation Deposit (RAD): A lump sum that you pay upfront. It is fully refundable when you leave the facility or pass away, minus any agreed deductions for fees or damages.
  • Daily Accommodation Payment (DAP): Instead of paying upfront, you can pay a daily fee, calculated based on the RAD amount and a government-set interest rate known as the Maximum Permissible Interest Rate (MPIR). This rate changes quarterly — as of 20th March 2026, it is 7.96% per annum.
  • Combination: You can split your payment, paying part as a RAD and part as a DAP.

Example: If the RAD is $500,000 and you choose not to pay a lump sum, the DAP would be calculated as follows:

$500,000 x 7.96% = $39,800 per year ÷ 365 = $109.04 per day.

Tip: The choice is yours — many people prefer to pay part of the RAD to reduce the daily DAP amount.





Hotelling Contribution

Some aged care homes offer premium rooms, special meal options, extra recreational activities, or hotel-style services. If you choose these, you may be charged:

  • Hotelling Contribution: Approved by the government and published on the facility’s website. This might include better rooms, wine with meals, or higher standard of linen or food.

Other Possible Charges

In rare cases, there may be other charges, such as:

  • Security deposits for special equipment or room modifications.
  • Fees for damage repair if damage is caused deliberately or through negligence.
  • Transport costs for medical appointments not covered by Medicare.

Always ask for a clear breakdown of all potential costs before signing a Resident Agreement.


Consumer Protections and Your Rights

All fees and charges must comply with the Aged Care Act 1997 and the Aged Care Quality Standards. You have the right to:

  • Receive clear, detailed information about all fees before signing any agreement.
  • Be given a Resident Agreement and an Accommodation Agreement that set out your rights and responsibilities.
  • Choose how to pay your accommodation costs — lump sum, daily payments, or a combination.
  • Receive refunds on your RAD within statutory timeframes when you leave care or pass away.
  • Appeal any incorrect fee assessments through Services Australia or the Aged Care Quality and Safety Commission.

How to Budget for Aged Care Fees

Moving into residential care is a major financial decision. To budget effectively:

  • Use the My Aged Care Fee Estimator to get an idea of costs.
  • Get independent financial advice from an accredited aged care financial advisor.
  • Understand how your pension may change when paying residential care fees.
  • Factor in personal spending money for clothes, gifts, outings, and any extras not covered by the Basic Daily Fee.




Frequently Asked Questions

Q: Can fees change while I am in care? Yes. Basic Daily Fees are indexed in line with pension changes, and Means-Tested Care Fees may adjust quarterly based on your financial circumstances.

Q: What happens if I can’t afford to pay? No eligible person will be denied care because they can’t pay. If you genuinely can’t afford the fees, the government may fully subsidise your accommodation and care costs.

Q: Can I negotiate fees? You can negotiate your accommodation price and payment method. Extra or additional service fees must be clearly explained and agreed to in writing.

Final Thoughts

Understanding fees and charges is essential for peace of mind when choosing a residential aged care home. While it can seem complex, there are clear rules and safeguards in place to ensure fees are fair and transparent. Knowing what you might pay, how it’s calculated, and your payment options will help you make informed decisions for yourself or your loved ones.

Plan ahead, ask questions, and remember — good information is the key to good care.