Planning for aged care is one of the most important and often stressful financial decisions many Australians face. With aged care costs rising and new rules taking effect from July and November 2025, it’s more important than ever to understand exactly what you’ll pay, how fees are calculated, and why the system is changing.
If you’ve ever Googled questions like:
- “How much does aged care cost in Australia?”
- “What is the basic daily care fee?”
- “Who pays for nursing home care in Australia?”
…you’re not alone. This guide is here to simplify it all and help you plan with confidence.
What Aged Care Costs Cover?
When someone moves into a residential aged care home (commonly called a nursing home), they pay fees covering:
- Daily living costs (meals, cleaning, laundry)
- Care services (personal assistance, nursing, medication management)
- Accommodation (your room)
- Optional extras (like Foxtel, hairdressing, premium meals)
These aged care fees aren’t “one size fits all.” What each person pays depends on their income, assets, and choices, like whether they pay accommodation as a lump sum or a daily fee.
Understanding Different Types of Fees in Aged Care
Aged care fees are payments made by residents or their families to cover the cost of care and accommodation in residential care facilities. These fees contribute towards daily care services, accommodation, meals, and other amenities.
Think of it like paying for a hotel stay, you have your basic room rate, meals, and then optional extras depending on your needs and preferences.
The main types of Residential Aged care fees and charges include:
Basic Daily Fee
The Basic Daily Fee is exactly what it sounds like, the fundamental charge everyone pays for their daily care and accommodation.
Everyone pays a basic daily fee for daily care, set at 85% of the single-age pension.
As of mid-2025, it’s around $61–$62 per day (about $22,000–$23,000 per year).
It covers essentials like meals, cleaning, laundry, and basic personal care.
It applies to everyone, regardless of assets or income, and adjusts with pension increases over time.
Want to know what you’ll pay for aged care?
Contact us today for a detailed, no-obligation discussion.
Means-Tested Care Fee / Non-Clinical Care Contribution
Until now, residents also paid a Means-Tested Care Fee (MTCF).
From 1 November 2025, this will be replaced by two new means‑tested payments:
Non‑Clinical Care Contribution (NCCC)
- Helps cover non‑clinical support: showering, dressing, mobility, and lifestyle activities.
- How much you pay depends on your aged care means test, done by Services Australia.
Hotelling Supplement Contribution
- A new daily fee covering daily living costs (meals, laundry, cleaning) that were partly subsidised before.
- Also means‑tested: people with higher income/assets contribute more.
The government will now cover 100% of clinical care costs (nursing, medical care, medication management).
Together, these new fees aim to make the cost of aged care in Australia fairer: those who can afford more pay more.
Accommodation Payments
Your aged care accommodation cost depends on your choice:
- RAD (Refundable Accommodation Deposit): An upfront lump sum, refunded when you leave (minus agreed deductions).
- DAP (Daily Accommodation Payment): A daily fee instead of an upfront payment. From November 1, 2025, it will now be indexed to CPI twice per year, meaning your payment can change, unlike the previous fixed rate.
- Combination: Part RAD, part DAP.
Extra & Additional Services Fees
Some facilities offer optional premium extras like better meals, private dining, or extra entertainment, charged as Extra Service Fees.
Others offer Additional Services Fees for things like hairdressing, allied health visits, or newspaper delivery.
These costs vary, aren’t government-set, and are only paid if you choose those upgrades, so always ask what’s included.
How Are Your Aged Care Fees Calculated?
Understanding how your fees are assessed is important for financial planning. The process centres around Services Australia’s comprehensive review of your income and assets.
The Means Test Process
Services Australia conducts what’s called an “aged care means assessment” to determine your financial contribution. This assessment looks at both your income and assets to calculate your financial contribution, which for new residents entering from 1 November 2025, will determine their Non-Clinical Care Contribution, Hotelling Supplement Contribution, and how their accommodation payments are structured.
The assessment considers various income sources, including pensions, superannuation, investments, and rental income. On the assets side, they evaluate your home (with some protections), investments, bank accounts, and other valuable possessions.
What Affects How Much You Pay?
Several factors influence your final aged care costs:
- Your Financial Situation: Higher assets and income generally mean higher fees, but the system is designed to ensure you can always afford basic care.
- Care Needs: While the Australian government now covers 100% of clinical care costs under the new reforms, your personal care requirements can still influence some charges.
- Facility Choice: Different facilities charge different amounts for accommodation, and premium facilities with extra services will naturally cost more.
- Payment Method: Your choice between RAD, DAP, or combination payments affects your ongoing costs and cash flow.
The rules are changing, don’t wait to get informed.
Reach out to our team now to see how your aged care costs may change from July and November 2025, and what you can do to stay prepared.
What’s New in 2025: The Major Changes You Need to Know
Australia’s aged care system is undergoing significant reforms, with most changes taking effect from 1 November 2025. These aged care reforms aim to make fees fairer, improve transparency, and ensure quality care remains accessible to everyone.
Key Changes for New Residents
The changes mainly affect people entering residential aged care from 1 November 2025. If you’re already in care before this date or approved for a Home Care Package before 12 September 2024, you generally keep the current fee rules. However, if you later leave care and return, change providers, or switch packages, the new system may apply. This is part of the government’s ‘no worse off’ principle to protect existing residents.
RAD Retention Changes
One of the most significant changes affects Refundable Accommodation Deposits. From 1 November 2025, aged care providers may possess 2% per annum of new Refundable Accommodation Deposits (RADs) for up to 5 years (max 10%), calculated daily and deducted monthly. Existing residents already in care before that date are protected under the ‘no worse off’ principle, so their previously paid RADs remain fully refundable.
Government Coverage of Clinical Care
A positive change for residents is that the government will pay for 100% of clinical care costs under the new system. This means that the government fully covers the cost of nursing care, medication management, and other clinical services.
Updated Fee Structure
These changes are part of new rules that aim to simplify aged care and ensure fees better reflect your situation. The reforms are designed to create a more equitable system where people contribute based on their capacity to pay.
Home Care Changes
Looking ahead, from 1 November 2025, Support at Home will replace the existing Home Care Packages Program and Short-Term Restorative Care (STRC) Programme. This reform aims to help older people live independently at home for longer. Around 1.4 million people in Australia will benefit from the new system.
Government Subsidies for Home Care Packages
Alongside residential aged care, many Australians choose to stay at home with the help of different levels of Home Care Package. The government helps by subsidising a large portion of the cost, depending on the level of support you need:
| Package level | Daily rate from 1 January 2025 | Daily rate from 1 March 2025 |
|---|---|---|
| Level 1 | $29.28 | $29.31 |
| Level 2 | $51.49 | $51.54 |
| Level 3 | $112.07 | $112.18 |
| Level 4 | $169.90 | $170.07 |
Practical Steps: What You Should Do Next?
Guiding aged care fees doesn’t have to be overwhelming if you take a structured approach.
Get Professional Advice
Consider speaking with an aged care financial adviser who understands the 2025 changes. They can help you model different payment scenarios and understand how the reforms specifically affect your situation. Many advisers now offer aged care specialisation and can provide valuable guidance on optimising your financial strategy.
Use Official Tools and Resources
The My Aged Care website offers fee estimator tools that have been updated to reflect the 2025 changes. These tools can give you a preliminary idea of what your fees might look like under the new system.
Services Australia also provides detailed information about the means testing process and can help you understand how your specific circumstances will be assessed.
Plan for Different Scenarios
Consider various accommodation payment options and their implications under the new RAD retention rules. Model both RAD and DAP scenarios to see which works better for your cash flow and estate planning goals.
Stay Informed About Future Changes
The aged care system continues to evolve, with more changes planned for home care in November 2025. Stay connected with reliable sources of information and consider subscribing to updates from My Aged Care or working with advisers who specialise in this area.
Review Your Financial Position
Take stock of your current assets and income, as these will directly impact your aged care fees. Consider whether any restructuring of your finances might be beneficial before entering care, but always seek professional advice before making significant changes.
Bottom Line: Aged Care Costs in Australia, 2025 and Beyond
The cost of aged care depends on what care you need, your income and assets, and where you live.
The November 2025 reforms simplify fees, fully fund clinical care, and ask higher‑income residents to contribute more.
Whether you’re planning for yourself or a loved one, understanding aged care fees now helps you avoid surprises later.
And remember: always get professional advice and use trusted tools like My Aged Care before making big decisions.
Still have questions about aged care fees, RAD, DAP, or the 2025 reforms?
Get in touch with our team today for personalised guidance and peace of mind as you plan for aged care. We’re here to help every step of the way.
