When someone you love needs residential aged care, the costs can look like one confusing total. In reality, the amount is made up of separate fees that pay for different parts of living and receiving care in an aged care home.
This guide explains the main fee types in plain English. It focuses on permanent residential aged care in Australia. The exact fees a person pays depend on their entry date, income and assets, the aged care home they choose, the agreed room price and any optional services.
There is not one single aged care fee
A residential aged care invoice can include charges for everyday living, personal care, accommodation and optional extras. Some amounts apply to everyone. Others depend on a means assessment, which considers the person's income and assets.
Which fee arrangement applies?
There are currently two residential aged care fee arrangements. Most people entering permanent care on or after 1 November 2025 are covered by the newer arrangements. People who entered earlier generally remain under the 1 July 2014 arrangements, and some people are protected by the no-worse-off rules.
This is why one family may hear the term non-clinical care contribution, while another family is still paying a means tested care fee.
The main residential aged care fees
Basic daily fee
Routine day-to-day living services such as meals, cleaning, laundry, utilities and upkeep.
Hotelling contribution
An extra means-tested contribution towards the everyday living services provided by the home.
Non-clinical care contribution
Personal care and non-clinical support, such as help with bathing, movement and lifestyle activities.
Means tested care fee
A means-tested contribution towards the cost of personal and clinical care.
Accommodation costs
The resident's room, paid through a refundable lump sum, daily payments or a combination.
Higher everyday living fee
Optional higher-standard or additional everyday living services.
1. The basic daily fee
The basic daily fee contributes to the ordinary costs of living in the home, including food, cleaning, laundry, utilities and facilities management. Every permanent resident pays this fee.
It is separate from the room price and separate from any means-tested contribution towards care. The maximum rate is set by the Australian Government and indexed twice each year.
2. Means-tested contributions towards living and care
Depending on the fee arrangement and the resident's assessed income and assets, Services Australia may calculate an additional contribution.
Under the 1 November 2025 arrangements, this may include a hotelling contribution and a non-clinical care contribution. Under the 1 July 2014 arrangements, the care-related amount is generally called the means tested care fee.
Not everyone pays these amounts. Services Australia completes the means assessment and issues a fee advice letter explaining what can be charged.
3. Accommodation costs: paying for the room
Accommodation is different from care. Before entering an aged care home, the resident and provider agree on a room price in writing.
A resident who is not eligible for government accommodation assistance generally pays the agreed room price. A lower-means resident may have some or all of the accommodation cost subsidised and may instead pay an accommodation contribution.
Accommodation can generally be paid as a refundable lump sum, non-refundable daily payments or a combination of both. These options are commonly described as a RAD, a DAP or a combination payment.
4. Optional higher everyday living services
Some providers offer additional or higher-standard everyday living services for an extra charge. These charges are optional and should be explained in a separate agreement.
A higher everyday living fee cannot be required to secure a room or used as a condition of entry. Families should check what is included, whether the resident is likely to use it and how the agreement can be changed or cancelled.
What does the Australian Government pay?
The Australian Government pays subsidies and supplements directly to aged care providers. Under the newer fee arrangements, clinical care in residential aged care is fully government funded. Assistance with other care, daily living and accommodation costs depends partly on the resident's means assessment.
How do you find out the actual amount?
- Confirm which fee arrangement applies.
- Identify the aged care home and proposed room price.
- Complete the residential aged care means assessment.
- Review the Services Australia fee advice letter.
- Check the accommodation agreement and any optional service agreement.
- Compare the total point-in-time cost, not just one daily fee.
Questions to ask before signing
- Which fee arrangement applies?
- What is included in the basic daily fee?
- Has Services Australia completed the means assessment?
- What is the agreed room price?
- What would a RAD, DAP or combination payment look like?
- Are there optional charges, and can they be declined?
- Which amounts may change after entry?
- What is the estimated total daily and monthly cost?
Aged care fees can change
Rates and caps are indexed, and a resident's contribution can change when financial or personal circumstances change. Provider charges and optional agreements may change as well. A useful calculation should therefore state the date, information and assumptions used.
Need help making sense of the figures?
Aged Care Fee Experts provides point-in-time fee calculations, accommodation payment comparisons and practical Services Australia support. We help families understand their options without telling them what decision to make.
Book a Complimentary Initial ConsultationGeneral information only: This article does not provide financial advice. Fees depend on individual circumstances, provider agreements and the rules, rates and thresholds applying at the relevant time.