Aged Care Costs 2026: What You'll Actually Pay

Bottom line? Aged care costs in Australia are structured around four distinct fee types, and understanding each is essential for planning. First, the basic daily fee: this is a standard contribution toward living costs (meals, cleaning, laundry, utilities) that everyone in residential aged care pays regardless of means.

As of March 2026, the basic daily fee is $65.55 per day ($23,926 per year) for all residents. It's set at 85% of the single basic Age Pension. Second, the means-tested care fee: this is an additional daily fee for residents who have income and/or assets above certain thresholds.

It ranges from $0 to a maximum of approximately $305.49 per day ($111,504 per year), with an annual cap of $33,309 and a lifetime cap of $79,942. Your means-tested fee is calculated by Services Australia based on your income and assets assessment. Third, accommodation costs: these are your 'room and board' payment, either as a lump sum (Refundable Accommodation Deposit, or RAD) or a daily payment (Daily Accommodation Payment, or DAP), or a combination.

Fourth, additional services fees for optional extras like a premium room, Foxtel, or hairdressing — these vary by facility and are negotiated directly.

The accommodation cost is typically the largest single expense in residential aged care. The Refundable Accommodation Deposit (RAD) is a lump sum that functions like a bond — it's refunded when you leave the facility (or to your estate).

So what does this actually mean? RADs range from $200,000 in regional and outer-suburban facilities to $700,000-$1,500,000 in premium metropolitan facilities. The Australian median RAD is approximately $420,000. The RAD is fully refundable (less any agreed deductions), so it's not a 'cost' in the traditional sense — but it does tie up a large amount of capital that could otherwise be earning investment returns.

The alternative is the Daily Accommodation Payment (DAP), calculated as the RAD amount multiplied by the Maximum Permissible Interest Rate (MPIR), currently 8.34% per annum, divided by 365. For a $420,000 RAD equivalent, the DAP is $420,000 x 8.34% / 365 = $95.97 per day ($35,029 per year). You can also do a combination — for example, pay a $200,000 RAD and a DAP on the remaining $220,000 ($220,000 x 8.34% / 365 = $50.27/day or $18,349/year).

The RAD-vs-DAP decision depends on your circumstances. If you've the capital (typically from selling the family home), paying the full RAD means zero daily accommodation cost and your lump sum is returned later.

If you want to keep capital invested and earning returns above the MPIR of 8.34%, the DAP may be cheaper on a net basis — but 8.34% is a high hurdle rate to consistently beat.

The means-tested care fee is determined by Services Australia through a combined income and assets assessment. For the income test, assessable income includes Age Pension (if receiving), super pension income, employment income, rental income, deemed income from financial assets, and any other regular income.

In plain English: For the assets test, assessable assets include financial assets (bank accounts, shares, super), investment properties, personal assets above $14,000, and the former family home if you've a partner still living there (the home is exempt if occupied by a 'protected person' — your spouse, dependent child, or close relative who has lived there for 5+ years). If no protected person lives in the home, it's assessed as an asset up to a capped value of $201,231. The means-tested fee is calculated as: 50% of income above the income-free threshold ($33,622/year for singles) plus 17.5% of assets between $201,231 and $418,676, plus 1% of assets between $418,676 and $636,121, plus 2% of assets above $636,121.

The result is divided by 365 to give a daily fee. A single homeowner with $300,000 in super, $25,000 in deemed income, and a former home worth $800,000 (capped at $201,231 for assessment) might face a means-tested fee of approximately $25-$55 per day, depending on other income. The annual and lifetime caps provide important protection against catastrophic costs.

Not everyone needs residential aged care. Home Care Packages allow older Australians to receive subsidised care in their own home.

There are four levels. Level 1 (basic care needs): provides approximately $10,586/year in government subsidy, covering services like basic personal care, help with shopping, and social support. Level 2 (low-level care): approximately $18,622/year, adding more hours of personal care, nursing visits, and allied health.

Level 3 (intermediate care): approximately $40,556/year, for people needing regular assistance with daily activities, wound management, and medication administration. Level 4 (high-level care): approximately $61,440/year, for complex care needs that would otherwise need residential placement. Recipients pay a basic daily fee of up to $13.41/day ($4,895/year) — the same 85%-of-pension calculation as residential care.

The short version: An income-tested care fee may also apply, up to $18.29/day ($6,676/year) for those with assessable income above $33,622/year. Wait times have improved significantly since the 2023 reforms.

As of early 2026, Level 1-2 packages are typically available within 1-3 months, Level 3 within 3-6 months, and Level 4 within 3-9 months — down from waits of 12-24 months that were common before the reforms. You receive an interim Level 1 or 2 package while waiting for a higher-level package.

The new Aged Care Act, which took effect on 1 November 2025, introduced the most significant changes to aged care funding and regulation in decades. Key changes affecting costs include: a new 'hotelling' supplement of up to $12.55 per day for residents in facilities that meet higher accommodation and food standards — this is a new cost that did not exist under the old system.

The means-testing formula has been adjusted to include a broader range of assets, and the lifetime cap on means-tested fees has been indexed. A new 'Support at Home' program is being phased in to replace the existing Home Care Packages program, with more flexibility in how funding is allocated and a greater emphasis on consumer-directed care. Transparency requirements have been strengthened: facilities must now publish their pricing, service offerings, and quality ratings on the My Aged Care website.

For accommodation, the new Act tightens rules around 'extra service' fees and requires clearer disclosure of what is included in the RAD/DAP versus what is an additional charge. Importantly, existing residents who were in care before 1 November 2025 are 'grandfathered' — their fees continue under the old rules unless they move to a new facility. For new entrants from November 2025 onwards, the new fee structure applies.

Real talk — If you can't afford the standard aged care fees, several hardship provisions exist. First, fee reductions: if paying the full means-tested care fee would leave you in financial hardship, you can apply to Services Australia for a fee reduction.

This typically applies when your income is close to the pension rate and your assets are modest. Second, accommodation supplement: if your assets are below $201,231 (as assessed), the government pays all or part of your accommodation cost directly to the facility — you pay nothing for accommodation. Approximately 40% of residential aged care residents receive a full accommodation supplement and pay zero accommodation fees.

Third, hardship supplement: in cases of genuine financial hardship (for example, where selling the family home would cause hardship to a remaining family member), a hardship supplement can reduce or eliminate the means-tested care fee. Fourth, the Commonwealth Seniors Health Card: if you hold this card, you receive additional concessions on pharmaceutical costs and may be eligible for other fee reductions. For families helping an elderly parent navigate aged care costs, the key first step is always the means assessment through Services Australia.

This determines the exact fees payable and identifies any entitlements to fee reductions or supplements. Do this early — ideally 3-6 months before care is needed — because the assessment takes 4-8 weeks. Worth double-checking.

Margaret, 82, is entering residential aged care. Her financial position: she owns a home worth $950,000 (no partner living there), has $280,000 in super, $40,000 in a bank account, and receives the part Age Pension of $18,000/year.

One thing people miss: Her home is assessed at the capped value of $201,231. Total assessable assets: $201,231 + $280,000 + $40,000 = $521,231. Margaret's fees: basic daily fee of $65.55/day ($23,926/year) — everyone pays this.

Means-tested care fee: based on her income and assets, approximately $42/day ($15,330/year). She is below the lifetime cap, so this is payable until either the annual cap ($33,309) or lifetime cap ($79,942) is reached. Accommodation: the facility's RAD is $450,000.

Margaret sells her home for $950,000, pays the $450,000 RAD (refundable), and retains $500,000 in liquid assets. Alternatively, she could pay a DAP of $450,000 x 8.34% / 365 = $102.82/day ($37,530/year) and keep the $450,000 invested.

If Margaret pays the RAD, her total ongoing daily cost is $65.55 + $42.00 = $107.55/day ($39,256/year). If she pays the DAP, it's $65.55 + $42.00 + $102.82 = $210.37/day ($76,785/year). Most residents in Margaret's position choose the RAD because it eliminates the large daily accommodation cost, and the lump sum is returned to the estate.

Over a typical residential stay of 2.5-3 years, Margaret's total out-of-pocket costs (after pension income) would be approximately $40,000-$65,000, plus the opportunity cost of having $450,000 tied up in the RAD.