Basic Daily Fee
Standard contribution for meals, cleaning, laundry and utilities.
- aged care costs guide
Aged Care Fees and Costs Explained
Understand RAD, DAP, means-tested care fees, accommodation costs and daily fees — explained in plain English.
This guide helps families make sense of aged care costs and financial decisions before they commit.
What You’ll Learn in This Guide
✓Understand likely daily and accommodation costs.
✓Learn how RAD and DAP decisions affect cashflow.
✓Get clear on means testing before signing anything.
Residential Aged Care Home Fees
The Main Aged Care Costs
Most residential aged care costs fall into four main categories.
Means-Tested Contribution
Additional contribution based on income, assets and personal circumstances.
RAD or DAP
The accommodation cost of the room, paid upfront, daily, or both.
Optional Service Fees
Additional lifestyle or premium service costs in some homes.
How Aged Care Fees Work
Aged care costs are made up of several different fees, not just a single price. These can include daily living costs, accommodation payments and contributions based on your financial situation.
The exact mix of fees depends on a number of factors, including your income, assets, the type of care you need and the accommodation you choose within a facility.
Because of this, two people in the same home — even in similar rooms — can have very different fee outcomes depending on how their finances are structured.
This is why two people in the same facility can end up paying very different amounts.
Basic Daily Fee
The basic daily fee is the standard contribution most residents pay for everyday living costs in an aged care home. This typically covers meals, cleaning, laundry, utilities and general services provided by the facility.
It is generally linked to the Age Pension and applies to most people entering residential aged care, regardless of their financial situation. For many residents with lower means, this may be the primary ongoing cost.
While it is one of the more straightforward fees, it is still important to factor into your overall cost, as it forms part of your daily and long-term aged care expenses.
Means-Tested Contribution
The means-tested contribution is based on your financial situation, including your income and assets. It is designed to ensure that those who have greater financial capacity contribute more towards the cost of their care.
Depending on when you enter aged care and which fee framework applies, this may be called a means-tested care fee under older rules, or a non-clinical care contribution under newer arrangements.
The amount can vary significantly between individuals, which is why understanding how your finances are assessed is critical before making any decisions about aged care.
Accommodation Costs
RAD and DAP explained
Accommodation costs relate to the price of the room in an aged care facility. This can be paid as a lump sum through a RAD, a daily payment through a DAP, or a combination of both.
A RAD is a refundable amount paid upfront, while a DAP is an ongoing daily cost charged on any unpaid portion of the accommodation price. The balance between these two can have a major impact on your cashflow and long-term costs.
Choosing how to structure your accommodation payment is one of the most important financial decisions in aged care, and even small changes can significantly affect your overall position.
Key insight: Paying more RAD usually reduces your DAP — but the right strategy depends on cashflow, assets, pension position and your broader financial plan.
Optional Service Fees
Optional service fees cover additional lifestyle or premium services offered by some aged care providers. These may include enhanced meals, activities, entertainment or upgraded room features.
These fees are not mandatory and will vary depending on the facility and the level of service selected. Some providers offer bundled higher everyday living services under newer arrangements.
While optional, these costs can add up over time, so it is important to understand exactly what is included and whether the additional services represent value for your situation.
Important Update
Aged Care Rules Changed in November 2025
Not everyone in aged care is on the same fee system. Depending on when someone entered care, different fee arrangements may apply.
Older arrangements
Some residents remain on earlier fee settings and legacy structures.
No worse off rules
Some people are protected from being disadvantaged by the newer changes.
New framework
New entrants may face different contribution, accommodation and retention rules.
RAD Retention
What Is RAD Retention?
Under newer arrangements, a portion of a RAD may be retained over time rather than being fully refundable in every case. This is one of the least understood changes in aged care pricing.
In simple terms, retention means the refundable value of the lump sum can reduce over time in certain circumstances, which is why families should not assume the amount refunded will always match the amount originally paid.
This does not affect every resident, but it is important enough that families should understand it before signing accommodation documents or making large funding decisions.
Strategy Insight
Where Families Often Overpay
Aged care is not just about choosing a facility — it is about structuring the finances around that decision properly.
Focusing only on the room price
The room quote rarely tells the full story once care fees and daily charges are included.
Choosing RAD or DAP too quickly
Paying too little upfront can create much higher ongoing daily costs than expected.
Selling the home too early
Property decisions can affect aged care fees, pension outcomes and overall flexibility.
Signing before seeing the bigger picture
Documents are often signed under pressure before the family understands the long-term cost impact.
Want to Estimate What You Might Pay?
Use our calculator to test likely daily costs, compare RAD and DAP scenarios, and explore how simplified means-tested outcomes may affect the numbers.
FAQs
Frequently Asked Questions
What is a RAD in aged care?
A RAD is a refundable accommodation deposit paid as a lump sum toward the room cost in an aged care home.
What is a DAP?
A DAP is a daily accommodation payment charged on any unpaid portion of the room price, instead of paying the full amount upfront.
What is means testing in aged care?
Means testing looks at a person’s income, assets and circumstances to determine how much they may need to contribute toward care and accommodation costs.
Does everyone pay the same aged care fees?
No. Two residents in the same facility can pay very different amounts depending on their financial situation, room choice and the fee arrangement that applies.
Is a RAD always fully refundable?
Not always. Under some newer arrangements, retention rules may reduce the amount refunded over time.
What changed in November 2025?
Different fee and accommodation arrangements now apply depending on when the resident entered care, which is why current aged care cost advice needs to be tailored.
Get Clarity Before You Commit
Aged care decisions can affect cashflow, assets, accommodation costs and long-term family outcomes. Before signing agreements or making major financial decisions, it is worth understanding the numbers clearly.
Last reviewed: March 2026. Fees and arrangements can vary depending on individual circumstances.
Supporting Australian families through aged care decisions — with clarity, structure and care.
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The information on this website is general in nature and does not consider your personal objectives, financial situation or needs. You should consider whether it is appropriate for you and seek personalised advice before making any decisions.
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