The letter from the aged care home lands with a quote attached, and it lists four separate charges with four different names. For a family working out what a parent’s move into residential aged care will actually cost each week, that alone can stop the process in its tracks.
Understanding what each of the four fees covers, and who decides how much a resident pays, turns that quote from a puzzle into a document that can be checked line by line.
What are the four fees on an aged care quote?
Residential aged care costs in Australia are built from four separate components: the basic daily fee, the means-tested care fee, an accommodation payment, and any fees for extra services. Each is calculated on a different basis, and each is set or assessed by a different body.
The first two cover care and daily living. The accommodation payment covers the room itself. Extra services fees, for anything above the standard offering, sit outside government assistance schemes entirely.
What does the basic daily fee cover?
The basic daily fee is currently $68.93 a day, set at 85% of the standard full age pension. It covers meals, cleaning, laundry and general management of the facility.
This fee is not means tested. Every resident pays the same amount, regardless of income or assets, and it applies even to those with very limited means. Aged care fees are indexed twice a year, on 20 March and 20 September, so the rate moves in line with those review dates.
How is the means-tested care fee worked out?
The means-tested care fee is the variable component, and it is not set by the aged care home at all. Services Australia (Centrelink) or the Department of Veterans’ Affairs (DVA) completes a formal assessment of a resident’s income and assets to determine how much this fee will be.
That assessment sits at the centre of the whole system. It decides not only the means-tested care fee but also whether a resident receives any government help with the cost of accommodation.
What’s the difference between a RAD and a DAP?
Accommodation can be paid three ways: as a lump-sum Refundable Accommodation Deposit (RAD), as an ongoing Daily Accommodation Payment (DAP), or as a combination of both, negotiated directly with the aged care facility.
The average RAD across Australia sits near $470,000, though this varies greatly by location and by facility, so a national average says little about what any particular room will cost. A DAP is calculated from the RAD figure for that room, multiplied by 365 days and the Maximum Permissible Interest Rate (MPIR), which is reviewed every quarter.
The structural difference matters for a resident’s remaining assets. A RAD is refundable when the resident leaves care. A DAP is not, and it accrues at the MPIR on the unpaid balance for as long as it runs, so paying by the day carries an ongoing cost that a lump sum does not.
Who gets help with accommodation costs?
The Australian Government Department of Health assesses a resident’s income and assets to determine how much financial assistance they receive toward accommodation costs. Under the “limited means” test, a single person with assets under $64,500 and income below $35,313 a year is generally considered to have limited means, with revised means-tested fee arrangements applying from 20 March 2026 for residents with lower assets and income.
For residents who fall inside those thresholds, contributions can be deducted directly from pension payments rather than paid as a separate accommodation charge. Financial hardship assistance is also available for people who cannot meet aged care fees, though this provision does not extend to fees for extra services.
Because the thresholds are narrow, many residents fall outside government-covered accommodation support and negotiate a RAD, a DAP or a combination directly with the facility. The Aged Care Home Fee Estimator on the My Aged Care website (myagedcare.gov.au) gives an individual estimate based on personal circumstances, and Services Australia or a licensed financial adviser can confirm how a specific income and assets position will be assessed.
Read against that structure, a quote for an aged care home stops being four unexplained figures and becomes four separate questions, each with its own answer: what is fixed, what depends on the resident’s own assessment, and what is still open to negotiate with the home itself.
