One of the first things you’re going to discover when you start researching residential care is that there’s a maze of costs and charges to get your head around. It’s complicated at first, but once you understand the basics you’ll be in a good place to start making some decisions.
To make it as clear as possible, let’s go step-by-step through all the various charges.
The Basic Daily Fee
Everyone in residential care pays a government-levied basic daily fee. Depending on your assets and circumstances, it may be the only fee you’ll pay. It’s set at 85% of the single pension, and goes up twice a year in line with pension increases.
Accommodation costs (RADs and DAPs)-
An amount that some people pay to contribute towards, or cover, the total costs of their room, depending on their means assessment.
Refundable Accommodation Deposit (RAD) – this is what used to be known as a bond. It’s a one-off lump sum that you pay to the aged care home and that you (or your estate) get back at the end of your stay.
Its worth noting that aged care homes from Nov 1st, 2025 will now retain 2% of the RAD per year, for up to five years, from the time the deposit is paid.
Previously, the RAD was refunded in full (less any agreed deductions), but this change introduces a capped retention amount of up to 10% over five years, reducing the refund amount families may receive upon exiting care.
OR
Daily Accommodation Payment (DAP) -
If, for whatever reason, you choose not to pay a RAD, you can pay this component by a Daily Accommodation Payment (DAP) instead – essentially the RAD paid by monthly installments. Daily payments work like rent payments; they are not refunded when you leave care.
OR
You can also pay a combination of RAD and DAP – if you do this there are many different ways you can cut it, and you will probably want to get some professional advice.
Other fees and charges
Besides the main care fees, there are other costs that you may incur.
Contributions based on your means assessment-
- Hotelling contribution: additional contribution that some people pay towards daily living services such as meals, cleaning and laundry.
- Non-clinical care contribution (NCCC): an amount that some people pay to cover personal care, such as bathing, mobility assistance, and lifestyle activities.
- Means tested care fee: an amount that some people pay toward the cost of their care.
Optional costs-
- Higher everyday living fee: some providers offer higher quality services for an additional fee.
Please note, people who moved into an aged care home before 1 November 2025 will have their fees determined differently to those who move into a home after 1 November 2025.
Learn more about pre-1 November 2025 accommodation payments
