Nursing home costs are easier to follow once you know there are only four kinds of payment, and that each one is worked out in a different way. Some are the same for everyone. Some depend on your income and assets. One is a price you agree with the home, and one is optional. This guide explains each part in plain terms and shows where to get figures that apply to you.
In short, the costs of living in an aged care home are:
- A basic daily fee, which every resident pays.
- Contributions based on your means assessment, which some residents pay and others do not.
- Accommodation costs for your room, paid as a lump sum, a daily payment or a mix of both.
- A higher everyday living fee, which is optional and only applies if you choose extra services.
This guide does not quote dollar amounts. The government adjusts most of them during the year, so the only reliable figures are the current ones on My Aged Care.
The four kinds of cost in an aged care home
An aged care home is also called a nursing home or residential aged care. Living there permanently means paying for three different things: daily living services like meals and laundry, the personal care you receive, and the room you live in.
Which of these you pay, and how much, depends on four things set out by My Aged Care:
- the fee arrangements that apply to you, based on when you enter care and your circumstances
- your income and assets, as worked out in your aged care means assessment
- the aged care home you choose
- the room price you negotiate with that home.
Two people in the same home can pay very different amounts. That is normal, and it is why a friend’s figures are rarely a useful guide to your own.
The basic daily fee
Everyone living in an aged care home pays a basic daily fee, whatever their means. It goes towards daily living services such as meals, cleaning, laundry and utilities.
The fee is set at 85% of the single person rate of the basic age pension. It is indexed twice a year, on 20 March and 20 September, so the amount moves in step with the pension. You pay it directly to the home, usually each fortnight or each month, and it applies for every day you are a resident, including nights spent away in hospital or on holiday.
Contributions that depend on your means assessment
For people entering permanent care from 1 November 2025, two further contributions may apply. Whether you pay them, and how much, comes from your means assessment.
Hotelling contribution
The government pays aged care homes a hotelling supplement, which tops up the basic daily fee to cover the real cost of meals, cleaning and laundry. If your income and assets are above certain thresholds, you may be asked to contribute towards that supplement yourself. If you pay part of it, the government pays the rest. If your means are below the thresholds, the government continues to pay it in full.
Non-clinical care contribution
If your means assessment has you paying the full hotelling contribution, you may also be asked to contribute towards non-clinical care. This covers things like help with bathing, mobility and lifestyle activities. Clinical care, such as nursing, is not part of this contribution.
The non-clinical care contribution has a daily cap and a lifetime cap. Once you reach the lifetime cap, or after 4 years of contributions, whichever comes first, you stop paying it. The caps are indexed twice a year. The current amounts are on My Aged Care.
Accommodation costs: RAD, DAP or a mix
Everyone entering an aged care home agrees a room price in writing with the home before moving in. Room prices vary between homes and between rooms, depending on things like room size, a shared or private bathroom and where the home is.
Homes must publish the maximum price for each room on My Aged Care. You can negotiate a lower price, but you cannot be charged more than the published price.
Whether you pay the full room price depends on your means assessment. If you have less means, the government pays some or all of your accommodation costs and you may pay a smaller accommodation contribution. If you do not qualify for help, you pay the agreed price, and there are three ways to do it:
- Refundable accommodation deposit (RAD). A lump sum. The balance is refunded when you leave the home, less any amounts that have been deducted from it.
- Daily accommodation payment (DAP). A regular payment that works like rent. It is not refunded.
- A combination of both. You pay part as a lump sum and the rest as a smaller daily payment, split however you choose.
You do not have to pay the full cost upfront, and you cannot be asked to choose your payment option before you move in. Until a lump sum is paid, you pay by daily payments. One detail catches families out: a refundable deposit counts as an asset in the means assessment, even when a family member pays it, so it can change your other fees.
The higher everyday living fee and when you can be asked
Some homes offer services above the standard level, such as a wider menu or extra amenities, for an additional fee. This is called a higher everyday living fee, and it is optional.
A home cannot ask you to agree to it until after you have entered care, and it cannot be a condition of getting a room. The agreement must list each service, how often it is delivered and how it is charged. There is a cooling off period during which you can cancel or change the services without a cancellation fee, and the agreement must be reviewed at least once a year.
Which fee rules apply to you
Two sets of fee arrangements are in use, and your entry date mostly decides which one you are on:
- Entering permanent care on or after 1 November 2025: the basic daily fee, hotelling contribution, non-clinical care contribution and, if you choose it, a higher everyday living fee.
- Already in care on or before 31 October 2025: your existing fees and accommodation costs stay the same while you remain in care, unless you choose to opt in to the 1 November 2025 arrangements.
There is one important exception, called the no worse off principle. If you were receiving a Home Care Package, or had been approved and were waiting for one, on or before 12 September 2024, you pay under the older 1 July 2014 fee arrangements when you move into an aged care home. Those arrangements use a means tested care fee in place of the hotelling and non-clinical care contributions.
The means assessment, and why independent financial advice comes first
A means assessment looks at your income and assets to work out what you pay and what the government contributes. For most people, Services Australia does the assessment. If you receive a means tested payment from the Department of Veterans’ Affairs, it is done there instead. When it is complete, you receive a fee advice letter that sets out the fees you can be asked to pay.
It helps to have the assessment done before you choose a home, because the result shapes which rooms are realistic for you.
Some payment choices affect your pension and your other aged care fees, and a couple’s choices can affect each other. My Aged Care recommends independent financial advice before you decide how to pay. Services Australia runs a free Financial Information Service that can explain how the options affect you.
Using the official fee estimator
The aged care home fee estimator on My Aged Care gives you an estimate based on your answers about your situation, income and assets. It can estimate fees under either set of arrangements if you are entering a home for the first time, and it can help someone already in care decide whether to opt in to the 1 November 2025 arrangements.
Before you start, gather your income and asset details so the estimate is close to real. An estimate is a guide only. Your actual costs come from your means assessment and from the room price you agree with the home.
Most people reach this stage after an aged care assessment has confirmed they are eligible for residential care. If that step is still ahead of you, the guide to what happens at an aged care assessment explains how it works.
Comparing aged care homes and accommodation options
Once you have an estimate, you can start comparing homes on the things the numbers do not show: location, the rooms on offer and how the home runs day to day. Provider24 lists businesses in its Accommodation & Housing category and its Retirement & Independent Living category, or you can use the Explore page to search by category and location. Provider24 does not check or endorse listed businesses, so confirm room prices and fees with each home in writing and check its details on My Aged Care.
This article is general information, not advice, so check your own figures on My Aged Care or with a financial adviser before you commit.
Frequently asked questions
How much do you have to pay to get into a nursing home?
It depends on your fee arrangements, your means assessment and the room price you agree with the home. Everyone pays the basic daily fee, and some people also pay means-tested contributions and accommodation costs. The aged care home fee estimator on My Aged Care gives you an estimate, and your means assessment gives you the actual amounts.
Do you have to sell your house to go into a nursing home in Australia?
You do not have to pay your accommodation costs upfront. You can pay by a refundable lump sum, by daily payments that work like rent, or by a combination of both, and until a lump sum is paid you pay daily. How your home and other assets are treated is part of your means assessment, so get independent financial advice before you decide how to pay.
What happens when you run out of money in a nursing home in Australia?
If you cannot afford your aged care home costs for reasons beyond your control, you can ask to be considered for financial hardship assistance. If you are eligible, the government pays some or all of the costs it covers. People with lower means may also receive government help with accommodation costs through their means assessment.
Can I negotiate the room price?
Yes. Each home publishes a maximum price for each room, and you can agree a lower price with the home. You cannot be charged more than the published price for that room.