Importnat note: This article was originally published in July 2024 and reflects the aged care rules in place at that time. Significant aged care reforms came into effect on 1 November 2025, changing how many residential aged care fees and charges are calculated for new entrants. For the latest aged care costs, thresholds and planning strategies under the current rules, read our updated guide: Aged Care Costs: New Thresholds & Strategies.
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Navigating the aged care fees and charges in Australia is not an easy task but is necessary to ensure the best possible care for yourself or your loved ones as you age.
This in-depth resource will help simplify the aged care services in Australia, looking specifically at several of the costs linked to home care services and aged care facilities.
By exploring the factors that influence these costs, such as geographic location, level of care required, and individual financial circumstances, you’ll gain valuable insights to make well-informed decisions about your future care needs.
Exploring Various Aged Care Options
Australia’s aged care system provides an array of services to address diverse needs. These offerings include:
1. Home Care Services
Home care services are intended to empower individuals to maintain independence while receiving essential support in the familiar comforts of home. Services are personalised to provide holistic, tailored assistance spanning daily living needs, personal care, and skilled nursing.
The Australian Government subsidises the cost of home support services, so what you need to pay depends on your services and in some cases, your financial situation. The services offered are known as Australian Government Home Care Packages and there are four levels available. Levels 1 and 2 cover basic needs and Levels 3 and 4 cover more complex needs and nursing services. You may choose to supplement the Government Home Care Package with some private services also.
Eligible recipients receive help with day to day living assistance such as gardening, home maintenance, meal prep and housekeeping for a safe living environment. If you need more hands-on care, there are home-care professionals that offer dignified personal assistance with bathing, dressing, and grooming to promote independence and privacy.
Getting some help at home can enable you to continue to live independently in your own home for as long as possible, which the government sees value in trying to support.
2. Residential Aged Care Facilities
Residential aged care facilities provide 24 hour care for individuals with extensive care needs. These communities aim to offer a caring home environment that foster comfort, dignity, and social connection. Aged care facilities assist with the residents’ daily tasks like bathing, dressing, and medication management. Integrated skilled nursing allows for seamless medical care and chronic condition management. Activities such as bus trips, exercise classes, art classes, music, book clubs, cooking, are offered and all designed to entertain and encourage social participation.
3. Respite Care
Even devoted family caregivers require respite to recharge from the immense demands of providing attentive care. Respite care services offer a compassionate solution, providing temporary relief that allows caregivers to prioritize self-care without compromising their loved one’s well-being.
Respite care is offered at most aged care facilities. Respite care means the carer can have a rest. Your elderly family member or friend can stay in the aged care facility with 24 hour care and join in all the regular activities offered by the aged care facility. This chance to embrace self-care, run errands, or simply enjoy a change of scenery sustains caregiver resilience. Caregivers can then return refreshed, with renewed energy to continue their vital roles.
Assessing Eligibility and Costs
In Australia, accessing aged care services involves an assessment to determine both eligibility and the necessary level of care.
Assessment
To access Government funded assistance for extra help at home via a Home Care Package, or Respite Care in an Aged Care Facility, or permanent residential aged care, you must first have an Aged Care Assessment. This service can be accessed through the myagedcare website, via phone or on-line. This assessment is carried out by trained assessors. Once the assessment is completed, you will be able to access the appropriate care and assistance for your individual situation. There is no cost for an assessment.
Breaking Down the Costs: What to Expect
The expenses for aged care services can differ based on the required care level, the individual’s financial circumstances, and the particular provider. Here is an overview of some typical fees and charges:
Home Care Package
You may be asked to pay a fee towards the cost of your Home Care Package.
The Fees are a ‘Basic Daily Fee’ and some recipients will be required to pay an ‘Income Tested Fee’.
The Basic Daily Fees for a Home Care Package (as at 1 July 2024) are:
Income Tested Fee
The income tested fee is based on the home care package recipients’ income from all sources and includes deemed income on financial assets and the age pension. There is no assets test.
Income Tested Fee Thresholds
There are different thresholds for a single person, a couple and a couple separated by illness.
- A single person can earn up to $33,027.80 per year and will not be asked to pay an income tested fee.
- If a single person earns between $33,027.80 and $63,559.60 they will pay an income tested fee, capped at $6,661 pa ($18.30 per day).
- If a single person earns over $63,559.60, they will pay an income tested fee, capped at $13,323.68 pa ($36.60 per day).
Lifetime Cap
As at 1 July 2024, the lifetime cap on the income tested fee is $79,942.44. After you reach the lifetime cap you will not have to pay any further income tested fees. This is the same cap that applies to the means tested care fee for aged care residents. Both the ‘income tested fee’ and the ‘means tested care fee’ are counted towards the lifetime cap.
Respite Care
Respite care is subsidised by the Australian Government. An individual is entitled to 63 days of respite care per financial year. The cost of respite care is a basic daily fee plus any extra or additional service fees levied by the individual aged care facility.
The cost for respite care is a Basic Daily Fee of $61.96 per day (as at 1 July 2024) and any extra service or additional daily fees charged by the individual aged care facility.
Residential Aged Care
1. The Basic Daily Care
The Basic Daily Fee is a mandatory payment that helps cover everyday living expenses like meals, utilities, and laundry services. This fee applies to all residents in aged care facilities, irrespective of their financial status. The cost for respite care is a Basic Daily Fee of $61.96 per day (as at 1 July 2024).
2. Means-Tested Care Fee
The Means-Tested Care Fee is based on an individual’s income and assets. It is designed to ensure those with higher incomes and assets contribute more towards the cost of their care. The means tested care fee ranges from $0 per day to a maximum of $416 per day (as at 1 July 2024).
There are annual and lifetime caps on the means tested care fee. The annual cap is $33,309.29 and the lifetime cap is $79,942.44 (as at 1 July 2024). Once the lifetime cap is reached, no further means tested care fee will be payable.
3. Accommodation Costs
Accommodation costs cover the expenses related to the physical living space in an aged care facility. These costs can vary significantly depending on the location and type of facility and the type of room chosen.
- The average Refundable Accommodation Deposit (RAD) across is Australia is $550,000.
- The Refundable Accommodation Deposit (RAD) can be paid as a lump sum, a daily payment or part lump and a daily payment.
- The equivalent daily payment is based on an interest rate of 8.36% pa (as at 1 July 2024).
For example, a Refundable Accommodation Deposit (RAD) of $550,000 will have an equivalent Daily Accommodation Payment (DAP) of $125.97.
$550,000 x 8.36% pa = $45,980 pa or $125.97 per day
If the resident made a contribution of $250,000 towards the $550,000 Refundable Accommodation Deposit (RAD), the Daily Accommodation Payment (DAP) would reduce to $68.71 per day.
$300,000 x 8.36% pa = $25,080 pa or $68.71 per day
4. Additional Service Fees
Some aged care facilities may offer additional services or amenities, such as premium accommodation, specialised care, or recreational activities, which may incur additional fees. For example, an additional fee may cover Foxtel, hairdressing, bus trips, lunches and special entertainment and activities.
Strategies for Managing Aged Care Costs
Managing the financial aspects of aged care can present challenges, yet there exist effective strategies to mitigate expenses:
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Government Assistance
Maximising the age pension is a key consideration when planning for residential aged care. This is especially true if a future resident is selling an asset, such as the family home to pay for their aged care costs. An aged care financial plan will consider how to maximise age pension entitlement.
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Cash flow
Managing cashflow for the ongoing care costs for an aged care resident is very important. Aged care fees can increase (or decrease) if there is a change to the resident’s financial situation. Financial planning to ensure current and future costs can be met will give the resident and their family peace of mind.
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Planning
A financial plan means aged care costs are calculated and planned for ahead of time. The implications of selling or keeping the family home, renting the family home, selling other assets, capital gains tax and other various financial scenarios are analysed to ensure the right strategy is put in place at the start.
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Seeking Professional Advice
Collaborating with financial advisors, aged care specialists, or legal experts is crucial for understanding and managing the complex financial aspects of aged care. These professionals provide personalised guidance tailored to your individual needs, helping to develop strategies that maximise financial resources and effectively utilise available support programs. Whether it’s determining eligibility for government subsidies or creating sustainable long-term investment plans, seeking expert advice ensures you can make well-informed decisions and navigate the expenses related to aged care with confidence.
How Yield Advisors Can Help?
Navigating the intricate landscape of aged care fees and charges can be overwhelming, but you don’t have to go through it alone. At Yield Financial Planning, our team of experienced advisors are dedicated to guiding you through this complex process. Our advisors possess in-depth knowledge of the aged care system in Australia and can provide personalised advice tailored to your unique circumstances.
Whether you’re considering options for yourself or a family member, our advisors prioritise understanding your individual needs and financial circumstances. They’ll guide you through the diverse range of aged care services, evaluate your eligibility, and clarify associated expenses. Furthermore, our advisors are equipped to aid you in navigating government aid programs, planning for future care needs, and devising effective financial management strategies tailored to aged care.
Contact us today to schedule a consultation and take the first step towards securing the best possible care for yourself or your loved ones.
