Aged care costs

How much will I pay?

If you can afford to, you will pay a basic fee of up to 85 percent of the maximum base rate of the Age Pension for a single person, a means tested (your income and assets combined) contribution to your accommodation, and a means tested contribution to your care.

The maximum means tested contribution will be allocated toward your accommodation payment until the full cost is paid and then toward your care fee.

The family home will continue to be exempt from the aged care assets test if occupied by a spouse or other protected person. Any income tested contributions you may have made as a recipient of Home Care Packages will be taken into account in calculating lifetime care expenditure.

The treatment of the family home will not change from the current arrangements, for example if it is occupied by a spouse or protected person.

Even when the value of your former home is included as an assessable asset, its value will be capped at $193,219.20 (March 2023 prices). It is only counted in determining your ability to pay for your accommodation.

Understanding the rules and seeking specialist advice from an aged care financial advisor to minimise costs is recommended. See page 112 for more information on financial advice.

Choose how you pay

When moving into an aged care home, if you have the capacity to contribute to the cost of your accommodation, you can now choose how you pay for it.

You have a choice of three options, however, if you start with one option and change your mind, you have up to 28 days from the date you move into the care home to decide how you wish to pay.

Payment Option 1:

Refundable Accommodation Deposit (RAD)

This is a single payment made to the care home and works similar to an interest-free loan.

The balance of the deposit is guaranteed to be refunded when you leave the home, but only after any amounts which have been used to pay for agreed services have been deducted.

Payment Option 2: Daily Accommodation Payment (DAP)

In this option, you pay a periodic payment (usually on a monthly basis) for your accommodation; it is calculated based on the daily rate of the RAD. To calculate the daily payment equivalent of the refundable deposit, the RAD is multiplied by the Maximum Permissible Interest Rate (MPIR) and divided by 365 days.

The MPIR is set by the Government and is updated every three months –as of 1 April 2023, it is 7.46 percent.

The daily payment amount must be equivalent to the refundable deposit amount and is the maximum you can be charged per day for the room. These periodical payments are not refunded when you leave the home.

Payment Option 3: Combination payment of RAD and DAP

If you wish you can also choose to pay a combination of both a RAD and a DAP. For example, let’s assume the RAD is $400,000 but you want to only pay half of a deposit ($200,000) and the other as a DAP.

Use this formula to calculate the DAP:

(Balance of price x MPIR) / 365 = ($400,000 - $200,000) x 7.46% / 365 = $40.87 per day (MPIR from 1 April 2023).

Or use our easy to use fee estimator calculator on agedcareguide.com.au/nursing-home-fee-estimator

For further information, call My Aged Care on 1800 200 422 or Centrelink on 13 23 00, or discuss with a placement consultant or financial advisor.