Navigating the cost of aged care can be one of the most stressful experiences for any family. You’re trying to find the best possible care for a loved one, but you’re faced with a wall of confusing terms, uncertain figures, and a deep-seated fear of the financial burden. It’s a complex system, and it’s easy to feel overwhelmed and alone.
This guide is here to change that. We’ll walk you through every single aspect of nursing home costs in Australia for 2025. We will break down the different fees, explain the assessment process step-by-step, and answer the real-world questions you’re probably worried about. Our goal is to give you clarity and confidence, so you can make the best decision for your family without the stress.
How Much Do Nursing Homes Really Cost in Australia?
There is no single, simple answer to this question, as the final cost depends entirely on your individual financial situation (your income and assets) and the specific aged care home you choose. However, everyone who enters a nursing home will pay a basic daily fee. Many people will also pay a means-tested care fee and an accommodation cost.
The key takeaway is that the Australian government provides significant subsidies to make care affordable. You will only ever be asked to pay what you can reasonably afford based on a formal government assessment.
Step-by-Step Guide: Understanding Your Aged Care Costs
The process of determining what you will pay is systematic. Here is the journey from starting your application to understanding your final fees.
Step 1: The My Aged Care Assessment
Before any costs are discussed, you must be assessed by the Aged Care Assessment Team (ACAT, or ACAS in Victoria). This assessment determines your eligibility for government-funded aged care and the level of care you need. You can start this process by applying on the My Aged Care website.
Step 2: The Formal Income and Means Test
This is the most crucial step for determining costs. You (or your representative) will need to complete and lodge a Residential Aged Care Property details for Centrelink and DVA customers (SA485) form.
This assessment, conducted by either Services Australia or the Department of Veterans’ Affairs (DVA), looks at your income and assets to work out exactly what you can afford to contribute towards your care and accommodation. You can find more details on the Services Australia website.
Step 3: Receiving Your Fee Letter
Once the assessment is complete, you will receive a letter that details the maximum fees you can be asked to pay. This letter is your most important financial tool. You can then provide a copy of this letter to your chosen aged care home, and they will use it to finalise your costs.
Demystifying the Costs: A Breakdown of Nursing Home Fees
Your final nursing home bill is typically made up of three main parts. Here’s what they are and who pays them.
| Fee Type | What it Covers | Who Pays It |
|---|---|---|
| Basic Daily Fee | Your contribution to day-to-day living costs like meals, laundry, cleaning, and utilities. | Everyone pays this fee. It is set by the government at 85% of the single person rate of the basic Age Pension. |
| Means-Tested Care Fee | Your contribution towards the clinical and personal care you receive (e.g., nursing, assistance with daily activities). | This is paid by residents who have income and assets above a certain amount. The exact amount is determined by your means test. |
| Accommodation Cost | The cost of your room. This is set by the aged care home. | This is paid by residents who have income and assets above a certain amount. If your means are below the threshold, the Australian Government will pay this for you. |
Understanding Accommodation Payments (RAD vs. DAP)
If you are required to pay for your accommodation, you have a choice in how you pay for it:
- Refundable Accommodation Deposit (RAD): A lump-sum payment, like an interest-free loan to the aged care home. The balance of the RAD is fully refunded to you or your estate when you leave.
- Daily Accommodation Payment (DAP): A daily rental-style payment. The DAP is calculated based on the RAD amount, using an interest rate set by the government.
- A Combination: You can choose to pay part of the RAD upfront and pay the rest as a smaller daily DAP.
Frequently Asked Questions
This process brings up many valid questions and fears. Here are answers to some of the most common concerns we hear from families.
What are the average costs of nursing home care in Australia?
While it varies, the basic daily fee is a standard starting point (currently around $63 per day). From there, your means-tested fee and accommodation cost depend entirely on your means assessment.
What happens if I can’t afford the fees?
The system is designed to protect you. If your income and assets are below the government thresholds, you will not be asked to pay a means-tested care fee or an accommodation cost. The Australian Government will pay these for you. You will only ever need to pay the basic daily fee.
Will I have to sell my family home?
Not necessarily. The value of your former home is included in the means test, but only up to a capped amount (currently around $206,663). Furthermore, the home is completely exempt from the test if a “protected person” (like a spouse or dependent child) continues to live there.
How much is the basic daily fee?
The basic daily fee is set by the government at 85% of the single person rate of the basic Age Pension. It changes in March and September each year along with the pension.
What’s the difference between a RAD and a DAP?
A RAD is a lump sum that gets refunded when you leave. A DAP is a non-refundable daily payment, like rent. The choice depends on your financial circumstances and whether you prefer to pay a lump sum or manage ongoing payments.
Figuring out aged care costs is a journey, but it’s not one you have to take alone. While the system has many parts, it is designed to ensure everyone can access the care they need, regardless of their financial situation. The key is to follow the process, get the formal assessments, and use that information to talk to potential aged care homes.
At MD Home Care, we believe that finding quality care shouldn’t be a stressful, confusing ordeal. We can help you understand the process and connect with the right services for your needs.
If you have questions about aged care or need help navigating your options, contact MD Home Care today.