What will a nursing home cost?

So, you have chosen or been offered a bed in a nursing home where you would like to live, but how much do you have to pay?

Last updated: October 28th 2024

Nursing Homes

Learning about how much it may cost you to receive aged care will help you to refine your fiscal planning. [Source: iStock]

When choosing a nursing home in Australia, it’s important to understand the costs involved. Whether you’re selecting a permanent residential aged care home or looking for temporary respite care, knowing what fees to expect will help you plan better.

In this guide, we’ll cover the different types of payments, how much you can expect to pay and the factors that affect nursing home care fees.

Key points:

Every person entering aged care will be asked to contribute toward their daily living expenses.
There are three payment options to choose from when deciding how to pay for aged care.
Government-funded aged care requires an assessment process to determine eligibility.

What determines nursing home costs?

The cost of living in a nursing home, also referred to as a ‘residential aged-care facility,’ depends on several factors, including the type of accommodation, your financial situation and the level of care required. Let’s break down the key components that influence the cost:

1. The basic daily fee

The basic daily fee is the standard fee that all residents of aged care homes must pay. It covers essential services such as:

meals;
room and home cleaning;
laundry services;
heating and cooling;
personal care and daily living assistance;
medical care and some pharmaceuticals.

The Australian Government sets the maximum amount for this fee, which is reviewed biannually in March and September. As of September 20, 2024, the maximum basic daily fee is 85 percent of the single basic Age Pension, amounting to $63.57 per day.

For more information on pension rates and other details, visit the Services Australia website.

2. Accommodation payments

Your accommodation payment depends on your income and assets. If your assets and annual income are under $61,500 (as of September 20, 2024), you won’t need to pay this fee. However, if you have more, you will need to contribute.

There are three ways to pay for accommodation and you have 28 days after moving in to change your payment choice:

Payment option one: the refundable accommodation deposit (RAD)

The RAD is a lump-sum payment, similar to an interest-free loan to the aged care home. This amount is mostly refundable when you leave.

Payment option two: the daily accommodation payment (DAP)

The DAP works like rent; you pay for your accommodation daily or monthly and this option isn’t refundable when you leave.

Payment option three: combination payment

You can also combine a smaller RAD with a DAP and this flexibility allows you to decide based on your financial situation.

To see current MPIR rates (Maximum Permissible Interest Rate), check the Department of Health website.

3. Means-tested care fee

The means-tested care fee looks at your assets and income to determine how much you contribute toward the cost of your care. This fee is capped at $34,174.16 per year (as of September 20, 2024) and it will fluctuate with changes in your financial situation.

No matter what happens with your income or assets, there is a lifetime cap of $82,018.15, ensuring your fees remain manageable.

4. Extra service fees

Some aged care homes offer extra services for residents who desire a higher standard of care. These services can include:

larger, more comfortable rooms;
premium meal options;
access to recreational facilities or therapies;
enhanced medical or wellness services.

The extra services fee applies to homes that offer a more luxurious experience and can vary depending on the location and level of services provided.

Temporary care: respite care costs

If you’re looking for respite care in a nursing home, you’ll only pay for the days you stay, much like booking a hotel. The fee for respite care is the same as the basic daily fee for permanent residents.

For those staying in homes offering extra services, an additional fee may apply for the enhanced level of care.

What happens if you can’t afford to pay?

If you’re facing financial hardship, you can apply for assistance from the government to help cover the cost of your aged care accommodation. This support is available through My Aged Care.

For more details on government assistance and how to apply for hardship support, visit the My Aged Care website.

Summary of nursing home costs

Cost Type	Description	Approximate Cost
Basic Daily Fee	Covers meals, cleaning, laundry, personal care, etc.	Up to $63.57 per day
Accommodation Payment (RAD)	Lump-sum refundable deposit, varies by home	Based on room and assets
Accommodation Payment (DAP)	Daily accommodation fee, non-refundable	Based on room and interest rate
Means-Tested Fee	Fee-based on income and assets, capped at $34,174.16 per year (as of September 2024)	Varies based on finances
Extra Services Fee	Higher-level services, luxury rooms, enhanced care	Varies by facility

Final tips: Understanding nursing home fees

Planning for aged care costs can feel complicated, but knowing your options and what to expect can help you make informed decisions. It’s a good idea to consult with a financial adviser to ensure your financial plan aligns with your care needs.

Need help finding a nursing home? Use the Aged Care Guide’s nursing home search tool to compare homes in your area.