Aged Care Costs Explained: RAD, DAP, Means-Tested Care Fee and Basic Daily Fee (2026)

Moving a parent into an aged care home is a big decision, and the fees can feel like alphabet soup: RAD, DAP, NCCC, MPIR. The good news is that the system follows a clear logic once you see the pieces side by side.

This guide covers permanent care in an aged care home (sometimes called a nursing home or residential aged care). If your family member is getting help at home instead, see our guide to Support at Home fees.

The short version

Costs in an aged care home fall into 4 groups (My Aged Care - Aged care home costs and fees):

1. Basic daily fee: everyone pays it.
2. Means-tested contributions: some people pay, depending on income and assets.
3. Accommodation costs: the price of the room, paid as a lump sum (RAD), daily payments (DAP) or a mix.
4. Optional extras: a "higher everyday living fee" for extra services, only if you choose them after moving in.

Source: Schedule of fees and charges for residential care from 20 September 2026 (health.gov.au).

First, which fee rules apply to you?

Since the new Aged Care Act started, there are 2 sets of fee arrangements (My Aged Care):

• 1 November 2025 arrangements: basic daily fee, hotelling contribution, non-clinical care contribution and an optional higher everyday living fee. Most people entering care now are on these.
• 1 July 2014 arrangements: basic daily fee, means-tested care fee and an optional higher everyday living fee.

You stay on the 1 July 2014 arrangements if:

• you moved permanently into an aged care home on or before 31 October 2025 (unless you choose to opt in to the new arrangements), or
• you were receiving a Home Care Package, or approved and waiting for one, on or before 12 September 2024. This is the "no worse off" principle.

The basic daily fee

Every resident pays the basic daily fee, whatever their means. It covers everyday living services like meals, cleaning, laundry and utilities. It's set at 85% of the single basic Age Pension and indexed on 20 March and 20 September (My Aged Care).

• Maximum from 20 September 2026: $68.93 a day, or $25,159.45 a year.
• You pay it every day you're a resident, including nights away on holiday or in hospital.

Means-tested contributions (1 November 2025 arrangements)

Hotelling contribution

The government pays providers a hotelling supplement on top of the basic daily fee. Depending on your means, you may be asked to pay some or all of it yourself, up to $22.15 a day (My Aged Care). If your income and assets are below the thresholds, the government keeps paying the full supplement.

Non-clinical care contribution (NCCC)

If your means assessment has you paying the full hotelling contribution, you may also pay a non-clinical care contribution. It covers things like help with bathing, mobility and lifestyle activities (My Aged Care).

• Daily cap: $109.45.
• Lifetime cap: $140,652.80 (indexed), or 4 years of contributions, whichever comes first.
• Contributions paid under Support at Home also count towards this lifetime cap.

Under the 1 November 2025 arrangements, the government fully funds clinical care, such as nursing.

The means-tested care fee (1 July 2014 arrangements)

If you're on the older arrangements, you may pay a means-tested care fee instead of the hotelling and non-clinical care contributions. Services Australia works out the amount from your means assessment (My Aged Care; health.gov.au schedule):

The caps are indexed in March and September. The fee isn't fixed when you move in and can change over time.

Accommodation costs: RAD, DAP or both

Everyone agrees a room price in writing with the aged care home before moving in. Homes must publish their maximum room prices on My Aged Care. You can negotiate a lower price, but you can't be charged more than the published price (My Aged Care - Understanding accommodation costs).

Whether you pay the full room price depends on your means assessment. If your income is below $36,454.60 and your assets are below $66,500, the government pays your full accommodation costs (My Aged Care). People with less means may pay a smaller accommodation contribution instead.

Your 3 ways to pay

1. Refundable accommodation deposit (RAD): a lump sum. The balance is refunded when you leave, minus any agreed deductions.
2. Daily accommodation payment (DAP): works like rent. It isn't refunded.
3. A combination: part lump sum, part daily payments, split any way you like.

If the government is helping with costs, the equivalent terms are RAC (refundable accommodation contribution) and DAC (daily accommodation contribution).

You can't be asked to choose how to pay before you move in. Until you pay a lump sum, you pay daily (My Aged Care).

How the DAP is worked out

The DAP uses a government rate called the maximum permissible interest rate (MPIR):

DAP = (room price x MPIR) / 365

The MPIR is 8.51% for 1 October to 31 December 2026 (health.gov.au - BIR and MPIR). Your rate is locked in on the day you agree the room price.

These match the worked examples on My Aged Care.

New rules if you entered care from 1 November 2025

• RAD retention: the provider keeps 2% a year of your RAD or RAC balance, deducted regularly, for up to 5 years. On a $500,000 RAD, that's roughly $10,000 a year if the balance stays the same.
• DAP indexation: DAPs rise with indexation on 20 March and 20 September each year. This doesn't apply to DACs.

Source: My Aged Care.

Other numbers worth knowing

• Maximum RAD without special approval: $789,686. Above this, the home needs approval from the Independent Health and Aged Care Pricing Authority.
• Minimum permissible asset level: $66,500. If you pay by RAD, you must be left with at least this much.
• Maximum accommodation supplement: $73.73 a day.

Source: health.gov.au schedule from 20 September 2026.

RAD or DAP: things to weigh up

• A RAD balance counts as an asset in the aged care means assessment, even if family paid it. It can raise your other fees. It's exempt from the Age Pension assets test.
• If you're part of a couple, half your combined income and assets are counted, so one partner's RAD can affect the other's fees.
• You can ask the home to draw your DAP from a part-paid RAD. Over time your lump sum shrinks and your daily payment grows.

Source: My Aged Care.

Optional: the higher everyday living fee

Some homes offer a higher standard of services, or extra services, for a higher everyday living fee. It replaced the old extra service and additional service fees. The agreement must set out the cost of each service, how often it's delivered and how it's charged. You can't be asked to agree to it until after you've moved in, and it can't be a condition of entry. There's a 28-day cooling-off period, and the agreement must be reviewed at least once a year (My Aged Care).

How to find out your actual costs

1. Get an estimate with the official aged care home fee estimator. It doesn't ask for identifying details.
2. Get a means assessment from Services Australia (or DVA for some veterans). You'll receive a fee advice letter.
3. Compare room prices with My Aged Care's Find a provider tool.
4. Get free financial information from Services Australia's Financial Information Service on 132 300. My Aged Care also recommends independent financial advice.
5. Struggling to pay? Ask about financial hardship assistance. It can cover the basic daily fee, means-tested care fee and accommodation costs, but not a higher everyday living fee.

Source: My Aged Care.

Frequently asked questions

How much does a nursing home cost per day in Australia?

Everyone pays the basic daily fee, up to $68.93 a day from 20 September 2026. Depending on your means you may also pay a hotelling contribution (up to $22.15 a day), a non-clinical care contribution (up to $109.45 a day) and accommodation costs. Total costs vary widely, so use the official fee estimator.

What is a RAD in aged care?

A refundable accommodation deposit. It's a lump sum paying for your room. The balance is refunded when you leave, less any agreed deductions and, if you entered from 1 November 2025, a 2% a year retention for up to 5 years.

What is a DAP in aged care?

A daily accommodation payment. It's worked out as room price x MPIR / 365. On a $500,000 room at 8.51%, that's $116.58 a day. It isn't refunded.

Does everyone pay the means-tested care fee?

No. It only applies on the 1 July 2014 arrangements, and only if your means assessment says so. Most people entering care now are on the 1 November 2025 arrangements, which use the hotelling and non-clinical care contributions instead.

Is the RAD refunded?

Yes, the balance is refunded when you leave, but amounts deducted along the way, including retention, aren't refunded.

Does the family home count in the aged care means test?

It can. For the means assessment, the home's value is counted only up to a cap of $219,858.40 (from 20 September 2026), and any value above that is excluded. How your home is treated depends on your circumstances, so get independent financial advice or call the Financial Information Service on 132 300.

What is the maximum RAD?

Homes can charge up to $789,686 without special approval (from 20 September 2026). Above that they need approval from the Independent Health and Aged Care Pricing Authority.

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This guide is general information, not financial advice. Figures are as of 28 October 2026 and are indexed in March and September. Use the official fee estimator, or speak to an independent financial adviser, for your situation.