Aged care home costs: RAD, DAP, the basic daily fee and the means test

Aged care fees confuse almost everyone the first time, and that's not your fault. There isn't one bill. There are several separate charges, each set a different way, and the rules changed for new residents from 1 November 2025. This guide pulls them apart so you can see what's what.

A heads-up before we start: the dollar figures here are indexed and move twice a year. We've linked the official My Aged Care pages for every amount. Always check those, and get a financial adviser to run your own numbers, because the means-tested parts depend entirely on your personal situation.

The four things you might pay

For someone entering a home now, there are up to four cost components:

1. Basic daily fee (everyone pays)
2. Means-tested care contributions (depends on income and assets)
3. Accommodation payment (RAD, DAP, or a mix; government may cover it)
4. Higher everyday living fees for optional extras (only if you choose them)

Let's take them one at a time.

1. The basic daily fee

This is the contribution everyone makes towards day-to-day living: meals, cleaning, laundry, heating, cooling. It's the same for almost everyone because it's set at 85% of the single age pension.

Because it's pegged to the pension, it goes up automatically on 20 March and 20 September each year. The maximum basic daily fee is $66.80 a day (current as at June 2026), per the Department of Health's basic daily fee page and My Aged Care. It is re-indexed each 20 March and 20 September, so check the live figure on those pages before relying on it.

2. The means-tested care contributions

This is where it gets personal. The government works out, based on your income and assets, how much you should contribute towards your care (the nursing and personal care, as opposed to the room and board).

Here's the important bit: the system split on 1 November 2025.

If you entered care before 1 November 2025

You're under the older rules and a "no worse off" guarantee protects you. You pay a means-tested care fee with an annual cap and a lifetime cap. Once you hit the annual cap, the fee stops for that year; once you hit the lifetime cap, you never pay it again. Both caps are indexed each March and September. Current figures are on the My Aged Care fees and caps page.

If you entered care on or after 1 November 2025

The single means-tested care fee was replaced by two new contributions:

• Hotelling Supplement Contribution (HSC) towards everyday living costs, kicking in above certain income and asset levels.
• Non-Clinical Care Contribution (NCCC) towards non-clinical care, which starts once your assets pass a threshold and rises to a daily cap. It also stops once you reach the lifetime cap or have paid it for a cumulative four years, whichever comes first.

The thresholds, daily caps and lifetime cap are all indexed (re-set each 20 March and 20 September). Do not rely on figures you read in a blog (including this one). Get them from the official means-tested fees page and from a financial adviser. Clinical care, the actual nursing, remains fully government-funded; you're never charged for that.

Some people pay nothing in means-tested contributions. Full pensioners with few assets often fall into this group.

3. The accommodation payment: RAD vs DAP

This is the cost of your room. How much you pay depends on the home, the room, and your means assessment. Some people have it paid in full by the government; others pay the lot; many are somewhere in between.

You get a genuine choice in how to pay, and you have 28 days after moving in to decide:

RAD: Refundable Accommodation Deposit

A RAD is a lump sum, like a big interest-free deposit you lend the home. It's fully refundable when you leave or pass away (subject to some new retention deductions for residents entering from 1 November 2025, see below). The maximum a home can charge without special approval is capped and indexed; it is $750,000 (current as at June 2026). See My Aged Care accommodation costs and the Department of Health's maximum accommodation payment amounts for the live figure.

DAP: Daily Accommodation Payment

A DAP is the same cost paid as a daily, rent-style amount instead of a lump sum. It's worked out by applying a government-set interest rate (the MPIR, Maximum Permissible Interest Rate) to the room price. You don't get a DAP back; it's a payment, not a deposit.

Or a combination

You can pay part as a RAD and the rest as a DAP. Lots of people do, especially if they don't want to tie up all their cash.

Which should you choose?

There's no universal right answer. It hinges on your assets, your income, your pension, and what you want to leave to family. As a rough framework:

Your situation	Worth considering
Plenty of cash, want to preserve pension/income	A RAD can help, but model it first
Don't want to sell assets or the home	A DAP keeps cash free, at an ongoing cost
Unsure, or assets may change	A combination, decided after advice

This is exactly the kind of decision where an hour with an aged care financial specialist pays for itself many times over. See financial advice.

4. Higher everyday living fees (the extras)

Some homes offer optional extras: a glass of wine with dinner, premium TV channels, hairdressing, outings. From 1 November 2025 these are charged as higher everyday living fees. They're genuinely optional, a home can't make them a condition of getting in, and you should see a clear list of what you're paying for.

What changed on 1 November 2025, in one table

Component	Before 1 Nov 2025	On or after 1 Nov 2025
Means-tested care	Single means-tested care fee, with caps	Hotelling Supplement Contribution + Non-Clinical Care Contribution
RAD refund	Fully refunded	A retention amount of 2% a year, for up to 5 years, is kept (RAD/RAC retention, Dept of Health)
DAP indexation	Set at entry	Indexed twice a year for new residents
Extra services	"Extra service" / "additional service" fees	Higher everyday living fees

If you moved in before 1 November 2025, the "no worse off" principle means you keep your old arrangement.

A worked example, in plain terms

Say your dad is a part-pensioner with some savings and owns his home, which his partner still lives in. He might:

• Pay the basic daily fee like everyone
• Pay some means-tested contribution, because he has assets above the threshold but not a fortune
• Pay part of his room cost, with government covering the rest, choosing a RAD/DAP combination so he keeps cash on hand
• Pay no extras, because he doesn't want them

The exact numbers? That's the adviser's job, and the income and assets assessment from Services Australia is what feeds them.

Frequently asked questions

Is the RAD really safe? It's a lot of money to hand over.
RADs are government-guaranteed, so even if a provider failed, your refundable balance is protected. New retention deductions do apply to people entering from 1 November 2025, so confirm the detail before paying.

Do I have to pay the basic daily fee even if I'm broke?
Yes, everyone pays it, but if you're a full pensioner it's designed to be affordable out of your pension, and hardship help exists. Ask My Aged Care about financial hardship assistance.

Can the home charge whatever it likes for the room?
No. There's a maximum RAD it can advertise without special approval, and prices must be published. Higher prices need Pricing Authority sign-off.

Will Mum lose her pension by paying a big RAD?
A RAD is treated differently from ordinary assets in the pension test, which is one reason advice matters. It can help or, occasionally, not. Model it.

The bottom line

There's no single aged care bill. There's a basic daily fee everyone pays, a means-tested contribution that depends on you, a room cost you can pay as a lump sum or daily, and optional extras. The 1 November 2025 reforms reshaped the means-tested and accommodation rules for new residents.

Two rules will keep you safe: never act on a dollar figure without checking the official My Aged Care page, and get personalised financial advice before you sign or sell anything.