The Australian Government subsidises aged care, but residents are expected to contribute to their care if they can afford to do so.
Understanding these fees is the first critical step before comparing the best retirement and aged care facilities in Shepparton.
Proper financial planning ensures you can access the care you need without unexpected financial strain.
Understanding the Three Tiers of Aged Care Fees
To navigate residential aged care costs in Australia, you must understand how the fee structure is broken down.
1. Basic Daily Fee
Every resident in an Australian aged care facility pays a basic daily fee. This covers day-to-day living expenses such as meals, cleaning, laundry, and facility heating or cooling.
This fee is set by the government at 85% of the single basic Age Pension and is adjusted twice a year (March and September).
2. Means-Tested Care Fee
This is an additional contribution towards the cost of your clinical and personal care.
Services Australia conducts a formal income and assets assessment to determine if you need to pay this fee.
There are annual and lifetime caps applied to the means-tested care fee to protect residents from excessive ongoing costs.
For detailed, up-to-date thresholds on means testing, visit Services Australia.
3. Accommodation Costs (RAD and DAP)
If your income and assets sit above a certain threshold, you will be required to pay for your room.
Facilities publish their maximum room prices, which you can pay in two ways:
- Refundable Accommodation Deposit (RAD): A lump-sum payment that is fully refunded when you leave the facility.
- Daily Accommodation Payment (DAP): A non-refundable daily interest payment on the unpaid RAD amount.
- Combination: You can choose to pay a partial RAD and cover the rest via a DAP.
To estimate your potential costs before touring facilities, the Australian Government provides an official Fee Estimator on My Aged Care.
Seeking Financial Advice
Before signing an aged care contract, it is highly recommended to seek independent financial advice.
Structuring your assets—such as deciding whether to sell the family home or keep it to rent out—will drastically impact your aged care fees and your Age Pension entitlements.
For impartial guidance on retirement finances, consult the government's Moneysmart website.
Frequently Asked Questions (FAQs)
What is a Refundable Accommodation Deposit (RAD)?
A Refundable Accommodation Deposit (RAD) is a lump-sum payment made to an aged care home to cover the cost of your room.
The balance is fully refunded to you or your estate when you leave the facility, minus any agreed deductions.
What is a Daily Accommodation Payment (DAP)?
A Daily Accommodation Payment (DAP) is a non-refundable daily fee paid for your aged care room if you choose not to pay the lump-sum RAD.
It is calculated using a government-set maximum permissible interest rate applied to the room's total price.
Do I have to sell my house to pay for aged care?
You do not strictly have to sell your house to pay for aged care. You can opt to pay for your accommodation via a Daily Accommodation Payment (DAP), which can be funded through your pension, savings, or by renting out your family home.
How much is the basic daily fee for aged care?
The basic daily fee is currently set at 85% of the single basic Age Pension. Because the Age Pension changes in March and September each year, the basic daily fee is updated concurrently to reflect these adjustments.
Is there a cap on aged care fees in Australia?
Yes, there are caps on the means-tested care fee. The Australian Government sets an annual cap and a lifetime cap.
Once you reach these financial ceilings, you will not be required to pay further means-tested care fees, though basic daily fees still apply.
Can the government help if I cannot afford aged care?
Yes. If Services Australia determines you have income and assets below the required threshold, the Australian Government will subsidise or fully cover your accommodation costs and your means-tested care fees.
You will only pay the basic daily fee.
Are extra service fees mandatory in aged care?
No, extra service fees are not mandatory for basic clinical care. Some facilities offer "extra service" rooms that include higher-end food, wine, or premium television subscriptions.
These additional daily fees must be agreed upon before you enter the facility.
How long do I have to decide how to pay my accommodation costs?
You have 28 days from the day you enter a residential aged care facility to decide your payment method.
You can choose to pay a lump sum (RAD), a daily rate (DAP), or a combination of both.
Does my superannuation count towards my aged care asset test?
Yes, the balance of your superannuation is generally counted as an asset by Services Australia during your income and assets assessment, which determines your means-tested care fee and accommodation contributions.
Will moving into aged care affect my Age Pension?
Moving into aged care can affect your Age Pension. Changes to your living situation, specifically how you structure the payment of your Refundable Accommodation Deposit (RAD) and the status of your former home, can alter your pension entitlements.
