How much does residential aged care cost in Australia in 2026?

Residential aged care costs in Australia in 2026 vary depending on your means assessment, care needs, and facility. Under the new Aged Care Act (effective November 2025), residents pay a Refundable Accommodation Deposit (RAD) capped at $758,627 for facilities requiring government price approval (as of April 2026), with the Maximum Permissible Interest Rate set at 7.96% per annum for those paying a Daily Accommodation Payment (DAP). On top of accommodation, residents pay a Basic Daily Fee of approximately $65.65 per day (2025-26 rate, indexed to the Age Pension), a means-tested care fee of up to $420.05 per day for high-means residents, and potentially a hotel supplement covering meals, cleaning, and laundry. A middle-income resident with $800,000 in assets might expect total annual costs of $45,000 to $75,000 per year depending on their facility and means assessment.

What is a Refundable Accommodation Deposit (RAD) in Australian aged care?

A Refundable Accommodation Deposit (RAD) is a lump-sum payment made to a residential aged care facility in Australia in lieu of paying daily accommodation fees. The RAD is fully refunded (without interest) when the resident leaves the facility or passes away, making it more like a loan to the facility than a fee. As of April 2026, facilities requiring government price approval cannot charge a RAD above $758,627. The alternative is a Daily Accommodation Payment (DAP), calculated using the Maximum Permissible Interest Rate (MPIR) of 7.96% per annum on the RAD amount. Many residents choose a split arrangement: paying part as a RAD lump sum and the balance as a DAP to preserve liquidity while reducing daily fees.

What changed in Australian aged care from November 2025 under the new Aged Care Act?

Australia's new Aged Care Act 2024 took effect on 1 November 2025 and introduced the most significant overhaul of the aged care system since the Aged Care Act 1997. Key changes include: a new rights-based framework giving residents stronger legal rights; a restructured Support at Home program replacing the Home Care Packages and Commonwealth Home Support Programme; a new means-testing framework that treats accommodation and care fees differently; the hotel supplement (covering meals, cleaning, laundry) becoming means-tested rather than flat-rate; stronger quality and safety standards with tougher provider obligations; and a new Aged Care Quality and Safety Commission with expanded powers. For families, the financial implications are significant: means testing now captures more income and assets, and the calculation of fees has become more complex.

Does the family home count in the Australian aged care means test in 2026?

The family home is partially included in the aged care means test in Australia in 2026, depending on whether a protected person is still living in it. If a protected person (spouse, dependent child, carer who has lived in the home for two years, or close relative who has lived there for five years) continues to reside in the home, it is exempt from the means test entirely. If no protected person remains and the resident has been in care for more than two years, the home becomes assessable for means-testing purposes. However, only $197,735.20 (2025-26 indexed capped home value) of the property's value counts toward the means assessment, not the full market value. This is a critical planning consideration, particularly for couples where one partner enters residential care and the other remains at home.

Is it better to pay a RAD lump sum or daily accommodation payments in Australian aged care?

The decision between a Refundable Accommodation Deposit (RAD) lump sum and a Daily Accommodation Payment (DAP) in Australian aged care depends on your financial position and goals. Paying the full RAD eliminates daily accommodation fees and is often preferred when you have liquid assets (cash, term deposits, shares) that are earning less than the current MPIR of 7.96% per annum. For example, if your term deposit earns 4.5% per annum but the MPIR is 7.96%, you effectively 'save' 3.46% by using those funds to pay the RAD. However, paying the RAD means it counts as a depletable asset for pension means testing, potentially increasing your Centrelink assessed assets. A split RAD/DAP approach is often optimal: pay enough as a RAD to reduce means-tested fees, while preserving enough liquidity for other expenses. This is an area where specialist aged care financial advice is essential.

How do you find a qualified aged care financial adviser in Australia?

Aged care financial advice in Australia is a specialist area requiring both financial planning qualifications and specific knowledge of the aged care means-testing framework, Centrelink rules, and aged care legislation. You should look for a financial adviser who holds an Australian Financial Services Licence (AFSL) or is an authorised representative of a licensee, and who has specific experience or qualifications in aged care advice (such as the Aged Care Adviser certification). The Financial Planning Association of Australia (FPA) and the SMSF Association both have adviser directories. WealthWorks also lists verified financial advisers with aged care planning expertise. Be aware that basic aged care questions can be answered by My Aged Care (government website) for free, but personalised financial modelling for your specific situation requires a licensed adviser.

Aged Care Financial Planning in Australia: What the 2025 Reforms Mean for Your Family

Australia’s Aged Care System Has Changed Fundamentally

On 1 November 2025, Australia’s aged care system underwent its most significant structural reform in nearly three decades. The new Aged Care Act 2024 replaced the 1997 legislation with a rights-based framework that changes how care is delivered, how fees are calculated, and how families need to plan financially for the transition into aged care.

For families navigating aged care planning in 2026, the timing is critical. Whether you’re thinking about it for yourself in the decades ahead, or dealing with an urgent placement decision right now, understanding the new rules is essential to making sound financial decisions.

This guide breaks down the key changes, explains the cost structures under the new system, and outlines the financial planning strategies that apply in 2026.

What Changed Under the New Aged Care Act 2024

The Rights-Based Framework

The most fundamental shift is philosophical: aged care is now treated as a rights-based system. Residents have legally enforceable rights to quality care, dignity, autonomy, and transparency around fees and charges. Providers have corresponding legal obligations, backed by stronger enforcement powers held by the Aged Care Quality and Safety Commission.

In practice, this means residents can now formally challenge care decisions and access more information about how their fees are calculated. For families, it means providers must be more transparent about pricing.

The New Support at Home Program

At home, the Commonwealth Home Support Programme (CHSP) and Home Care Packages (HCP) have been consolidated into a single Support at Home program. This replaces what was previously a two-tiered, often confusing system with a more streamlined model where services are tailored to assessed need rather than assigned to a fixed package level.

The financial implications include:

Contributions are now calculated based on income rather than package level
Services can be scaled up or down more flexibly as needs change
New “assistive technology and home modifications” funding is available for items like grab rails, ramps, and telehealth equipment

Residential Care: The New Fee Structure

The residential aged care fee structure has been overhauled. Under the new system, there are four potential cost components:

Fee Component	What It Covers	Means Tested?
Basic Daily Fee	Personal care, nursing, some meals	No (flat rate)
Means-Tested Care Fee	Additional care costs based on means	Yes
Accommodation Payment (RAD or DAP)	Accommodation in the facility	Yes
Hotel Supplement	Meals, cleaning, laundry, activities	Yes (new from Nov 2025)

The hotel supplement becoming means-tested is one of the biggest practical changes under the new legislation. Previously, this was largely a flat fee. Now, what you pay for meals and laundry depends on your assets and income.

Understanding Aged Care Costs in 2026

The Basic Daily Fee

Every residential aged care resident pays the Basic Daily Fee, which is set at 85% of the single Age Pension rate. For 2025-26, this is approximately $65.65 per day (around $23,962 per year). This is non-negotiable and applies to all residents regardless of means.

The Means-Tested Care Fee

The Means-Tested Care Fee (MTCF) is calculated by Services Australia based on your income and assets assessment. In 2025-26, the maximum MTCF is $420.05 per day for residents with substantial means, capped at:

$33,309.29 annually (annual cap)
$83,273.23 over a lifetime (lifetime cap)

Once you hit the lifetime cap, you no longer pay the MTCF even if your means assessment would otherwise require it. This cap resets each financial year but is cumulative across your time in aged care.

Accommodation Payments: RAD vs DAP

Accommodation in a residential aged care facility is paid as either:

Refundable Accommodation Deposit (RAD): A lump sum paid to the facility, refunded in full when you leave (without interest). As of April 2026, the RAD price approval threshold is $758,627 — facilities wanting to charge more than this require government approval.

Daily Accommodation Payment (DAP): A daily fee calculated by applying the Maximum Permissible Interest Rate (MPIR) to the agreed RAD amount. From 1 April 2026, the MPIR is 7.96% per annum.

Example calculation: If a facility charges a RAD of $600,000, the equivalent DAP would be: $600,000 × 7.96% ÷ 365 = $130.85 per day (approximately $47,760 per year).

Most residents can also pay a combination: part as a RAD lump sum, part as a daily DAP.

The Hotel Supplement (New from November 2025)

Under the previous system, the hotel supplement (covering meals, cleaning, laundry, and lifestyle activities) was largely a flat fee negotiated with the facility. Under the new Act, the maximum hotel supplement is $120 per day for high-means residents, with lower amounts applying for lower-means residents on a sliding scale.

The Means Assessment: What Gets Counted

Services Australia conducts a means assessment to determine your MTCF and accommodation costs. The assessment looks at both income (including deemed income from financial assets) and assets.

Assets Included in the Assessment

Asset Type	Included?	Notes
Bank accounts, term deposits	Yes	Full value
Shares, managed funds	Yes	Full value
Investment properties	Yes	Market value
Family home	Partially	Capped at $197,735.20 if unoccupied; exempt if protected person remains
Superannuation (accumulation)	Yes (from age pension age)	Deemed income applies
Superannuation in pension phase	Yes	Deemed income applies
RAD paid to facility	No	Excluded from means assessment
Funeral bonds (up to $15,500)	No	Exempt
Personal assets (car, furniture)	No	Exempt

The Family Home: A Critical Planning Point

The family home treatment deserves special attention. If your spouse, dependent child, carer of two or more years, or close relative of five or more years continues to live in the home, it is fully exempt from the means assessment.

If the home is vacant when you enter care:

During the first 12 months: exempt
After 12 months: capped at $197,735.20 for the assets assessment

This creates a significant financial incentive for couples to carefully consider their living arrangements when one partner requires residential aged care. The non-care partner remaining in the family home can preserve substantial assets from the means assessment.

Key Financial Planning Strategies for 2026

Strategy 1: Timing the RAD Payment Decision

The RAD/DAP decision has both cash flow and means-test implications. Consider:

Opportunity cost: Is your money earning more in the bank than the MPIR of 7.96%? In 2026, with most term deposits paying 4-5%, paying the RAD is often financially advantageous.
Pension impact: The RAD is excluded from the assets means test, while the cash used to pay it would otherwise be assessed. This can increase Age Pension entitlements.
Estate implications: The RAD is refunded to your estate on death or departure, making it a preserved asset rather than a consumed expense.

Strategy 2: Gifting and Asset Reduction (with Care)

Some families consider gifting assets to reduce the means assessment. However, Centrelink’s gifting rules are strict: you can only gift up to $10,000 per year (and $30,000 over five years) without those gifts being added back to your assessable assets for five years. Attempting to reduce assets through gifting before an aged care assessment is typically ineffective within that five-year window.

Strategy 3: Pre-planning the Superannuation Question

For anyone approaching aged care age (generally 75 to 85 is when planning starts to matter practically), how your superannuation is structured affects the means assessment. Superannuation in accumulation phase (before pension age) is generally not assessed. Once you reach Age Pension age (currently 67), super moves into the assessed category.

Some individuals nearing care age consider:

Whether to take lump sums from super for specific purchases (including the RAD)
How account-based pension drawdowns affect the assessment
Whether to consolidate or restructure super before the means assessment is triggered

Strategy 4: Couples Planning — The Split Asset Scenario

When one partner enters care and the other remains at home (the community spouse), the couple’s combined assets are split 50/50 for means-testing purposes, subject to the lower asset threshold protecting the community partner.

In 2025-26, the community spouse protected amount ensures they retain at least $69,038 (the lower assets threshold) regardless of the split. Planning to ensure the community spouse’s ongoing living costs are met while the care-resident’s fees are managed is a significant financial planning exercise.

Strategy 5: Funeral Bonds and Prepaid Funeral Plans

Funeral bonds of up to $15,500 (2025-26 threshold) are exempt from both the Age Pension and aged care means tests. Prepaid funeral plans with a funeral director are also exempt. For residents close to or above the means-tested threshold, funding a funeral bond or prepaid plan is one of the few remaining strategies to legitimately reduce assessable assets.

The Support at Home Program: Home Care Financial Implications

For those receiving care at home under the new Support at Home program, the fee structure is also means-tested. Contributions are calculated as a percentage of your income above a lower threshold:

Income Tier	Contribution Rate
Below lower income threshold	Nil
Between lower and upper threshold	5% of income above lower threshold
Above upper income threshold	15% of income above upper threshold

This is simpler than the old Home Care Packages system, where fees varied by package level (Level 1 to Level 4) and were often a flat percentage.

Practical Steps for Families in 2026

If you’re planning for aged care — whether imminent or future — here are the immediate priorities:

Step 1: Register with My Aged Care. The My Aged Care portal (myagedcare.gov.au) is the entry point for all Australian aged care services. An ACAT (Aged Care Assessment Team) assessment is required before accessing residential care.

Step 2: Obtain a means assessment. Services Australia conducts a formal means assessment (Forms SA457 for residential care). This is not optional — without it, you’ll pay the maximum fees by default.

Step 3: Research facility RAD prices. All facilities are required to publish their current RAD prices on the My Aged Care website. Prices vary significantly — a metropolitan Sydney facility might charge $900,000 for a standard room while a regional Queensland facility might charge $300,000.

Step 4: Get specialist financial advice. Aged care financial planning is highly specialised. General financial advisers may not be across the new Act’s fee structures. Look for advisers who specifically list aged care planning as a service area.

Step 5: Review your estate plan. Entering aged care is often the trigger for reviewing wills, powers of attorney, and superannuation death benefit nominations. The financial changes that come with care can significantly affect how your estate passes to beneficiaries.

What the New Act Means for Care Quality (Not Just Cost)

It’s easy to focus only on the financial side, but the new Aged Care Act 2024 also delivers significant improvements in quality expectations. The new Strengthened Quality Standards (effective November 2025) include:

Standard 1 – The Person: Care must be tailored to individual needs, culture, identity, and preferences
Standard 3 – The Care and Services: Clinical care must meet contemporary best practice
Standard 6 – The Residential Community: Facilities must support residents’ social participation and wellbeing
Standard 8 – Organisational Governance: Boards must actively oversee quality and safety

These standards are enforceable, with the Aged Care Quality and Safety Commission able to issue compliance notices, condition breaches, and in serious cases, revoke a provider’s approval to operate.

The Cost of Not Planning

Consider this scenario: a 78-year-old widow with a home worth $1.2 million, $350,000 in super, and $80,000 in bank accounts enters residential care without any prior planning.

Without planning:

Home becomes assessable after 12 months (at capped value $197,735.20)
Super assets assessed in full
Maximum MTCF applies: up to $420.05 per day
No RAD/DAP optimization
Annual costs potentially $85,000 to $110,000

With planning (specialist advice):

Home sold before means assessment, proceeds used to pay RAD (excluded from assessment)
Super drawdown strategy reduces income-assessed amount
MTCF significantly reduced
Annual costs potentially $45,000 to $60,000

The difference of $25,000 to $50,000 per year, compounded over several years in care, represents a substantial preservation of estate value for beneficiaries.

Finding the Right Professional Help

Aged care financial planning sits at the intersection of financial advice, Centrelink rules, estate planning, and health system navigation. The professionals best placed to help include:

Financial advisers with aged care specialisation (look for AFSL licensees who list aged care as a service area)
Specialist aged care advisers who focus exclusively on this area
Estate planning lawyers for the will and power of attorney implications
Accountants for the tax implications of asset sales and lump sum withdrawals

WealthWorks lists verified financial advisers and accountants across Australia who specialise in retirement and aged care planning. Start with a professional who understands both the financial and regulatory landscape of the new aged care system.

Find a financial adviser near you on WealthWorks

This article provides general information about Australia’s aged care financial system and is not personal financial advice. Aged care planning is complex and individual circumstances vary significantly. We strongly recommend obtaining advice from a licensed financial adviser with aged care planning experience before making any financial decisions.