Thinking about how to pay for a Nursing Home (also known as an Aged Care Home or Residential Aged Care facilities) is one of the most significant decisions for elderly Australians and their families. It can be highly emotional and financially stressful. The costs of Nursing Homes in Australia vary greatly, and cost is dependent on factors like location, facilities and services, and the type of Home. 

Additionally, the cost of the Home is calculated based on an assessment of the resident’s income and assets, known as a means assessment. 

In this article, we will break down how this assessment works, how much you can expect to pay for a Nursing Home in Australia, and the standard fees you’ll encounter when applying for a Nursing Home.  

Overview of Nursing Home costs 

There are several different types of fees associated with Nursing Homes. Everyone must pay the basic daily fee and additional fees (if applicable) but only those who have income and/or assets over a certain threshold need to pay accommodation fees and the means tested care fee. Most Australians meet this threshold and will need to pay these. 

The basic daily fee 

Every resident in an Australian Nursing Home is required to pay a basic daily fee. This fee is intended to cover everyday living costs, such as meals, laundry, and cleaning services. The Australian government sets this fee at 85% of the full Age Pension. The current basic daily fee for Nursing Homes is $61.96 (March 2024). 

This fee is updated twice a year in March and September, and is published on the Department of Health’s website

Accommodation costs 

Each Nursing Home sets accommodation costs depending on the room size, location, and if it’s a shared or single room. Generally, you are encouraged to negotiate the price and get an agreed accommodation fee in writing from the Nursing Home. 

Accommodation payments can be paid in a few ways: 

  • A refundable lump sum payment upfront, known as a Refundable Accommodation Deposit (RAD) 
  • A rental-style daily payment, known as a Daily Accommodation Payment (DAP) 
  • A combination of both the above methods 

Residents do not have to decide between how they will pay for their accommodation immediately, as they have 28 days from their move-in date to determine how they’d like to pay the accommodation cost.  

Learn more about the RAD and DAP. 

Means tested fee 

Elderly Australians applying for a Nursing Home may need to disclose their income and assets to the Australian Government for a means assessment

This assessment is done to understand the resident’s current financial situation and determine how much they will have to pay towards their means tested care fee – a fee that’s part of the Nursing Home cost. Residents can choose not to complete this assessment, but if so, they will be required to pay the maximum contribution for the means tested care fee. 

Additionally, not everyone will have to complete this assessment. For example, full or part pensioners would have their income and assets records in Service Australia, so they may not need to provide further information. The My Aged Care website has a handy questionnaire to determine if you need to undergo a means assessment.  

The means tested care fee is calculated daily, and residents are charged this fee each day until they reach the annual or lifetime cap. Currently, the annual cap set by the Australian Government is $33,309 and the lifetime cap is $79,942 (March 2024). 

Extra or additional fees 

These are added fees requested by the resident of the Nursing Home or set by the particular Home as an additional service. Examples of additional or extra fees include therapies, satellite TV, or transport arrangements. Some Nursing Homes also offer extra services, such as better furnishing and higher quality essentials (such as fine bed linen) for residents, which have added costs. 

To best understand these fees, you should confirm these additional services with your chosen Nursing Home before moving in. 

Factors Influencing the Cost of Nursing Homes 

Several key factors influence the overall cost of nursing homes. They are: 


Just like other property, the cost of a Nursing Home can vary significantly between urban and rural areas and among different states. Metropolitan Homes often charge higher fees due to increased demand and the cost of living. 

Size and Type of Accommodation

Nursing Homes offer various room sizes and types, influencing the cost. A private suite might be more expensive than a shared room.

Type of care  

The level of care required plays a crucial role in determining costs. Specialised care, such as dementia care or high care for complex medical needs, typically comes at a higher price but is mostly subsidised. 

Nursing Home amenities 

Nursing Homes offer different levels of comfort and amenities. Luxury Homes provide a more comfortable and feature-rich environment but come at a premium cost compared to standard or basic options.

Government Subsidies and Support 

The Australian government offers financial support through the Aged Care Funding Instrument (ACFI), which provides funding to accredited Aged Care Homes. ACFI is designed to ensure that residents receive appropriate, quality and respectful care even if they cannot afford it. Nursing Homes receive subsidies based on the individual care needs of each resident. 

Government support for Nursing Home costs is means-tested, meaning it is determined by an individual’s income and assets. The higher your income and assets, the less government support you (or the Home) may receive. 

If you cannot afford to pay for your Aged Care, there is further financial assistance available through the Financial Hardship Assistance Program and through Residential Aged Care Supplements. 

What is the average cost of a Nursing Home? 

Knowing how much you’ll need to pay for a Nursing Home is a complex question, as it’s often tied to the Nursing Home itself and your financial capacity. For context, the average refundable deposit (RAD) in Australia is around $470,000 per year, and this figure can go up to $1 million for homes located in inner city areas. 

Most elderly Australians who contemplate paying for their Nursing Homes sometimes consider selling their family homes, but this doesn’t always have to be the case. Seniors who make the best financial decisions often have sound, up-to-date information at their disposal. 

Read this article for more information on How to avoid selling home to pay for Nursing Home in Australia

Tips to manage and reduce Nursing Home costs 

To manage and potentially reduce Nursing Home costs, consider the following tips: 

  1. Negotiate your room costs! These are not always set in stone, and you are allowed to try and reach another agreement with the Nursing Home. 
  1. Plan and budget. If you can, start planning and budgeting for your aged care expenses well in advance. Many people see an aged care financial planner for tips on how to best pay for aged care. 
  1. Shop around. Don’t settle for the first Nursing Home you visit. It’s essential that you compare different options to find the best fit for your needs and budget. CareAbout can provide you a FREE list of government accredited Homes in your local area that you can tour. 

The future of Nursing Home costs in Australia 

As Australia’s population ages, the demand for Aged Care services, including Nursing Homes, continues to rise. If the number of rooms available is less than the demand, it could push costs up even more.  

Innovations in healthcare technology may enhance care quality, but they could also affect costs. On one hand, they may reduce costs by improving efficiency and the effectiveness of certain care services, but the cost of the technology itself may initially drive costs higher. State-of-the-art facilities may come with higher price tags. 

The decision to move yourself or a loved one into a nursing home (also known as an Aged Care Home, or Residential Aged Care) can be highly emotional and financially stressful.  

You don’t have to do it alone. Luckily, there are experts available to guide you in making your decision.   

CareAbout helps carers and older Australians find proper financial advice and care for themselves and their loved ones. Our team of experts also help families navigate the various Home Care and Aged Care options available. To find a quality Aged Care Home, contact our team today for a personalised discussion.