Cost of aged care

  Government support 
  Your former home

Aged care is not cheap. But when you think about it you are paying for somewhere to live and a number of people to look after you around the clock. The good news is that a lot of the cost is paid by the government. You only pay a portion of the cost of your care. The more you have in assets or income, the more you may be asked to pay.

Did you know?

On average the cost to look after someone in residential aged care is around $35,000 a year in low-care and $66,000 in high-care. The government generally pay around two-thirds of this cost.

What fees will I pay?

The fees you will pay are divided into four categories as shown in the diagram below.

What fees will i pay?

The real cost of aged care in AustraliaHow much you pay will depend upon which facility you move into, how much income you have and the value of your assets. The rules for calculating fees are set by the government.

An entry fee is paid for the right to live in the facility for life. This helps cover the cost of the building and maintenance. The basic-daily care fee and income-tested fees pay for your cost of care. The extra-service fee is only payable if the facility has been approved for extra-service and covers the cost of the services included in your package (such as newspapers or choice of meals).

What are the current fees?

If you are already in a facility you need to look at the rates you are currently paying and any special rules that apply for you. This is because some rates and rules are fixed when you move in.

If you are moving into aged care now, the table below is a guide to the current fees (current to 19 September 2013).



If you are moving to low care or extra-service high care ...

If you are moving to high care (standard) ...

Entry fee

Accommodation bond negotiated with the facility

Up to $34.20 per day ($12,483 per year)

Daily care fee

$46.50 per day

$46.50 per day

Income-tested care fee

$0 - $73.86 per day (based on your assessable income)


$0 - $73.86 per day (based on your assessable income)


Extra-service fee

If payable, the fee is set by the facility (and approved by government). Typical range from $10 - $150 per day.

Not applicable

How much is the accommodation bond?

Unfortunately there is no easy answer to this question.

The first thing to know is that bonds are paid in low-care and are only paid in high-care if it is extra-service. The second thing to know is that each facility decides how much to charge.

The average new bond across Australia is around $230,000 but in capital cities and major regional centres it may average $350,000 or higher.

Higher bonds may be payable in areas where the cost of real estate is higher or in newer facilities. How much you pay may also depend on how much you have in assessable assets. The only condition is that after paying the bond you need to still have at least $45,000 in assessable assets.


 Alice's Bond

A low care facility recently built 20 new rooms. The bond range is set at $200,000-$300,000 for the older rooms and $300,000-$400,000 for newer rooms.

Alice has applied to move into one of the new rooms. Her assessable assets are $680,000 and the facility has asked her to pay a bond of $400,000.

A high-care facility that is not extra-service does not charge a bond. Instead you will pay an accommodation charge each day. This charge is in addition to the ongoing care fees.

The table below shows how the entry fee is affected by your level of assessable assets.


Level of assets

High care
(non extra-service)

Low care or high care

Less than $45,000

No entry fee

No entry fee

$45,000 < $116,136

Daily charge between $0 and $34.20

Lump sum bond between $0 and $71,136

$116,136 or more

$34.20 per day

Negotiated bond (but you must be left with $45,000 after paying the bond)


Aged Care Lifetime Expectations


You may be keen to shop around for the lowest bond possible but the most important first step is to identify the facility of choice and negotiate with that facility to determine the amount of bond needed to secure a place. You can then decide if you can afford this bond and whether you think it is value for money.

When do I have to pay the bond?

You don’t have to pay the bond before you move in. You just need to agree on how much you will pay and sign the Resident Agreement.

Once you move in, you can restructure investments to pay the bond as a cash lump sum or you can pay monthly interest payments (periodic payments) to the facility for any unpaid bond. The interest rate is set by the government and is fixed for your lifetime.

Aged Care Lifetime Expectations


Get advice on how to restructure your investments. Strategies may be available to increase your Age Pension or reduce fees as well as to ensure you have enough cashflow.

Cost of Aged Care Will I Get My Bond BackWill I get my bond back?

Most of your bond will be paid back to you when you leave or pass away.

The facility holds the bond in trust for you. The facility can invest the money to earn interest or use it to buy land or buildings or pay for maintenance. Each month the facility can also deduct and keep a portion as detailed in the table below, but only for up to 60 months.

This means the most the facility can keep is $19,860, depending on your bond, and all earnings. The rest of the bond is paid back to you or your estate. The bond is really like an interest-free loan to the facility. There is no risk with getting your money back as repayment is guaranteed by the government.

Bond Amount

Maximum Monthly Retention Amount

Maximum Retained

$39,720 or more



Between $20,520 and $39,720

10% of the bond amount, divided by 12, rounded to the nearest $5

As per the formula x 60 months

Not more than $20,520


$10, 260

How much do I pay as ongoing care fees?

Once you have moved in you need to pay part of the ongoing cost of your care. The government pays the rest. The rules for how much you pay are set by the government and are the same for both low-care and high-care.

The fees are generally charged monthly and the facility may directly debit your bank account.

What if I don’t have the cash to pay the bond?

If you have assets such as a former home or investment properties and don’t want to sell these assets to pay a bond (or are waiting to sell) you can negotiate to pay regular interest payments instead of the bond.

If any of the agreed bond is unpaid, the facility will invoice you for:

Interest – the rate is set by the Government and is fixed for your whole stay at the rate that
             applied when you moved in, and
Retention amount (unless deducted already from any bond paid) – this is the $331 per month
             the facility can deduct from any bond it holds.



Alice agreed to pay a bond of $400,000. She needs to sell her home to pay the bond, so in the interim she pays the full bond as a periodic payment.

She moved in on 20 August 2012 when the interest rate was set at 7.66% per annum.

Each month, the facility will invoice Alice for an amount of:

Interest charge: $400,000 x 7.66% = $30,640 / 12 = $2,553.33 per month
Retention amount: $331 per month (first 60 months only)


Basic daily care fee

The daily care fee is set by the government at 85 per cent of the annual single basic Age Pension (not including supplements). It will increase each 20 September and 20 March in line with Age Pension changes.

Income-tested daily care fee (ITF)

If you have higher levels of income (over a specified threshold) you will pay an income-tested fee. This effectively means that you pay a higher share of the cost of your care and the government pays less.

If you receive a full means-tested pension from Centrelink/Veterans’ Affairs you will not pay an income-tested fee. Some other exceptions apply.

Extra-service fee

This is only payable if you accept an extra-service place. The fee relates to extra services such as a higher standard of accommodation, choice of meals, glass of wine/beer with meals, newspapers etc.

Details of such services and the fees will be outlined in the Resident Agreement provided by the facility.

What are some tips and the traps to avoid?

Check how bonds are set – Some facilities may have a set bond for all residents or charge a
             range. Tip: when putting your name on the waiting list ask how bonds are set and see if the
             facility can give you an indication of what to expect.
Review your full finances – Don’t implement strategies just to reduce fees. Tip: seek
             professional advice to review all implications.
Don’t hide assets - If you can’t pay the bond requested by the facility (because you don’t have
             enough assets) you may not be offered a place. Trap: hiding assets may mean that you lose
             the place you want.


Did you know?

If you are accessing respite care you cannot be asked to pay an entry fee. The only fee you will pay is the standard daily care fee – currently $46.50 per day.

The government subsidises the rest of the cost if you hold an ACAT/ACAS approval and have not exceeded 63 days of respite care in the financial year (extensions up to 21 days can be applied for).

Veterans’ Affairs may pay all respite care fees for a client who holds the Gold Concession Card for the first 28 days of care in any financial year. No fees are charged during respite stays for former prisoners of war who receive high care.


This article is prepared by the strategy specialists at Aged Care Steps, an independent company supporting financial planning advice for aged care. To find a professional adviser who specialises in aged care advice go to and click on the Find an Adviser link.

Disclaimer: This is general advice and does not take into account your particular circumstances or objectives. Before taking any action you should seek personal financial planning, taxation or legal advice and refer to the relevant Product Disclosure Statement before investing in any product. Aged Care Steps is an authorised representative of Strategy Steps Pty Ltd ABN 14130045242, AFSL 333649.

The costs of residential aged care

The costs of residential aged care

Understand and make informed decisions around the financial issues of aged care

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