UNDERSTANDING RESIDENTIAL AGED CARE

Residential Aged Care is funded by a combination of private and public financing. Basically, there are two main categories of funding:

1. CARE COSTS PAYMENTS

   In general, the Government funds most of these payments, which cover the costs of care and related services.

   
   

   The Government calculates and makes payments directly to providers (that is, residential care facilities) on behalf of residents based on the resident’s classification under the Australian National Aged Care Classification (AN-ACC). The payment consists of a basic subsidy plus supplements based on the resident’s appraised specific care needs (as distinguished from general nursing care, interventions, and treatments).

   
   

   Residents may be asked to contribute to the cost of their care and accommodation through payment of the Means Tested Amount (MTA), which involves assets and income tests.

   
   

   The MTA is collected by the provider but is wholly paid to the Government.




2. DAILY LIVING EXPENSES AND ACCOMMODATION PAYMENTS

   In most cases, residents pay for the majority of these charges, which cover the cost of food, utilities, and providing accommodation for residents.

   
   

   • DAILY LIVING EXPENSES:

     These expenses consist of day-to-day living costs just like when living at home, such as breakfast, lunch, dinner, morning and afternoon teas, linen, laundry, lighting, heating and cooling, amenities, room cleaning, entertainment, excursions and care costs such as nursing and personal care.

     
     

     This is partly covered by payment of the Basic Daily Fee (BDF), a standard contribution that all residents pay.

     
     

     The BDF is currently set by the Government at 85% of the single basic age pension, indexed twice yearly at the same time as changes to the age pension. Residents in financial hardship can apply to the Government for help paying the BDF.

   
   

   • ACCOMMODATION PAYMENTS:

     This is a payment to assist with the capital costs of building, landscaping, furnishing, maintaining and providing accommodation in the residential care facility, just like at home.

     
     

     The Accommodation Payment prices vary to reflect different room sizes, amenities and locations.

     
     

     Residents can choose to pay their Accommodation Payment as a refundable lump sum deposit, known as a Refundable Accommodation Deposit (RAD), an equivalent periodic (daily) payment, known as a Daily Accommodation Payment (DAP), or a combination of both.

These methods of payment allow a direct conversion between the DAP and the RAD, using the Maximum Permissible Interest Rate (MPIR). The formula to calculate the DAP from the RAD is to multiply the RAD by the MPIR and divide by 365 days. The MPIR is set by the Government and, at 20 September 2025, is 7.61%. It is updated by the Government every three months.

If any amounts are drawn down, the daily payment will be increased by the MPIR to compensate the decreasing refundable deposit balance.

If a resident chooses to make a combination payment, the formula to calculate the DAP payable from the RAD is to multiply the unpaid balance of the RAD by the MPIR and divide by 365 days.

For example, if the full RAD amount is $500,000 and a resident wishes to pay $300,000 of it as a refundable deposit then the DAP is $41.70 per day, determined as follows using an MPIR of 7.61%. Therefore, (500,000 – 300,000) × 7.61% / 365 = 200,000 × 7.61% / 365 = $41.70

If a resident pays by a combination of RAD and DAPs, they can choose to have the DAPs drawn down from the RAD. If they enrol in a peace of mind plan, then certain other daily payments, in addition to the DAPs, can be drawn down from the RAD. If any amounts are drawn down from the RAD, the amount of the DAPs will increase to compensate for the decreasing RAD balance, using the MPIR.

Residents can also top-up and increase their RAD payment to reduce the DAP payment.

Residents have up to 28 days from entering care to choose which method of payment they prefer. Until the method of payment is decided, they must pay DAPs unless and until a RAD is paid. Daily payments are paid one month in advance.

If You Are on the New Fee Structure

If you are on the new fee structure, a 2% per annum retention (capped at 10%) will be deducted from your paid Refundable Accommodation Deposit (RAD) or Refundable Accommodation Contribution (RAC) over a maximum period of five years. To find out more about these changes, please visit My Aged Care.

3. HOTELLING CONTRIBUTION

   The Hotelling Contribution covers part of the cost of meals and daily living services. The amount you pay is determined by your means assessment and is outlined in your fee advice letter from Services Australia.




4. NON-CLINICAL CARE CONTRIBUTION (NCCC)

   The Non-Clinical Care Contribution covers a portion of the costs associated with services such as assistance with bathing, mobility support, and lifestyle activities. The amount you pay is determined by your means assessment and is outlined in your fee advice letter from Services Australia.

Transitioning Cohort

If you have previously received a Home Care Package or are transferring between different aged care services after 1 November 2025, your fees and eligibility for certain charges may differ from the information above. We will review your individual circumstances to confirm which rules apply, or you can contact Services Australia for further clarification.

The Government assesses and assists those residents who do not have sufficient means to pay their accommodation payments. Fully and partly supported residents (full and part pensioners) may be eligible for the Government’s Accommodation Supplement payment.

If a resident’s assets are between $210,555.20 and $505,665.60 (1 October 2025 – 31 December 2025), the resident can be means tested and may be required to pay a lesser Accommodation Contribution, rather than an Accommodation Payment. Like the Accommodation Payment, an Accommodation Contribution can be paid as a refundable lump sum deposit [the Refundable Accommodation Contribution (RAC)], periodic (daily) payments [the Daily Accommodation Contribution (DAC)] or a combination of both. If a resident chooses a combination payment, the DAC can be deducted from the RAC.

The actual Accommodation Contribution amount is assessed and advised by Services Australia (Centrelink).

The Government will either pay the full or a part amount of the Accommodation Supplement, depending on the resident’s assessed financial circumstances.

The Means Tested Amount (MTA) is the contribution that residents may be asked to pay towards to the cost of their accommodation and care. It is calculated through asset and income tests.

A resident’s contribution is currently capped to a maximum of $35,238.11 annually to a lifetime maximum of $84,571.66. This will be assessed and calculated by Services Australia through Centrelink.

This is different to the situation prior to 1st July 2014, where only an asset assessment was used to determine a resident’s contribution towards accommodation costs, and only an income assessment used towards their ongoing costs of care.

Services Australia (Centrelink) will calculate the daily MTA essentially as follows:

1. From Income:

   The daily income tested amount is 50 cents per dollar above the ‘assessable income free area’ (as at 20 September 2025 this is $34,762.00) and divided by 365.

   
   

2. From Assets:

   1. 17.5% of assets between ‘first asset threshold’ of $210,555.20 and the ‘second asset threshold’ of $505,665.60 plus

   2. 1.0% of assets between ‘second asset threshold’ of $505,665.60 and the ‘third asset threshold’ of $63,000.00, plus

   3. 2.0% of assets above the ‘third asset threshold’ of $63,000.00.

   4. Divide the sum of a), b) and c) by 365.

   
   

THE TOTAL SUM OF 1 (FROM INCOME) AND 2 (FROM ASSETS) IS THE DAILY MEANS TESTED AMOUNT.

From 1 November 2025, Regents Garden offers Higher Everyday Living Services for residents who wish to enjoy a premium lifestyle beyond the standard inclusions of the Basic Daily Fee, Hotelling Contribution, and Non-Clinical Care Contribution (NCCC). Both ongoing and short-term care residents can choose from these premium service options, which include access to the Regents Garden Club.

Regents Garden provides a unique selection of Higher Everyday Living Services, which may include:

• Enhanced dining experiences
• Premium beverage options
• Personalised one-on-one support
• Enriched entertainment and leisure activities
• Other lifestyle enhancements tailored to your preferences

Our team will guide you through the available options at your home and help you select the services that best suit your needs.

You may choose individual services or select a package that combines popular offerings at a discounted rate. If you decide to access these services, you will be asked to sign a separate agreement outlining your selections before any charges apply.

Regents Garden reserves the right to amend its Higher Everyday Living offerings from time to time. These services are available to residents from their start date at participating homes and are subject to the full terms set out in the Standing Higher Everyday Living Agreement.