Aged care room prices: how to read and compare them, and why the "sticker price" isn't what everyone pays

When an older Australian moves into residential aged care, the cost of their room — the accommodation cost — is one of the largest financial pieces of the placement. It is a separate question from how the room is paid for (a refundable lump sum versus a daily payment, covered elsewhere) and from the means-tested care fee; this article is about how accommodation is priced, how to compare prices between homes, and what the price actually reflects. Providers must publish their maximum room prices on the My Aged Care website and in their own materials, expressed as a Refundable Accommodation Deposit (RAD), a refundable lump-sum price, with an equivalent Daily Accommodation Payment (DAP) derived from it. These figures can look alarming — often in the hundreds of thousands of dollars — but a published RAD is a "sticker price" that only a full-means resident pays in full. A lower-means resident, after the government means assessment, pays a subsidised accommodation contribution instead — often much less, sometimes nothing. Understanding the gap between the advertised maximum and what a particular person actually pays, how to compare prices, the scope to negotiate, and the crucial point that a higher price reflects the room and location rather than better care, helps families make a sound decision under real time pressure.

Where does accommodation fit among the other aged care costs?

It helps to see the components. A resident generally pays a basic daily fee — a standard living-costs fee set at 85% of the single basic Age Pension, $66.80 a day as at 20 March 2026, that nearly everyone pays; a means-tested care contribution toward their care, based on income and assets and subject to caps (covered elsewhere, and changed under the new Aged Care Act); the accommodation cost for the room (the focus here); and any optional higher-amenity fees. The accommodation cost is paid either as a means-tested accommodation contribution (for lower-means residents, where the government subsidises part or all) or as an accommodation payment (for residents with enough means to pay the full agreed price). Keeping these apart avoids much of the confusion that surrounds aged care costs.

How is a room actually priced?

The price is set as a lump-sum RAD — a deposit refunded when the resident leaves or dies, to them or their estate, less any agreed deductions. The equivalent daily payment, the DAP, is worked out from the RAD using the government-set Maximum Permissible Interest Rate (MPIR): broadly, RAD times the MPIR, divided by 365, gives the daily figure. With the MPIR at 7.96% (the rate for the quarter from 1 April 2026), a $500,000 RAD converts to a DAP of roughly $109 a day — the same accommodation cost expressed as a daily charge for someone who would rather not pay a lump sum. Providers publish a maximum RAD per room type, and different rooms — single versus shared, with or without an ensuite, larger rooms, garden outlooks — carry different prices. The published figure is the most the home can charge a full-means resident for that room.

What is the maximum amount a home can charge without approval?

There is a consumer-protection ceiling on pricing. A provider can set a RAD up to the "maximum accommodation payment amount" without seeking approval — and this is where many older articles are out of date. The threshold rose from $550,000 to $750,000 on 1 January 2025, and it is now indexed to the Consumer Price Index each 1 July: from 1 July 2025 the maximum is $758,627. To charge a RAD above that ceiling, a provider must apply to the Independent Health and Aged Care Pricing Authority (IHACPA) — which took over this role from the Aged Care Pricing Commissioner in 2022 — and justify the higher price; such approvals last four years. So a published price above roughly $758,627 has been independently scrutinised, while anything at or below it has not needed approval. (The new Aged Care Act's accommodation arrangements commenced on 1 November 2025 alongside the existing arrangements, and changed some contribution rules for new residents, so the current position is worth confirming for a recent entry.)

How do you find and compare prices between homes?

Pricing is more transparent than many families expect: providers must publish their maximum room prices on My Aged Care, so a family can line up several homes in an area and compare. But the published price is the maximum, not necessarily what a given person pays — that turns on the means assessment — and price is only one factor. A sensible comparison weighs location relative to family, care quality, availability and suitability alongside price, rather than price alone.

How does the means assessment decide what you actually pay?

This is the point that defuses most of the sticker shock. Services Australia (or the Department of Veterans' Affairs) assesses the resident's income and assets to set their accommodation category. Lower-means residents pay a means-tested accommodation contribution, with the government subsidising some or all of the cost — they do not pay the full advertised RAD. Residents with sufficient means pay the accommodation payment, the full agreed price. The former home generally counts in the assets side of the assessment, but only up to a capped value — $214,884 as at 20 March 2026 — and it is exempt entirely if a protected person such as a spouse still lives there. That home-value cap, far below most house prices, is one reason a person with a former home can still land in a more subsidised category than families fear. So the frightening published figure is what a full-means resident pays; a lower-means resident's actual cost is means-tested and can be far lower or nil. The first question for a panicking family is which category the person falls into.

Can prices be negotiated, and what does a higher price really tell you?

Two practical points round this out. First, the published RAD is a maximum, not a fixed price, and there can be room to negotiate — particularly where a home has vacancies, or where the family is paying the full RAD as a lump sum the provider can use as capital. A sought-after home with a waiting list has little reason to discount; one with empty beds has more. The advice is simply to ask, because many families never do. Second, and most important, a higher accommodation price reflects the room and the location — homes in high-property-value areas cost more because their land does, and single rooms, ensuites and outlooks command more — but it does not necessarily mean better care. Care quality is regulated and rated separately, through star ratings, accreditation and quality indicators, and a beautiful, expensive room tells you nothing reliable about the care. Assess care quality independently of price. Finally, on capital: the RAD is refunded when the resident leaves, and is government-guaranteed under the Accommodation Payment Guarantee Scheme if a provider fails, but paying a large RAD ties up substantial money — often the proceeds of the family home — and although it is exempt from the Age Pension assets test, it counts in the aged care means assessment, an interaction with consequences well beyond the room price itself.

Worked examples

These two cases show how to read aged care pricing. They are illustrative only and not personal advice.

The Nguyen family are choosing a home for their mother, 84, who has about $180,000 in savings and no home of her own (she rented). They have seen rooms advertised at $450,000 to $550,000 and fear they can't possibly afford it. On these facts the alarm is likely misplaced once the means assessment is understood: with modest assets and no home, their mother is very likely a lower-means resident, who would pay a means-tested accommodation contribution — with the government subsidising the accommodation — rather than the advertised RAD, which is the sticker price for full-means residents. On these facts the rational first step is to have her means assessment done to confirm her category and actual contribution, then compare homes on care quality, location and suitability using star ratings and visits, rather than being frightened off by prices she won't pay. The means assessment is the key that unlocks her real cost.

Geoffrey, 86, is a full-means resident: he owns a home worth $900,000 (to be sold) and has $300,000 in super, and the family is choosing between a premium inner-city home with a $620,000 RAD and an outer-suburb home with a $420,000 RAD, assuming the dearer one must offer better care. On these facts Geoffrey would pay the full accommodation payment, so the price difference is real for him — but note that both prices sit below the $758,627 maximum, so neither needed IHACPA approval; the gap simply reflects inner-city land values, not a quality tier. The assumption to correct is that the dearer home gives better care. On these facts it is rational to assess care quality independently for both — star ratings, accreditation, quality indicators, visits, talking to current residents' families — since the cheaper outer-suburb home may match or beat it; to weigh location against how often family can visit; and to ask both homes whether the RAD is negotiable, especially for a full lump-sum payer. The decision should weigh care, location, suitability and price together, not treat price as a signal of care.

For families facing an aged care accommodation decision, understanding how rooms are priced — and what the price does and doesn't tell you — leads to calmer, better choices. The work is to separate the accommodation cost from the basic daily fee and the care contribution, read and compare the published prices, clarify the person's means category (which often dissolves the sticker shock), encourage negotiation, make the crucial point that a higher price reflects the room and location rather than better care, and weigh the RAD-versus-daily decision and its Age Pension and means-assessment interactions. The published figures can be frightening at first glance, but they are maximums that only full-means residents pay in full — and even then they reflect property and amenity, not care. Cutting through to what a particular person will actually pay, and judging care quality separately from price, turns an overwhelming decision into a clearer one.

Sources

• Department of Health, Disability and Ageing — Published prices and maximum accommodation payment amounts
• IHACPA — About refundable accommodation deposits
• Services Australia — How much you pay for residential aged care