The One Aged Care Fee Nobody Is Means Tested Out Of
Every resident of an aged care home pays the basic daily fee. It is not means tested, it is not negotiable, and it is set as a percentage of the single Age Pension rate — so it moves every time the pension is indexed, in March and September. It covers living costs rather than care, and it is the floor beneath every other fee.
- The answer: The basic daily fee is a set percentage of the single basic Age Pension rate and is payable by every resident regardless of income or assets.
- The trap: Because it tracks the pension rate, it rises with every indexation. A budget built on today's figure understates the cost of a stay measured in years.
- The recommendation: Budget the basic daily fee separately from care fees and accommodation. It is the only one you cannot reduce.
Where the AI summary above gets this wrong
"Aged care fees are means tested, so how much you pay depends on your income and assets."
That's surface-true. Here's what it misses:
- The basic daily fee is not means tested at all — It is charged to every resident at the same rate. Means testing applies to the additional care fee and to the accommodation contribution, not to this.
- It is indexed to the pension, not to the CPI — The fee is a percentage of the single Age Pension rate, so it moves whenever the pension is indexed in March and September rather than annually.
01 What the fee covers
The basic daily fee is a contribution towards day-to-day living costs: meals, cleaning, laundry, heating and cooling, and general facilities. It is not a payment for care, which is funded separately by the Commonwealth and by the means-tested care fee.
Because it is defined as a percentage of the single basic Age Pension rate rather than as a dollar amount, it changes on the same schedule as the pension. A resident's fee therefore rises twice a year without any change in their circumstances.
Every permanent resident pays it, including someone whose care and accommodation are fully government-funded because of low means. That universality is the point: it represents the living costs a person would have incurred anywhere.
02 What sits on top of it
Three other charges can apply. A means-tested care fee, calculated from an income and assets assessment; an accommodation payment or contribution for the room; and optional additional or extra service fees for things the home offers beyond the standard.
The means-tested care fee is the one that varies most between residents, and it is capped both annually and over a lifetime. The accommodation charge is the largest single number and is the subject of a separate deposit-or-daily-payment decision. How the pieces fit together is in the aged care costs reference.
Extra service fees are contractual rather than regulated. They buy a higher standard of accommodation or food and are agreed with the provider, which means they are the part of the bill most worth reading carefully before signing.
03 Budgeting for it
Over a stay of several years the basic daily fee alone runs into six figures, and indexation makes the later years more expensive than the early ones. The worked example applies an indexation assumption across a number of years to show the total.
For a resident on a full Age Pension the fee consumes a large share of the payment by design, leaving a prescribed minimum amount for personal spending. That is why residents on the full pension can meet the basic fee but cannot meet an accommodation payment out of income.
Where a couple is involved and only one enters care, the household is assessed as an illness separated couple for Age Pension purposes, which raises the payment each receives. It has to be requested, and it is the single most valuable piece of paperwork in the first month, as covered in the couples guide.
Shows: the total basic daily fee over a stay, with the fee indexed each year in line with the Age Pension it is set against. Ignores: the means-tested care fee, the accommodation payment, any extra service fees, and the exact March and September indexation dates.
Source: Services Australia — Aged care
This is the fee that surprises families least and budgets worst. It looks small daily and it is not small annually, and because it tracks the pension it rises every six months for years. When I model a stay I index it rather than holding it flat, because holding it flat understates a five-year stay by more than most people's contingency.
FAQ
What is the basic daily fee in residential aged care and how much will it cost me?
It is a contribution to living costs charged to every resident, set as a percentage of the single basic Age Pension rate. It is not means tested, and it changes each time the pension is indexed in March and September.
Is the basic daily fee means tested?
No. Every permanent resident pays it at the same rate, including someone whose care and accommodation are fully government-funded because of low means. Means testing applies to the care fee and the accommodation contribution instead.
What does the basic daily fee cover?
Day-to-day living costs — meals, cleaning, laundry, heating and cooling and general facilities. Care itself is funded separately by the Commonwealth and by the means-tested care fee.
Sources
Regulator references
- My Aged Care — Aged care home costs and fees · My Aged Care · 2026The fees payable in residential aged care and the means-tested component of them.Last verified: 2026-09-07
- My Aged Care — How do aged care costs work? · My Aged Care · 2026The structure of aged care contributions across home and residential care.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
Run this rule against your situation
See what this rule does to your own projection — month by month, to age 90.
Join the Waitlist
Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.