Aged Care Costs in Australia 2026: Support at Home, RAD, DAP, and How a Financial Planner Can Help

Australia''s aged care system underwent its most significant transformation in decades on 1 November 2025, when the Support at Home program replaced the previous four-level Home Care Package system. For families navigating the transition -- whether for an ageing parent, a spouse, or themselves -- the financial complexity can be overwhelming. Refundable Accommodation Deposits, daily accommodation payments, means-tested contributions, and the treatment of the family home all interact in ways that can have lasting consequences for retirement savings and estate planning. A qualified financial planner can make an enormous difference in this process.

Understanding the New Aged Care Landscape in Australia

Australia''s aged care system now operates across two primary pathways: the Support at Home program for those who wish to remain in their own homes, and residential aged care for those who require full-time facility-based support. Both pathways involve a mandatory means assessment conducted by Services Australia, which determines the fees a person is required to contribute toward their care.

The means assessment considers both income and assets, including superannuation balances, investment portfolios, and -- in many cases -- the family home. Understanding how these assessments work, and how to structure your finances before entering care, is one of the most valuable services a financial planner can provide.

The Support at Home Program

The Support at Home program, which commenced on 1 November 2025, uses eight funding classifications with quarterly budgets. Annual government funding ranges from approximately $10,732 for the lowest classification to $78,106 for the highest. Clinical care services -- including nursing and allied health -- are fully government-funded. Personal care and everyday living expenses remain means-tested, with the government and the individual sharing the cost based on the means assessment outcome.

As of July 2026, the government mandates maximum prices for all services under the program, and care management fees are capped at 10% of the total budget. This pricing transparency is a significant improvement over the previous system, but it does not eliminate the need for careful financial planning around the means-tested components.

Residential Aged Care Costs

Residential aged care involves several distinct cost components, each with its own rules and means-testing arrangements. Understanding these components is essential before signing a resident agreement.

The basic daily fee is payable by all residents and is set at 85% of the single Age Pension rate -- approximately $66.80 per day as of 2026. This fee is not means-tested and applies regardless of a resident''s financial position.

Accommodation costs are negotiated between the resident and the facility and can be paid as a Refundable Accommodation Deposit (RAD), a Daily Accommodation Payment (DAP), or a combination of both. The RAD is a lump sum that is fully refundable when the resident leaves or passes away. The DAP is a non-refundable daily fee calculated using the Maximum Permissible Interest Rate (MPIR), which was 7.96% per annum as of April 2026.

RAD vs DAP: Key Considerations for Financial Planning

The choice between paying a RAD, a DAP, or a combination is one of the most consequential financial decisions in the aged care journey. There is no universally correct answer -- the right approach depends on a person''s asset base, income, Age Pension entitlements, and estate planning objectives.

• Paying a full RAD -- Preserves the capital for the estate (as it is fully refundable), but reduces the asset base available to generate income. This may increase Age Pension entitlements if the RAD reduces assessable assets below the pension threshold.
• Paying a full DAP -- Retains the capital in income-producing investments, but the daily fee is a non-refundable ongoing cost. This approach may be preferable if the investment return on retained capital exceeds the MPIR.
• Combination approach -- Many families use a partial RAD and partial DAP, balancing capital preservation with cash flow management. This is often the most flexible approach and can be adjusted over time.
• Impact on Age Pension -- The RAD is not counted as an assessable asset for Age Pension purposes, which can significantly affect pension entitlements. A financial planner can model the pension impact of different payment structures.

The MPIR is set by the government and reviewed quarterly. At 7.96% per annum, the DAP on a $500,000 RAD would be approximately $109 per day. Comparing this to the after-tax return on retained investments is a key part of the financial planning analysis.

The Family Home and the Aged Care Means Test

The family home is typically the most significant variable in the aged care means assessment, and its treatment can have a profound impact on the fees a person is required to pay.

If a "protected person" remains in the family home -- such as a spouse, a dependent child, or a qualifying carer or close relative who has lived there for a specified period -- the home is fully exempt from the aged care assets test. This exemption can significantly reduce the means-tested contribution and preserve the family''s financial position.

If no protected person resides in the home, the property''s value is included in the assets test, but it is capped at $214,884 (as of March 2026) while the resident remains in care. However, if the home is sold, the full proceeds are counted as assessable assets, which can dramatically increase the means-tested contribution. This is a critical decision point that requires careful financial modelling before any action is taken.

Common Mistakes Families Make When Entering Aged Care

The time pressure associated with aged care transitions -- often triggered by a health crisis or sudden decline -- can lead to costly financial mistakes. A financial planner who specialises in aged care can help families avoid the following common errors.

• Signing the resident agreement without financial advice -- The resident agreement locks in the accommodation payment structure. Decisions made under time pressure can be difficult or impossible to reverse.
• Selling the family home prematurely -- Selling the home before understanding the means test implications can trigger a significant increase in means-tested contributions. In some cases, retaining the home (even vacant) is financially superior.
• Failing to update superannuation nominations -- Entering aged care is an appropriate time to review binding death benefit nominations and ensure superannuation is directed as intended.
• Overlooking the impact on the Age Pension -- Changes in assets and income as a result of aged care decisions can affect Age Pension entitlements. A financial planner can model these interactions.
• Confusing government information services with financial advice -- Services Australia''s Aged Care Specialist Officers and Financial Information Service officers provide free information about fee structures, but they are not financial planners and do not provide investment advice or financial product recommendations.
• Not planning ahead -- Aged care financial planning is most effective when done before a crisis. Families who engage a financial planner while a parent is still living independently have far more options available to them.

Australian Regulatory Context

Aged care in Australia is regulated under the Aged Care Act 1997 and the Aged Care Quality and Safety Commission Act 2018. The Aged Care Quality and Safety Commission oversees the quality of care provided by registered aged care providers, while Services Australia administers the means assessment process and determines fee obligations.

Financial planners who provide aged care financial advice must hold an Australian Financial Services Licence (AFSL) or operate as an authorised representative under an AFSL holder. They are regulated by the Australian Securities and Investments Commission (ASIC) and must comply with the best interests duty under the Corporations Act 2001.

The Financial Adviser Standards and Ethics Authority (FASEA) standards -- now administered by ASIC -- require financial advisers to hold a relevant degree, pass the financial adviser exam, and complete ongoing professional development. When seeking aged care financial advice, look for an adviser who is registered on the ASIC Financial Advisers Register and has specific experience in aged care planning.

The Aged Care Financial Advisers Association (ACFA) is the peak body for financial advisers who specialise in aged care. ACFA members have completed specialist training in aged care financial planning and are committed to ongoing professional development in this area.

Questions to Ask a Financial Planner About Aged Care

If you are approaching aged care for yourself or a family member, the following questions will help you identify a financial planner with the right expertise.

1. Do you specialise in aged care financial planning, and are you a member of the Aged Care Financial Advisers Association?
2. Can you model the financial impact of different RAD and DAP combinations, including the effect on Age Pension entitlements?
3. How should we treat the family home in the means assessment, and what are the implications of selling versus retaining it?
4. What are the means-tested contribution caps, and how long is my family member likely to reach the lifetime cap?
5. How will entering aged care affect existing superannuation, investment, and estate planning arrangements?
6. Can you liaise with the aged care facility and Services Australia on our behalf?
7. What are your fees for aged care financial planning advice, and can these be paid from superannuation?

How MyMoney Can Help

Aged care financial planning is one of the most complex and emotionally charged areas of personal finance. The decisions made in the weeks surrounding an aged care transition can affect a family''s financial position for years. Engaging a qualified financial planner who specialises in aged care is not a luxury -- it is a practical necessity.

MyMoney connects Australians with experienced financial planners who understand the Support at Home program, the RAD and DAP framework, the aged care means test, and the interaction with Age Pension and estate planning. Our marketplace makes it easy to find a professional who can guide your family through this process with clarity and confidence.

Post a Brief on MyMoney to describe your aged care financial planning needs and receive proposals from qualified financial planners. Or Browse Financial Planners on MyMoney to find a specialist in your area.

This article provides general information only and does not constitute financial advice. Aged care financial decisions should be made in consultation with a licensed financial planner who can assess your specific circumstances and objectives.