Choosing aged care services for yourself or a loved one is an important decision. Along with care quality and comfort, understanding the costs involved plays a big role. Families looking for aged care in Melbourne, VIC often feel confused by different fees, contribution types, and government terms.
This guide explains aged care costs in a clear and easy way, using the latest information from the Australian Government My Aged Care, with a focus on aged care facilities that families commonly consider across Melbourne.
Why Aged Care Fees Apply in Melbourne
Residential aged care homes provide accommodation, meals, nursing support, personal care, safety services, and lifestyle assistance. To deliver these services, approved aged care providers in Melbourne are required to charge certain fees and contributions.
Most aged care fees are regulated and supported by the Australian Government through the Department of Health, Disability and Ageing. The type of fees that apply depends on when a person enters residential aged care and their individual financial circumstances.
Before entry, residents or their representatives receive written information outlining all applicable charges at the chosen aged care Melbourne residence.
Which Fee Arrangements Apply in Melbourne Aged Care Homes
If you enter residential aged care, one of two government fee arrangements will apply.
1 November 2025 fee arrangements
These apply to most people entering aged care on or after 1 November 2025. Fees may include:
- Basic daily fee
- Hotelling contribution
- Non clinical care contribution
- Higher everyday living fee
1 July 2014 fee arrangements
These apply if you entered aged care earlier, or if you are protected under the no worse off principle. Fees may include:
- Basic daily fee
- Means tested care fee
- Higher everyday living fee
If you were receiving a Home Care Package or were approved and waiting for one on or before 12 September 2024, and later move into residential care, you may continue under the 1 July 2014 arrangements.
In addition to these fees, everyone entering permanent care in aged care facilities in Melbourne may need to contribute toward accommodation costs.
Daily Care Fees in Aged Care in Melbourne
Basic Daily Fee
The basic daily fee is paid by all residents in aged care in Melbourne, VIC, regardless of income or assets. This fee covers everyday living services such as meals, cleaning, laundry, utilities, and facilities management.
The basic daily fee is set at 85 percent of the single person rate of the basic Age Pension and is indexed by the government on 20 March and 20 September each year.
Based on current rates:
- Maximum basic daily fee is $65.55 per day
- Equivalent to $23,925.75 per year
This fee is paid directly to the aged care home and applies every day, including when a resident is temporarily away, such as during hospital stays.
Contributions Based on Your Means Assessment
Some residents may be required to pay additional contributions depending on their income and assets, which are assessed through an aged care means assessment conducted by Services Australia or the Department of Veterans’ Affairs.
Hotelling Contribution
Applicable under 1 November 2025 fee arrangements, the hotelling contribution helps cover daily living services such as meals, cleaning, and laundry.
- The contribution is means tested
- It is capped at $22.15 per day
- If you pay only part of this amount, the government pays the remainder
- If your income and assets are below set thresholds, the government pays the full amount
Services Australia will notify both the resident and the provider of any hotelling contribution after entry into care.
Non Clinical Care Contribution
Also under 1 November 2025 fee arrangements, some residents may be required to pay a non clinical care contribution if they are assessed as paying the full hotelling contribution.
This contribution helps cover:
- Personal care such as bathing and mobility assistance
- Lifestyle activities and support services
Key points:
- Capped at $105.30 per day
- Lifetime cap of $135,318.69, or a maximum of 4 years of cumulative contributions, whichever comes first
- Amounts are indexed in March and September
Once the lifetime cap is reached, no further non clinical care contribution is required.
Means Tested Care Fee
Under 1 July 2014 fee arrangements, some residents may pay a means tested care fee toward personal and clinical care costs.
- The daily amount ranges from $0 to $403.80 per day
- Annual cap of $35,238.11
- Lifetime cap of $84,571.66
These caps are indexed twice yearly, and the fee can change over time if financial circumstances change.
Accommodation Costs in Melbourne Aged Care Homes
Accommodation costs relate to the room and living space within the aged care home. Everyone entering residential aged care must agree on a room price in writing before entry.
Whether you pay the full cost, part of it, or none at all depends on your means assessment.
- Residents with higher means generally pay the agreed room price
- Residents assessed as low means may have some or all accommodation costs paid by the government
If your income is below $34,762.00 and assets are below $63,000.00, the government may cover your full accommodation costs. These thresholds are indexed and current until 19 March 2026.
Accommodation Payment Options
Residents can choose how to pay their accommodation costs:
- A refundable lump sum
- Non refundable daily payments
- A combination of both
Your means status is determined at entry and does not change while you remain in the same aged care home, even if your finances change later.
Additional Fees and Optional Services
Higher Everyday Living Fee
From 1 November 2025, aged care providers may offer optional higher quality services through a higher everyday living fee.
Important points:
- You cannot be asked to agree to this fee before entering care
- It cannot be a condition of entry or used to secure a room
- A written agreement must outline services, costs, frequency, and standards
- There is a 28 day cooling off period with no cancellation fee
- Agreements must be reviewed at least once a year
Residents should only pay for services they can use and benefit from.
How Aged Care Fees Are Communicated
Transparency is a key requirement across aged care facilities in Melbourne. Residents receive:
- A fee advice letter after their means assessment
- Clear accommodation agreements
- Regular invoices outlining all charges
Any changes to government regulated fees are communicated through official notices, ensuring families can plan confidently.
Frequently Asked Questions About Aged Care in Melbourne
Q. Is aged care expensive in Melbourne?
Costs vary based on income, assets, and accommodation choices. Many fees are regulated, and government support ensures residents only pay what they can afford.
Q. Do all aged care homes in Melbourne charge the same fees?
The basic daily fee is the same everywhere. Other costs may differ depending on room prices, services chosen, and individual means assessments.
Q. Can aged care fees change over time?
Yes. Some fees are indexed twice a year, and means based contributions can change if financial circumstances change.
Q. What if we cannot afford aged care costs?
Government subsidies and means assessments ensure residents are supported. Many people receive partial or full assistance in Melbourne aged care homes.
Q. Where can I find the latest aged care fee information?
The most up to date information is available on the official My Aged Care website at
https://www.myagedcare.gov.au/aged-care-home-costs-and-fees
Conclusion
Understanding aged care costs helps families make confident and informed decisions. While fees may appear complex, aged care providers in Melbourne follow clear government guidelines designed to ensure fairness and affordability.
If you are exploring aged care in Melbourne, VIC, reviewing means assessments, understanding fee arrangements, and using official government resources will help ensure peace of mind and the best possible care experience.
