Aged Care Star Ratings and the Fee Schedule That Decides the Cost

The tour finishes in a lounge room that smells of roast chicken and floor polish. A staff member hands you a folder. On the front page, a home you had never heard of that morning carries four and a half stars, a photograph of a garden and a line about person-centred care. By the time you reach the car park you have a shortlist, a dull headache and no clear idea what any of it will cost.

That gap is what this guide is about. The stars and the bill are separate documents answering separate questions. One is a summary of how a home is performing against a national framework. The other is a set of prices, rules and agreements that decides what a room costs your family.

This guide takes a clear position: use the star rating to shortlist, never to decide. Read the Compliance and Staffing sub-ratings first. Then compare the written room price, the daily payment at the current maximum permissible interest rate and the optional fee agreement. The published room price is a maximum you can negotiate, and the refund terms are set by statute.

This is general information, not advice about your own care or money. A means assessment and independent financial advice are the right next steps for your circumstances.

The rating comes first, then the two fee schedules, a hypothetical $500,000 room priced three ways, and the questions that turn a tour into a comparison.

Four scores, and the one that caps the rest

The number on the folder is not one judgement, but four sub-ratings combined under fixed weights.

Residents’ Experience comes from what residents report. Compliance reflects formal regulatory decisions and graded assessment against the Quality Standards. Staffing measures care minutes. Quality Measures tracks clinical indicators such as pressure injuries and falls.

Residents’ experience counts for a third, compliance nearly as much, staffing just under a quarter and quality measures the rest.

Then comes the rule that matters most. A Compliance rating of 1 or 2 stars caps the overall rating at 1 or 2, whatever the other three scores say. A home cannot average its way out of a poor compliance result. That is why Compliance is the first sub-rating to read, not the last.

The scale runs from 1, significant improvement needed, to 5, excellent. A star rating is a summary, much like a food safety rating: useful for a first sort, no substitute for the inspection behind it.

What the stars cannot tell you

The rating is useful, and narrower than the folder suggests.

Compliance is not a customer review score. It is built from formal regulatory decisions and graded assessment against the Quality Standards. That makes it weighty, and it means it reflects the conclusion of a formal process rather than the mood of a single shift. A home can have a sound compliance record and still be a place where a new resident is lonely.

The Department of Health and Aged Care commissioned an independent evaluation of the system and published the summary report in November 2024. The findings are worth sitting with. Just over 7 per cent of residents surveyed were aware of the ratings when they entered care. Half of the prospective consumers surveyed were only slightly confident in the ratings, or not confident at all. Trust was weakest on Staffing and Compliance. And some homes were receiving high ratings despite not meeting staffing benchmarks.

That last finding matters because Staffing is the sub-rating families reach for first, and it carries 22 per cent of the overall score. When a high overall rating sits above a staffing result that misses the benchmarks, the overall number is doing what the weights tell it to do. It is not telling you the night shift is calm.

So use the stars as a filter, then go and look. Visit at different times if you can. Read the Commission’s report for the home rather than the marketing page. Ask what has changed since the last assessment. A rating starts a conversation, and the conversation is where the useful detail lives.

Two fee schedules and the date that decides

Two sets of residential aged care fee arrangements run at the same time. Which one applies depends on when the person first entered care, not on which home they are considering now.

The basic daily fee is 85 per cent of the single basic pension, indexed on 20 March and 20 September. The no-worse-off group stays on the older arrangements, so two residents in the same home can be on different schedules.

Before you compare any quotes, ask which schedule applies. It is the same discipline as checking what a bulk-billing dentist actually bulk-bills before you book: the headline only helps once you know what sits underneath it.

Keep these charges separate from the accommodation price. A room can look affordable on one page of the folder and expensive on another.

The room price is a maximum

This is the part where the folder gets quiet. The price printed for a room is the published maximum. A provider can charge less, and you can ask for less. What a provider cannot do is charge more.

The daily accommodation payment is calculated from the agreed room price and the maximum permissible interest rate:

DAP = (room price x MPIR) / 365

The maximum permissible interest rate is 8.51 per cent for 1 October to 31 December 2026, and My Aged Care’s worked examples use that rate. It is set for a period, so check the date on any quote.

Take a hypothetical room at $500,000. The table below prices it three ways: a full refundable accommodation deposit, a full daily accommodation payment, and a combination. It is an illustration, not a quote, and it covers accommodation only. The basic daily fee and any care contribution are separate, and they apply whichever option you choose.

Assumptions: no other deductions, no DAP indexation, an unchanged room price and five years. The DAP is indexed on 20 March and 20 September, so both the daily payment and the five-year total will rise. Retention is 2 per cent a year on the declining balance, capped at five years, for people who first entered care on or after 1 November 2025 and pay by refundable deposit.

Read across the rows and the shape of the decision appears. With the full RAD, the $500,000 comes back at the end, less the retention. The cost is the retention and the time the money is tied up. With the full DAP, the payments do not come back. The combination sits between the two.

What the table cannot show is opportunity cost. Money tied up in a deposit is money not earning elsewhere. The RAD counts as an asset in the means assessment even if a family member pays it, though it is exempt from the pension means test. How much that matters depends on the person’s tax and pension position, which is a conversation for an independent financial adviser.

Negotiation is worth the ask. Every $10,000 taken off the agreed room price cuts the DAP by about $2.33 a day, or about $851 a year at 8.51 per cent. A room price is a quote like any other, and reading a removalist quote teaches the same habit: the published number is a starting point, and the written inclusions decide the final bill. No provider has to negotiate, so treat a reduction as a good outcome rather than a right.

The fee on top

The higher everyday living fee is the charge that replaced extra-service and additional-service fees. It covers the things people notice on a tour: a television, wifi, a hot breakfast, organised activities. It is optional, and it comes with rules.

It cannot be charged before entry. It must be set out in an itemised agreement. There is a 28-day cooling-off period, 28 days’ notice to change it, and an annual review. A provider cannot make you financially worse off by bundling services together.

The fair point on the other side is that the basic daily fee already covers everyday living, so a second charge for a television can feel like paying twice. The official answer is the itemised agreement: you should be able to see what the fee buys, line by line, and decline it.

Ask for that list before you sign. Then ask which items the basic fee already covers, what happens if you decline, and how the annual review works. It is the same approach as choosing a childcare centre: the weekly figure matters less than the schedule of what is included.

When the deposit comes back

Refund terms are statutory, not a matter of goodwill. If a resident leaves a home permanently, the refundable deposit must be refunded within 14 days after the day they leave. If the resident dies, the clock runs from the day the provider receives probate or letters of administration, and the refund is due within 14 days of that.

The refund carries interest. The base interest rate applies during the refund period, and the maximum permissible interest rate applies if the payment is late. That detail matters to an estate, because the deposit forms part of it, which is why probate can hold up a refund a family expected quickly.

The deposit is refundable, but refundable is not free: retention, opportunity cost and time all take something. Keep the paperwork in one place, because the person dealing with the estate may not be the person who signed the agreement.

The RAD also counts as an asset in the means assessment, even when a family member pays it, and it is exempt from the pension means test. Those two facts pull in different directions, which is another reason to get advice before the family decides who pays what.

Questions for the tour, and what a good answer sounds like

A tour is a conversation with a salesperson, and that is not a criticism. The person showing you around has a job to do. Your job is to leave with enough written detail to compare one home with another.

The checklist near the top of this guide groups the questions into money, care and contract. Listen for the difference between a direct answer and a warm one.

On money, you want the written room price, the basic daily fee and what it covers, the itemised higher everyday living agreement, and the payment options in writing. A good answer names the document and offers to send it. A vague answer talks about how everything is included and suggests discussing the rest later.

On care, ask who is on duty overnight and at weekends, how care minutes are tracking against the targets, what the current compliance rating is and what has changed since the last assessment, and where to find the Commission’s latest report and complaints record. A good answer knows the numbers and the dates. A poor one says the rating does not capture the culture.

On contract, ask how retention is calculated and when it stops, when the deposit is refunded after a departure or a death, how the daily payment is indexed, and who to contact in writing when a fee changes. A good answer points to the clause. A poor one says not to worry about that.

No home is named in this guide, and that is deliberate. The point is the questions, not a league table. Ask the same questions everywhere, write the answers down and compare the documents rather than the tours. The home that answers best may not carry the highest rating, and the highest rating may not belong to the home that answers best. That is exactly why you need both.

Price the room, then rank the home

The order matters. Price the room first, because the room is the part you can put a number on, and a home that is out of reach is not a real shortlist entry however many stars it carries. Then rank what remains on the rating, the Commission’s record and what you saw on the tour.

The star rating is the filter. Read Compliance first, note the cap, then look at Staffing, because those are the two areas where the Department’s own evaluation found trust was weakest. Use the overall number to sort the list, not to end the conversation.

The fee schedule is the decision. Compare the written room price, the daily payment at the current MPIR and the optional fee agreement. Ask for the room price in writing, ask whether it can move, and ask which fee schedule applies. Clear answers make a clear comparison.

Keep the two documents separate. One is a judgement about the home. The other is a set of numbers about your money. Neither decides the other, and neither is advice about your circumstances. A means assessment and independent financial advice will do more for your decision than any single number on a folder.

Sources: Aged care home costs and fees, My Aged Care (https://www.myagedcare.gov.au/aged-care-home-costs-and-fees); Understanding aged care home accommodation costs, My Aged Care (https://www.myagedcare.gov.au/understanding-aged-care-home-accommodation-costs); How are Star Ratings calculated?, My Aged Care (https://www.myagedcare.gov.au/how-are-star-ratings-calculated); Aged care home accommodation refunds, My Aged Care (https://www.myagedcare.gov.au/aged-care-home-accommodation-refunds); Schedule of fees and charges for residential care from 20 September 2026, Department of Health, Disability and Ageing (https://www.health.gov.au/sites/default/files/2026-09/schedule_of_fees_and_charges_for_residential_care_20_september_2026.pdf); Star Ratings for Residential Aged Care: Evaluation Summary Report, Department of Health and Aged Care (https://www.health.gov.au/sites/default/files/2025-01/star-ratings-evaluation-summary-report_0.pdf)