Why the daily payment goes up: indexation in March and September

If your parent pays for their room by the day, you may notice the daily amount rise twice a year. That's indexation. Since 1 November 2025, the daily accommodation payment (DAP) is adjusted in line with prices every 20 March and 20 September. Those are the same days the Age Pension goes up.

The room price itself doesn't change. What moves is the daily amount your parent pays for it.

Who it applies to

Indexation applies to the daily payment for people who:

• started in an aged care home from 1 November 2025 onwards, under the new fee arrangements, including people who opted in to them and then moved homes; or
• moved in under the older 1 July 2014 fee arrangements, but are going into care for the first time since 31 October 2025, or are coming back after more than 28 days away since then.

The second group includes many people covered by the "no worse off" rule for former home care recipients.

It doesn't apply to:

• the daily accommodation contribution paid by people on low means, where the government helps with the room; or
• daily payments by residents who are still under the older 1 July 2014 accommodation arrangements from before November 2025.

How the rise is worked out

The home works from a fixed starting point, not from last time's amount.

1. The starting daily amount. This is the full daily payment on the day the room price was agreed: the room price, times the interest rate in force on that day (8.51% for agreements made now), divided by 365. That interest rate is locked in for your parent's room.
2. The index numbers. Each indexation day has an index number, set in the Rules and published by the department before that day (1.04). The home divides the new number by the number for your parent's reference day.
3. The new daily amount. The starting amount is multiplied by that ratio.

If your parent has paid part of the room as a lump sum, the home then adjusts the result for the lump sum. So the indexed amount is only charged on the part of the room still being paid by the day.

The reference day

Your parent's reference day is the most recent 20 March or 20 September before they moved in. If they moved in on one of those days, it's that day.

It usually only changes if your parent chooses to move to a different room. Then it becomes the indexation day just before the move.

Because of this, someone who moved in shortly before an indexation day will see a small first rise. Someone who has been paying for longer will see the full change since their reference day.

What the home must do

• Apply the new amount from the indexation day itself.
• Use the published index number. It can't use a different rate, or index the payment at other times of the year.
• Tell your parent when the daily payment changes.

If the new amount isn't clear, ask the home to show its working. You can check it against the index numbers in the department's fee schedule.

Other amounts that change on the same days

Several other fees also move on 20 March and 20 September, including the basic daily fee and the caps on the means-tested contributions. Because the pension usually rises on the same days, part of the increase is often covered. Whether it's fully covered depends on your parent's situation.

Looking ahead

Future index numbers aren't known until the department publishes them before each indexation day. Any figure for later years is an estimate based on an assumed rate of price rises.

The Aged Care Costs calculator gives an estimate of the fees, with the home counted as it is today, and compares the ways of paying for the room. For future rises in the daily payment, we assume prices rise about 2.8% a year, based on the Reserve Bank's forecast. This is our estimate, not a government figure. Those figures are labelled as estimates.

Before deciding how to pay for the room, consider talking it through with a licensed financial adviser who specialises in aged care.

---