IHACPA Aged Care Accommodation Pricing: How Maximum Room Prices Are Set

What IHACPA Does

The Independent Health and Aged Care Pricing Authority (IHACPA) is the government body involved in approving residential aged care accommodation prices above a statutory threshold. If a provider wants to set a room price above that threshold — currently $758,627 as of March 2026 — it must obtain prior written approval from IHACPA. Without that approval, the price cannot legally be charged.

IHACPA replaced the former Aged Care Pricing Commissioner role and now sits within a broader mandate covering both health and aged care pricing. For families entering the aged care system, IHACPA matters because it creates a review point for higher accommodation prices — and understanding that threshold gives families leverage when negotiating accommodation costs.

The Approval Threshold

Aged care providers can set accommodation prices (the Refundable Accommodation Deposit or RAD) at any amount up to $758,627 without seeking approval. They publish these prices on the My Aged Care website and in their Key Features Statement, and families can negotiate within that range.

For rooms priced above $758,627, the provider must submit an application to IHACPA demonstrating that the higher price is justified. IHACPA assesses the application based on factors including:

• Room size and features — larger rooms, private ensuites, premium finishes, and additional amenities justify higher prices
• Location — facilities in high-cost metropolitan areas may receive approval for higher prices than comparable rooms in regional areas
• Building age and quality — newly built or recently renovated facilities with modern design standards are more likely to receive approval
• Local market conditions — IHACPA considers what comparable facilities in the area charge
• Extra amenities — private gardens, technology features, premium dining, and other lifestyle inclusions

Families should ask the provider for the prior written IHACPA approval and the approved room price for any accommodation above the threshold.

What This Means for Families

The IHACPA threshold creates two practical implications for families navigating accommodation costs:

For rooms priced at or below $758,627: The provider has full discretion to set the price. There's no regulatory approval required, and the published price is the starting point for negotiation. Families should compare the room price against similar rooms at nearby facilities (published on My Aged Care) and consider whether the quoted RAD reflects genuine value.

For rooms priced above $758,627: The provider must have prior written IHACPA approval. If a provider quotes a price above the threshold without approval, they're acting outside the regulations — and the family should ask for the approval documentation before proceeding.

Understanding the threshold also helps families contextualise prices. A room priced at $750,000 is below the approval threshold but may still be negotiable. A room priced at $850,000 requires prior approval, but that approval does not by itself establish that the price represents good value.

How Room Prices Connect to Daily Costs

The RAD price directly determines the alternative Daily Accommodation Payment (DAP). If a family chooses to pay accommodation as a daily fee instead of a lump sum, the DAP is calculated using the Maximum Permissible Interest Rate (MPIR):

DAP = (Room Price × MPIR) ÷ 365

At the current MPIR of 8.43% (from 1 July 2026), a room priced at $758,627 translates to a DAP of approximately $175 per day. A room priced at $500,000 equates to roughly $115 per day. A room at $1,000,000 (IHACPA-approved) means about $231 per day.

These are significant ongoing costs, paid on top of the Basic Daily Fee, Hotelling Contribution, and Non-Clinical Care Contribution. The higher the room price, the more a family pays whether they choose RAD, DAP, or a combination.

Negotiating Below the Published Price

Published room prices — whether below or above the IHACPA threshold — are starting points, not fixed. Providers can and do negotiate, particularly when:

• Beds are vacant — empty rooms generate zero revenue. Providers often accept below-published prices to fill beds quickly rather than hold out for the listed price
• The resident is entering from respite — providers prefer converting existing respite residents to permanent, as it avoids the marketing and administrative costs of finding a new resident
• The family is choosing between multiple facilities — competitive pressure works in the family's favour
• Payment method flexibility — some providers offer a discount for full RAD payment upfront, since it gives them access to a large lump sum (even with the 2% annual retention, the capital utility of holding $500,000+ is significant)

The IHACPA-approved ceiling for a premium room doesn't mean the family must pay that amount. It means the provider is legally allowed to charge up to that amount. The actual price is negotiable.

Where to Find IHACPA Pricing Data

• My Aged Care: Check the provider's published room prices on the My Aged Care "Find a Provider" portal, then request formal accommodation price disclosures from the facility.
• IHACPA approval: Ask the provider for the prior written approval and confirm that it covers the quoted room price.
• Key Features Statement: Providers must give prospective residents a Key Features Statement that includes all accommodation prices, room types, and included services before any agreement is signed.

How the Threshold Changes Over Time

The $758,627 threshold is indexed periodically, so it rises over time. When the threshold changes, rooms that previously required approval may fall below the new threshold — and providers may also adjust their published prices upward to match market conditions.

Families should check the current threshold at the time they're actively comparing facilities, not rely on figures from months earlier. The Department of Health's schedule of fees and charges and current IHACPA information should be checked for the latest threshold.

The Bigger Accommodation Decision

Room pricing is one component of the accommodation payment decision. Whether to pay a lump-sum RAD (now subject to 2% annual retention for post-November 2025 entries), a daily DAP (calculated at the MPIR rate), or a combination requires modelling the impact on pension entitlements, means-tested fees, and the family's overall asset position.

Our Paying for Residential Aged Care guide includes a RAD vs DAP Decision Worksheet that helps families compare scenarios at different room prices — including how the MPIR rate translates published prices into daily costs, how retention deductions erode the RAD over time, and how the accommodation payment choice affects the aged care means assessment.

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