The Real Cost of Aged Care in Australia (and How the Means Test Works)

"How much is this going to cost?" is the question everyone wants answered and nobody can answer in one number. The honest reply is: it depends on the type of care, and on your income and assets. But the system is more predictable than it looks, and there are caps that stop costs running away. Here's how it actually works.

A note on accuracy first: the dollar figures below change a few times a year (they're tied to the pension and indexed). We link the official page for every amount so you can check the current figure. Treat any number here as "go and confirm this on the government site," not as a quote.

The big principle: subsidised, not free

Australia's government heavily subsidises aged care, but it's means-tested. The idea is that people who can afford to contribute do, and people who can't are looked after. So your bill has two parts:

1. Fees everyone pays (a basic contribution toward daily living).
2. Means-tested contributions, worked out from your income and assets.

Your means are assessed by Services Australia, not by the care provider. (If you get a means-tested payment from the Department of Veterans' Affairs, DVA does it instead.) The provider just applies the figure Services Australia calculates.

Care at home: Support at Home and CHSP

There are two ways most people get help at home.

Commonwealth Home Support Programme (CHSP)

This is entry-level help: cleaning, meals, transport, a bit of personal care, social support. Providers ask for a modest co-contribution toward services, based on what you can afford. It's the cheapest way into the system. We cover it in detail in our guide to entry-level home support.

Support at Home

This replaced Home Care Packages in November 2025. It's a coordinated package for higher or more complex needs. Here's where the new contribution model matters, and it's actually quite logical. Services are split into three buckets, and how much you contribute depends on the bucket:

Service type	Examples	Your contribution
Clinical care	Nursing, physiotherapy	The government pays. You contribute nothing.
Independence	Personal care, showering, mobility	Moderate contribution
Everyday living	Cleaning, gardening, meals	Highest contribution

The exact percentages depend on your means. According to My Aged Care, full pensioners make the lowest contributions, and self-funded retirees who don't hold a Commonwealth Seniors Health Card make the highest. The principle is simple: clinical care is fully funded for everyone, and the more "lifestyle" the service, the more you chip in.

There's also a lifetime cap on contributions to protect people who need care for a long time. As of 1 November 2025 it was $135,318.69, per My Aged Care. It is indexed each 20 March and 20 September, so confirm the current figure on that page. Once you hit it, you stop contributing.

Residential aged care: the four possible costs

Moving into a care home is where the numbers get bigger, so it's worth understanding the pieces. There can be up to four:

1. The basic daily fee

Everyone pays this. It covers meals, cleaning, laundry and facilities. It's set at 85% of the single age pension, so it moves when the pension does. Current amount via the Department of Health.

2. A means-tested care fee (or care contribution)

This is the one driven by your income and assets. Services Australia calculates it. Lower-means residents pay little or nothing; higher-means residents pay more.

Crucially, there are caps. For residents on the pre-November 2025 (1 July 2014) fee arrangements, an annual cap and a lifetime cap apply to this fee: at the 20 March 2026 rates they are $35,910.43 a year and $86,185.23 over a lifetime, per the Department of Health. (These caps are indexed each 20 March and 20 September, so check the live figure.) From 1 November 2025, new entrants come under a revised structure with a hotelling contribution and a non-clinical care contribution (the latter sharing the $135,318.69 lifetime cap noted above). Because the rules differ depending on when you entered care, this is exactly the kind of thing to confirm on the official page or with a financial adviser for your specific date of entry.

3. Accommodation costs (your room)

You either pay for your room or the government helps, depending on your means. You can pay this as:

• A lump sum (a Refundable Accommodation Deposit, refunded when you leave), or
• A daily payment (like rent), or
• A combination of both.

You get up to 28 days after moving in to decide how to pay, so don't feel rushed into a lump sum on day one. The My Aged Care accommodation page explains the options.

4. Extra or higher everyday living fees

Optional, for things like a better room, premium meals or extra services. You only pay these if you agree to them. Read the agreement before signing.

How the means test actually works

The means test looks at both income and assets, combined into a single calculation by Services Australia. A few things people get wrong:

• Your home isn't always counted in full. For residential care, the family home is capped in the assets test, and is exempt if a protected person (like a spouse) still lives there. This is a common, costly misunderstanding.
• It's one assessment for both income and assets, not two separate tests you pass or fail.
• You can ask for an assessment before you commit. You don't have to be in care to find out your numbers.

Because the home, super, gifting rules and timing all interact, this is the one area where paying for financial advice genuinely pays for itself. A specialist aged care financial adviser can model lump sum versus daily payment, and whether keeping or selling the home leaves you better off. For most families, an hour with the right adviser saves far more than it costs.

Protections you should know about

• Caps limit annual and lifetime contributions, so costs can't spiral indefinitely.
• Financial hardship assistance exists. If you genuinely can't afford your contributions, you can apply to Services Australia, and the government may cover some or all of them. See My Aged Care.
• Full pensioners pay the least, by design.

A sensible way to approach costs

1. Get the My Aged Care assessment done first (it's free and decides eligibility).
2. Ask Services Australia for an income and assets assessment to get your actual numbers.
3. Use the official aged care home fee estimator for a ballpark.
4. For residential care or anything involving the home, get financial advice before signing.
5. Compare providers; published room prices vary a lot. Browse options in search.

Frequently asked questions

Will I lose my house?
Not automatically. The home is treated specially in the means test and is often partly or fully exempt, especially if a spouse still lives there. Get advice before selling anything.

Do I pay anything for clinical care like nursing?
Under Support at Home, no. The government fully funds clinical care. You contribute to everyday and independence services, not nursing.

What if I run out of money?
Hardship provisions exist. Apply to Services Australia. Care doesn't stop because you can't pay; the system has a safety net.

Are these figures fixed?
No. They're indexed and change through the year. Always confirm the current amount on the linked government page before relying on it.

The takeaway: clinical care is covered, pensioners pay the least, caps protect you, and the home is treated more gently than people fear. Get assessed, get your numbers, and get advice before any big lump sum.