The short answer

A permanent resident of an Australian aged care home pays some combination of four charges: a basic daily fee, a hotelling contribution, a non-clinical care contribution, and an accommodation payment. A full pensioner with modest assets may pay only the first. A self funded retiree in a metropolitan room can pay all four and pass $85,000 a year. The difference between those two positions is not luck — it is a single number called the means tested amount, and everything else follows from it.

1. The basic daily fee — $66.80 a day

This is the floor. It is legislated at 85% of the single basic Age Pension, it applies to every permanent resident and every respite resident, and no assessment of your finances changes it. At $66.80 a day it works out at $24,382 a year, and it is indexed on 20 March and 20 September along with the pension.

It is meant to cover meals, cleaning, laundry, heating and the ordinary business of running a home. It does not come close, which is why the government also pays providers a hotelling supplement — and why, from 1 November 2025, residents with means now contribute to that supplement themselves.

2. The hotelling contribution — up to $22.15 a day

This is the newest charge and the one families most often leave out of the budget. It is means tested: it begins once assessable assets pass $258,000 or assessable income passes $101,105, and it reaches its maximum of $22.15 a day at $361,367 of assets.

The critical thing about it is what it lacks. There is no annual cap, no lifetime cap and no time limit. Over a three year stay at the maximum rate it is $24,254, and over seven years it is more than $56,000, and no cap ever intervenes. Our guide to the hotelling contribution works through the formula in full.

3. The non-clinical care contribution — up to $107.32 a day

From 1 November 2025 the government fully funds all clinical care — nursing, medication management, wound care, allied health. What residents with means now contribute to is the non-clinical side: help with bathing, dressing, mobility, and lifestyle activities.

It starts much higher up the scale than the hotelling contribution: assessable assets above $536,384 or assessable income above $141,252.80. And unlike the hotelling contribution it is capped twice, at $137,917.01 of lifetime contributions and at four years, whichever arrives first. See the non-clinical care contribution in detail, and note that any Support at Home contributions you have already made count towards the same lifetime cap.

4. Accommodation — the number that actually matters

This is where the money is. If your means tested amount is below $72.30 a day you are a supported resident: the government pays most or all of your accommodation and you contribute only your means tested amount. If you are above that line you pay the room's advertised price, and you choose how.

That choice — a lump sum refundable accommodation deposit, a daily accommodation payment, or any split of the two — is the single most consequential financial decision in the process, and it is made under a 28 day deadline by families who have usually never heard of either term. The comparison, with the break even maths, is worth reading before you sign anything.

What families forget to budget for

Beyond the four charges, two more items reliably appear and reliably surprise. The first is the additional service fee or higher everyday living fee — anything from $10 to $100 a day for wine with dinner, a bigger television, hairdressing, or a "premium lifestyle package." These are optional by law and negotiable in practice, but they are frequently presented as though they are part of the room. Ask.

The second is what happens to the family home. Keeping it, renting it or selling it produces three very different five year outcomes, because the home is capped at $214,884 in the aged care means test but counted in full once sold — while a refundable deposit is invisible to the Age Pension assets test. Those two rules pull in opposite directions, and which one wins depends on numbers specific to your household.

Two systems, running side by side

Anyone who entered permanent residential care before 1 November 2025 is protected by a "no worse off" principle and stays on the older arrangements: a means tested care fee of up to $370.39 a day, capped at $35,910.43 a year and $86,185.23 over a lifetime, with no hotelling contribution at all. Anyone entering from that date is on the new system described above. The two systems compared is essential reading if you are not certain which one applies.

Working out your own number

There are only six figures you genuinely need: your assets excluding the home, your income, the value of the home, whether anyone still lives in it, the room price you have been quoted, and whether care started before or after 1 November 2025. Our step by step guide shows the order to work them in, or the calculator will do it for you in about three minutes and tell you free whether you sit above or below the supported resident line.

Household one — the full pensioner with no home

Assets of $30,000, a full Age Pension, renting before entry. The means tested amount is nil, so this resident is fully supported: the government pays the entire accommodation cost and no hotelling or non-clinical care contribution applies.

$66.80 a day — about $24,382 a year. The basic daily fee, and nothing more.

This is the position the system is designed to protect, and around one in four residents is in or near it. If this is you, the important thing is to make sure your income and assets assessment has actually been completed by Services Australia — until it is, a provider may charge you at higher interim rates.

Household two — the part pensioner who owns a home

A home worth $850,000 with nobody living in it, $140,000 in the bank, a part Age Pension. The home counts in the means test at its capped value of $214,884, so assessable assets are around $355,000. That is comfortably above the first asset threshold of $214,884, which means the means tested amount exceeds $72.30 a day and this resident pays the full advertised room price.

On a $550,000 room, paid entirely as a daily accommodation payment at the current Maximum Permissible Interest Rate of 8.43%, accommodation alone is $127.03 a day. Add the basic daily fee of $66.80 and a hotelling contribution of $20.76 — assets are above $258,000 but still below the $361,367 point where it caps — and the total is $214.59 a day.

$214.59 a day — $78,325 a year. Of which $46,366 is accommodation.

This household has the most to gain from running the numbers properly, because almost all of that $46,366 is negotiable in form if not in amount. Paying a lump sum instead, or splitting it, changes both the cost and the Age Pension.

Household three — the self funded retiree

$1.2 million in financial assets and superannuation, no Age Pension, a home already sold. Assessable assets are well above $536,384, so all three means tested charges apply at or near their maximums: the hotelling contribution at $22.15 and the non-clinical care contribution at or close to $107.32.

$196.27 a day in fees alone — $71,639 a year — before a dollar of accommodation.

Add a $650,000 room and the annual figure passes $120,000 if paid daily. The mitigating factor is the four year cap on the non-clinical care contribution: at $107.32 a day the $137,917.01 lifetime cap is reached in about three and a half years, after which that component stops entirely. The hotelling contribution does not.

Household four — the illness separated couple

One partner enters care, one stays in the family home. This is the most common shape of all and the most misunderstood. Because a protected person still lives in the home, the home is fully exempt — not capped at $214,884, exempt altogether. Combined income and assets are then halved for the assessment.

With $300,000 in combined financial assets, the assessed figure is $150,000 — below the first asset threshold of $214,884. This resident is partially supported: the means tested amount comes out at $41.11 a day, so that is the accommodation contribution, and no hotelling or non-clinical care contribution applies at all.

$107.91 a day — $39,387 a year. Basic daily fee plus a capped accommodation contribution, and nothing else. Where assets are lower still, it falls all the way back to $66.80.

The exemption ends when the protected person leaves the home, and the assessment is redone from that date. That is worth planning for rather than discovering.

What about care at home?

Support at Home replaced Home Care Packages on 1 November 2025. There is no basic daily fee at all. Instead you contribute a percentage of what is actually spent: nothing for clinical care, 5% to 50% for independence services, and 17.5% to 80% for everyday living. A full pensioner on a Level 4 budget of $30,469 typically contributes under $3,000 a year. See the side by side comparison.

Why the ranges are so wide

Because the system has a cliff in it. The means tested amount either clears $72.30 a day or it does not, and the difference between clearing it by a dollar and missing it by a dollar can be tens of thousands a year in accommodation. Every other figure is a gentle taper. That one is a step.

What each one actually is

A refundable accommodation deposit is an interest free loan to the aged care home for the price of the room. You hand over, say, $550,000 and it sits there. A daily accommodation payment is rent on the money you did not hand over, charged at a rate the government sets each quarter.

The formula is unglamorous and exact:

DAP = room price × MPIR ÷ 365

At the current Maximum Permissible Interest Rate of 8.43%, a $550,000 room is $127.03 a day, or $46,366 a year. Pay half as a lump sum and you halve the daily payment. Pay all of it and the daily payment is nil.

The naive comparison, and why it is wrong

The obvious sum is: does my money earn more than 8.43%? If yes, keep it and pay daily. If no, hand it over. That comparison was roughly right until 1 November 2025. It is now wrong in two directions at once.

Against the lump sum: retention

From 1 November 2025 a provider deducts 2% a year of the deposit balance, calculated daily, for up to five years. On a $550,000 deposit that is about $10,900 in year one and roughly $52,300 over five full years — money your estate never sees. Moving to another home does not restart the clock, but it does not refund what has already gone either.

For the lump sum: the Age Pension

Here is the part almost nobody accounts for. A refundable deposit is an exempt asset for the Age Pension assets test, while the cash you would have held instead is not. Converting $400,000 of counted assets into an exempt deposit can restore a pension entitlement worth $3 per fortnight for every $1,000 removed — up to $31,200 a year at the extreme. That effect frequently dwarfs the interest arithmetic. Our guide to how aged care changes your Age Pension works through it.

Note the asymmetry that makes this whole decision interesting: the deposit is exempt for the pension but assessable for the aged care means test. Paying it does not reduce your aged care fees at all. It only moves the pension.

The break even return

Put those three forces together — the 8.43% you avoid, the 2% retention you incur, and the pension you unlock — and there is a single investment return at which the two choices leave exactly the same amount behind. Earn more than that and paying daily finishes ahead. Earn less and the lump sum does.

For a full pensioner the break even is often well above 10%, because the pension effect is small and the interest saving dominates. For a self funded retiree with no pension to gain, it can fall to 6% or below once retention is counted. There is no general answer, which is precisely why a general answer is so dangerous. The calculator solves for it directly on your own figures and shows the crossing point on a chart.

Why the combination is usually the interesting answer

You are not limited to one or the other. Any split is permitted, and the split is where the good outcomes usually live, for three reasons.

First, you must be left with the minimum permissible asset level of $64,500 after paying a deposit — no provider can ask for more than that leaves. Second, a partial deposit lets you keep enough liquidity to actually pay the daily fees without selling something in a hurry. Third, you can ask the provider to draw the daily payment out of the deposit rather than paying it separately, which is convenient but quietly erodes the balance and the refund. Get that in writing either way.

The 28 day rule

You have 28 days from entering care to tell the home how you intend to pay. Say nothing and you default to the daily payment in full — the most expensive door in the building. Within those 28 days you can also change your mind. After them, changes are by agreement only.

One further timing trap: the MPIR that binds you is the one current on the day the room price is agreed, not the day you move in. It is reset on 1 January, 1 April, 1 July and 1 October. If a price is agreed in one quarter and settled in the next, the earlier rate is the one that applies — which can be worth thousands in either direction.

What if you are a supported resident?

Then none of this applies in the same way. Below the $72.30 a day line you pay a daily accommodation contribution equal to your means tested amount, and the government pays the rest. You can still convert it to a lump sum refundable accommodation contribution if you prefer, using the same MPIR formula in reverse, but the amounts are far smaller and the decision far less consequential.

A short checklist before you sign

• Is the room price you were quoted the same as the one published on My Aged Care?
• What is the additional service fee, what does it buy, and is it optional?
• Can the daily payment be drawn from the deposit, and will that appear on the monthly statement?
• Which quarter's MPIR applies, and on what date was the price agreed?
• If a deposit is paid, what is the retention shown as, and how is it calculated?

What it is

A refundable accommodation deposit is the lump sum price of a room in an aged care home. You pay it, the provider holds it and uses it — typically to fund building works or reduce debt — and when you leave or die, the balance is returned. No interest is paid to you on it. In exchange, no daily accommodation payment is charged on the portion you have paid.

Room prices are published. Every provider must list them on My Aged Care and on their own website, and the price you are quoted should match. Anything above $758,627 requires prior approval from the Independent Health and Aged Care Pricing Authority, so a higher figure without that approval is not enforceable.

Is it safe?

Yes, in the specific sense that matters. Deposits are guaranteed by the Commonwealth under the Accommodation Payment Guarantee Scheme. If a provider becomes insolvent, the government refunds the balance and then pursues the provider itself. There is no cap on the guarantee and no excess.

What the guarantee does not cover is the retention, because the retention is not a loss — it is a legislated charge.

The retention, which is new and permanent

This is the single biggest change to deposits in a decade, and it applies only to people on the 1 November 2025 accommodation arrangements. Providers must deduct a retention amount calculated at 2% a year on the deposit balance, accrued daily and deducted no more than monthly, for a maximum of five years from the date the deposit was first paid.

Because it compounds on a reducing balance, five full years costs a little under 10% rather than exactly 10%. On a $550,000 deposit:

Note the last row. After five years the deduction stops permanently, so a long stay dilutes the cost. Moving to a different aged care home does not restart the five years, and any amount already deducted reduces the balance that future retention is calculated on.

Residents who entered care under the pre 1 November 2025 arrangements pay no retention at all, even if they pay a deposit after that date. If you are unsure which set of rules you are on, this comparison will tell you.

What you must be left with

No provider can require a deposit that would leave you with less than the minimum permissible asset level of $64,500. If your total assets are $500,000 and the room is $550,000, the most you can be asked for as a deposit is $435,500 — the balance must be charged as a daily payment.

This is a floor, not a target. Paying right down to it leaves nothing to meet daily fees from, which is how residents end up asking to draw the daily payment out of the deposit. That is permitted, and it is often sensible, but it erodes the refund and it should be a deliberate decision rather than an accident. The split calculation is worth doing properly.

The two means tests treat it in opposite directions

A refundable deposit is:

• Exempt from the Age Pension assets test. Paying one can restore or increase a pension.
• Assessable in the aged care means test. Paying one does not reduce your aged care fees at all.

That asymmetry is the engine behind most good and most bad aged care outcomes. It is also why selling the home to fund a deposit can raise your pension and your fees simultaneously, and why the net effect has to be modelled rather than guessed.

Getting the money back

When a resident leaves, the balance must be refunded within 14 days. When a resident dies, it must be refunded within 14 days of the provider being shown probate or letters of administration. Until it is paid, the provider owes interest at the base interest rate — currently 3.25%.

The estate receives the deposit balance less any retention already deducted, less any daily payments or fees the resident agreed to have drawn from it. That final figure is worth calculating in advance, because it is frequently the largest single asset in the estate and beneficiaries tend to have assumed the full amount.

The formula

DAP = room price × MPIR ÷ 365

That is the whole calculation. It converts a lump sum room price into rent, using the Maximum Permissible Interest Rate that the Department of Health, Disability and Ageing publishes each quarter.

Why the rate has moved so much

The MPIR is tied to the general level of interest rates, and it has climbed steadily. It was 4.10% in mid 2021 and is 8.43% now — the highest since 2012. On a $550,000 room that difference is roughly $65 a day, or $23,800 a year, for exactly the same room in exactly the same building.

That rise is the main reason the lump sum has become more attractive relative to the daily payment, and it is why the break even calculation deserves redoing rather than relying on advice given a few years ago.

The quarter that binds you

This trips up more families than any other detail. Your DAP is calculated using the MPIR current on the day the room price was agreed — that is, the day you signed the accommodation agreement — not the day you moved in and not today's rate. Once set, it does not change when the MPIR changes.

So if the rate is falling and you can defer signing to the next quarter, that is worth thousands. If it is rising and you can sign before the quarter ends, likewise. The rate is published in advance of each quarter, so this is knowable rather than a gamble.

DAPs are now indexed

Under the 1 November 2025 arrangements, daily accommodation payments are indexed on 20 March and 20 September in line with the consumer price index. This is genuinely new. A DAP is no longer a fixed daily amount for the life of the stay — it drifts upward.

Over a seven year stay, indexation at around 2.75% a year adds roughly 20% to the daily figure by the end. A lump sum refundable deposit has no equivalent escalation, though it now carries a 2% a year retention instead. Neither is free; they simply cost in different shapes.

Combinations, and the arithmetic of a split

Pay part of the room price as a lump sum and the daily payment applies only to what is left:

DAP = (room price − lump sum paid) × MPIR ÷ 365

On a $550,000 room with a $300,000 lump sum, the outstanding $250,000 attracts $57.74 a day. The lump sum portion earns you nothing, but it costs you nothing either, apart from the retention and the return you gave up.

You can also ask the provider to deduct the daily payment from the lump sum you have already paid. This is convenient and it is common, but understand what it does: the deposit balance falls, the daily payment recalculates on the reducing balance, and the eventual refund shrinks accordingly. It should be a chosen strategy, not a default.

When a DAP is the better answer

Broadly, when your money is working harder than 8.43% after tax, when you need liquidity for medical or family reasons, when the expected stay is short enough that retention on a lump sum would be a large proportion of it, or when you have no Age Pension to gain by converting assets into an exempt deposit. Whether those apply to you is an arithmetic question with a definite answer, and the calculator produces it rather than leaving it to instinct.

Supported residents pay a contribution, not a payment

If your means tested amount is below $72.30 a day you do not pay a market room price at all. You pay a daily accommodation contribution equal to your means tested amount, capped at the accommodation supplement, and the government pays the rest. It can still be converted to a lump sum using the same MPIR formula, and the same 28 day choice window applies.

The structure

Two tests run, and their results are added, not compared. That is different from the Age Pension, where the test producing the lower payment wins. In aged care, income and assets both count and both contribute.

income tested amount = 50% × (assessable income − income free area)
asset tested amount = 17.5% × (assessable assets − asset free area)
means tested amount = (income tested + asset tested) ÷ 364

The divisor is 364, not 365. That is not a typo — it is how the fortnightly social security cycle lands on a daily figure, and using 365 will give you an answer that is subtly and consistently wrong.

The thresholds that matter

The first thresholds are not arbitrary. Run the arithmetic: 17.5% of ($214,884 − $64,500) is $26,317.20 a year, which divided by 364 is exactly $72.30 a day — the maximum accommodation supplement. The income side lands on the same figure. The whole scale is calibrated so that the first threshold is the supported resident line.

What counts as assessable income

More than most people expect, and one item in particular surprises everybody:

• The Age Pension itself. It counts as income for aged care purposes. That is why the income free area of $35,313.20 looks so generous — it is set to absorb a full pension plus a margin.
• Deemed income on financial assets, not actual income. Bank accounts, term deposits, shares and managed funds are deemed to earn 1.25% up to $64,200 (single) and 3.25% above it, regardless of what they actually earn.
• Net rent from an investment property or from the former home if you let it.
• Defined benefit and overseas pensions, employment income, and income from a private trust or company.

What counts as assessable assets

• Everything financial — cash, term deposits, shares, managed funds, and superannuation in full, at any age, whether drawn down or not.
• The former home, capped at $214,884, and only if no protected person lives in it. A spouse in the house makes it exempt outright.
• A refundable accommodation deposit you have paid. Yes, really — it counts in full. Paying one does not reduce your aged care fees.
• Investment property at market value, cars, boats, contents at what they would fetch rather than what they cost, and money owed to you.
• Gifts above the allowable limits made in the past five years. You may gift $10,000 a year and $30,000 over five years; anything beyond that is still counted as yours.

The cliff, and why it dominates everything

Most of this system is a gentle taper. One part of it is a cliff. If your means tested amount is below $72.30 a day you are a supported resident and no aged care home can charge you a market room price — the government pays. If it is above $72.30 a day, it pays nothing towards your accommodation and you negotiate the room price yourself.

The difference between those two positions on a $550,000 room is roughly $46,000 a year. There is no partial version. That single step is why families with assets close to $214,884 need to be unusually careful, and why the last dollar over the line is the most expensive dollar in the system.

Couples

Members of a couple are assessed on half the combined income and assets, whether or not both are in care. Where only one enters care and the other stays home, they are an "illness separated couple": the home is fully exempt while the partner lives in it, and both may qualify for the higher single rate of Age Pension. This combination is often much more favourable than families assume.

How to get it assessed

Services Australia does the assessment. If you already receive an income support payment they generally have what they need. Otherwise you complete the aged care calculation of your cost of care form (SA457) or the combined assets and income assessment (SA485). Do it early — until the assessment is finalised, a provider may charge interim rates, and the correction afterwards is a refund you have to chase.

Reassessments happen when your circumstances change: the home is sold, a protected person leaves, a large gift is made or falls out of the five year window. Each of those is a date worth marking.

Where the number goes next

Once the means tested amount is known, everything else follows mechanically. It sets your supported status and therefore your accommodation. It feeds the hotelling contribution and the non-clinical care contribution through their own thresholds. And under the older pre November 2025 rules it sets the means tested care fee instead.

Which set of rules applies to you

It is decided by one date and nothing else. If you were in permanent residential aged care on or before 31 October 2025, you remain on the arrangements that began on 1 July 2014, for as long as you stay in care. If you entered from 1 November 2025, you are on the new system.

A break in care of more than 28 days can move you onto the new arrangements, which is a detail worth confirming with Services Australia before any extended hospital stay is allowed to run long.

The old system: one means tested care fee

Under the pre November 2025 arrangements, everything above the accommodation supplement was collected as a single charge:

means tested care fee = means tested amount − $72.30 a day

It was capped at $370.39 a day, at $35,910.43 a year, and at $86,185.23 over a lifetime. It could not exceed the actual cost of the resident's care, so a resident with low care needs might pay less than the formula suggested.

The asset taper under the old rules had three bands rather than one: 17.5% between $64,500 and $214,884, then 1% between $214,884 and $515,652, then 2% above that. The gentle middle band is why very wealthy residents under the old system often paid proportionally less than the headline rate suggested.

The new system: two contributions, and free clinical care

The reform's central idea was to make government funding follow care, and make residents fund living and accommodation. So the means tested care fee was abolished for new entrants and replaced by two narrower charges, with the government picking up 100% of clinical care costs — nursing, medication management, wound care and allied health.

Which is actually better?

It depends entirely on wealth and length of stay, and the honest answer is that the reform made about half of new residents pay more.

Modest means: generally better off under the new rules. The non-clinical care contribution does not begin until assets pass $536,384, whereas the old means tested care fee began the moment the means tested amount cleared $72.30 a day. Many residents who paid a means tested care fee under the old rules pay no non-clinical care contribution at all under the new ones.

Substantial means: generally worse off. The lifetime cap rose from $86,185.23 to $137,917.01 — an extra $51,731 before the ceiling arrives — and the hotelling contribution is entirely new and entirely uncapped. Add the 2% a year retention on deposits and a wealthy resident paying a large deposit is materially worse off.

Long stays: better off under the new rules. The four year cap is genuinely generous. A resident paying the maximum non-clinical care contribution stops paying it after 1,460 days no matter how much or little has accumulated, and the government funds all care from that point on.

The no worse off principle

Nobody in care on 31 October 2025 was moved onto terms that cost them more. Existing residents keep the 1 July 2014 arrangements — the means tested care fee, the old caps, and no retention on any deposit, including one paid after the changeover.

The same principle protects home care recipients. Anyone who had or was approved for a Home Care Package on or before 12 September 2024 keeps much lower Support at Home contribution rates and the older $86,185.23 lifetime cap.

The one thing to check today

Ask Services Australia, in writing, which arrangements you are recorded under. It sounds trivial. It is not. A resident recorded under the wrong set of rules can be charged a hotelling contribution they do not owe, or denied a cap they are entitled to, and the correction is retrospective but only if somebody notices. Our calculator asks which system applies before it calculates anything, for exactly this reason.

What it pays for

Everyday living: meals, cleaning, laundry, heating, and the general running of the building. The basic daily fee of $66.80 was always meant to cover this and never has, so the government has long paid providers a top up called the hotelling supplement.

From 1 November 2025 that supplement became means tested. Residents with sufficient means now fund some or all of it themselves. The government continues to pay it in full for everyone below the thresholds.

The formula

hotelling contribution = [ 7.8% × (assets − $258,000) + 50% × (income − $101,105) ] ÷ 364
capped at $22.15 a day

Both components are added, not compared. Someone with high assets and high income pays on both, and hits the cap sooner than either alone would suggest.

Assumes no assessable income above $101,105. Add income above that and the cap arrives sooner.

The uncapped part

This is the detail that matters most and is stated least. The non-clinical care contribution stops at $137,917.01 or four years. The hotelling contribution stops when you leave care, and not before.

Ten years is not a hypothetical. It is the reality for a substantial minority of residents, particularly those who enter care in their late seventies with a physical rather than cognitive impairment. Over that period the hotelling contribution alone exceeds the entire old means tested care fee lifetime cap.

Where the thresholds come from

They are deliberately set well above the point where supported status is lost. The first asset threshold is $214,884; the hotelling contribution does not begin until $258,000. That gap of $43,116 is intentional: it means partially supported residents just over the accommodation line are not immediately hit with a second charge as well.

Fully and partially supported residents below those thresholds continue to have the whole hotelling supplement paid for them.

What actually moves it

The 7.8% asset taper is steep — every $10,000 of assessable assets above $258,000 costs about $2.14 a day, or $782 a year, until the cap. That means:

• Selling the home converts a capped $214,884 into a fully counted lump sum, and will typically push a resident straight to the hotelling cap. See keep, rent or sell.
• Paying a refundable deposit does not help. A deposit is an assessable asset for aged care, so it does not reduce this contribution by a dollar.
• Legitimate gifting within the $10,000 a year and $30,000 over five years limits does reduce assessable assets, but only after the five year window has closed on anything above those limits.

Once you are above $361,367 in assets the contribution is capped, and further assets make no difference to it at all. Households already well past that point can stop optimising for this particular charge and concentrate on the accommodation decision, where the money is.

Budget for it properly

At the maximum rate the hotelling contribution is $8,085 a year on top of the $24,382 basic daily fee. Together, that is $32,467 a year before accommodation and before any non-clinical care contribution — and it is the floor that a resident with means will pay for every year of their stay.

What it is and what it is not

From 1 November 2025 the government fully funds every clinical care cost in residential aged care. What residents with means contribute to is the non-clinical side: help with bathing, dressing, eating, mobility, continence, and the lifestyle and recreation programme.

This replaced the old means tested care fee for anyone entering care from that date. Residents already in care on 31 October 2025 keep the old fee instead.

The formula

non-clinical care contribution = [ 7.8% × (assets − $536,384) + 50% × (income − $141,252.80) ] ÷ 364
capped at $107.32 a day

The thresholds are deliberately high. A resident does not begin contributing to their care until their income and assets are more than sufficient to fund the whole hotelling supplement themselves. In practice that means most residents never pay this charge at all.

Assumes no assessable income above $141,252.80.

Two caps, and which one bites

The lifetime cap is $137,917.01, indexed on 20 March and 20 September. The time cap is four years — 1,460 days of paying the contribution, after which it stops permanently and the government funds the full cost of care for the remainder of the stay.

Whichever arrives first, wins. And which one arrives first depends entirely on the rate you pay:

The crossover is $94.46 a day. Below that, the stopwatch always wins — which means most residents who pay this contribution at all stop paying it after exactly four years, regardless of how much they have contributed. That is a genuinely generous protection for long stays, and it is worth knowing about before it arrives rather than after.

The shared cap that surprises people

The $137,917.01 lifetime cap is shared with Support at Home. Every dollar contributed towards independence and everyday living services at home counts towards the same ceiling.

So someone who spent three years on a Level 6 Support at Home budget contributing $6,000 a year arrives in residential care with $18,000 already used. Their remaining cap is $119,917.01, not the full amount. Services Australia tracks this automatically, but it is worth asking for the figure in writing — it is the single number that tells you how long this charge has left to run.

What the caps do not cover

This matters more than the caps themselves. Reaching the lifetime cap or the four year mark does not stop:

• The basic daily fee of $66.80 a day — $24,382 a year, for as long as you are in care.
• The hotelling contribution of up to $22.15 a day, which has no cap at all.
• Your accommodation payment, which runs for the whole stay.
• Any additional service fees you agreed to.

A resident who has reached every available cap still pays $88.95 a day in fees plus accommodation. The full picture of what the caps cover is worth reading before budgeting on the assumption that they solve the problem.

Financial hardship

If the contribution is genuinely unaffordable, Services Australia can reduce or waive it under financial hardship assistance. Apply on form SA462. A decision takes about 28 days and can be backdated. Who qualifies, and how it works.

The two rules that fight each other

Almost everything about this decision comes down to a single asymmetry in the law.

Rule one. In the aged care means test, the former home is counted at its net value up to a cap of $214,884. A home worth $900,000 counts as $214,884. A home worth $2 million counts as $214,884. Sell it, and the cash proceeds count in full — every dollar.

Rule two. A refundable accommodation deposit is an exempt asset for the Age Pension. Money sitting in a deposit is invisible to Centrelink. Money sitting in a bank account is not.

So selling the home and paying a deposit does two opposite things at once: it increases your aged care assessable assets (rule one) and decreases your pension assessable assets (rule two). Whether you finish ahead depends on how far you are from the relevant thresholds on each test — which is a calculation, not a philosophy.

Option one: keep it, leave it empty

Aged care. The home counts at $214,884. No rental income is added.

Age Pension. Fully exempt for two years from the date of entry to care. After that it counts at full net value, which for most homes wipes out any remaining pension entirely.

Cash flow. Nothing comes in, and rates, insurance, maintenance and possibly land tax go out. Fees have to be met from other income or capital.

This is the default for families who cannot face the decision, and it is often the worst of the three financially — although it is sometimes exactly right when a return home is genuinely possible, or when the family needs time.

Option two: keep it and rent it

Aged care. The home still counts at $214,884, and the net rent is added to assessable income. That extra income is taxed at 50% in the income test, so $25,000 of net rent adds about $34 a day to the means tested amount before caps.

Age Pension. The home stays exempt for two years, but the rent counts as income from day one. Under the rules that applied before 1 January 2016 rented former homes stayed exempt indefinitely; that concession is long gone.

Cash flow. Genuinely helpful. A $900,000 home at a 3.2% gross yield produces about $28,800, or roughly $21,600 after agent fees, rates, insurance, repairs and vacancy.

Families frequently assume the rent covers the daily accommodation payment. On a $550,000 room the DAP is $46,366 a year — the rent covers less than half of it, and it has raised the fees on the other side of the ledger. The full arithmetic of renting is worth reading.

Option three: sell it

Aged care. The proceeds count in full. On a $900,000 home the assessable amount goes from $214,884 to roughly $877,500 after selling costs — an increase of $662,600. At the 7.8% taper that is about $142 a day in additional contributions, before caps intervene.

Age Pension. If the proceeds go into a refundable deposit, they become exempt. Someone who had lost their pension to the assets test may recover a substantial part of it — up to $3 per fortnight for every $1,000 sheltered.

Cash flow. Excellent. There is no daily accommodation payment on the portion covered by the deposit, no holding costs, and liquidity for everything else.

Estate. The deposit is refundable, less the new 2% a year retention for up to five years — about 9.5% over the full term. Against that, the home is no longer appreciating.

The protected person exemption

This changes everything and is the single most valuable provision in the whole means test. If a protected person still lives in the home, it is fully exempt — not capped at $214,884, exempt altogether. A protected person is:

• a spouse or de facto partner;
• a dependent child or student;
• a close relation who has lived there for at least five years and is eligible for an income support payment;
• a carer who has lived there for at least two years and is eligible for an income support payment.

Where a partner remains at home, selling is almost always the wrong move financially, because it converts a fully exempt asset into a fully counted one. The exemption ends the day the protected person leaves, and the assessment is redone from that date — so plan for it rather than be surprised by it.

A worked comparison

A single resident, home worth $900,000, $150,000 in the bank, a $550,000 room, part pension, three year stay. Indicative outcomes:

Illustrative only, on stated assumptions. Notice that the option with the highest fees is not the one with the lowest final position, and the option with the lowest fees is not the winner either. That is the whole reason this needs to be modelled rather than argued about across a kitchen table.

What else belongs in the decision

• Capital gains tax. The main residence exemption generally continues for up to six years after you move out if the home is rented, and indefinitely if it is not. Selling later can create a partial liability.
• The two year pension clock. The exemption ends on day 731. Many families sell in year three for exactly this reason.
• Land tax. Renting the former home can trigger a liability in some states.
• What happens if care ends early. A home sold cannot be unsold.
• Everyone affected. Adult children living in the home, and beneficiaries expecting to inherit it, are part of this decision whether or not they are in the room.

The intuition, and why it misleads

It is a natural thought. The house is sitting empty, the fees are large, so let the house pay for itself. The trouble is that renting the home changes three things at once, and only one of them is the rent.

1. Rent arrives — good.
2. Assessable income rises, so aged care contributions rise — bad.
3. Assessable income rises, so any Age Pension falls — also bad.

Whether the first outweighs the other two depends on where you sit relative to the thresholds. For a supported resident with headroom, renting is often clearly worthwhile. For someone already at the hotelling cap with no pension left to lose, it is worthwhile again. For the large group in between, it can be close to neutral.

What the rent is actually worth

Start with gross rent and subtract the real costs of being a landlord: agent management at 6% to 8%, letting fees, council and water rates, insurance, repairs, and vacancy. A reasonable working figure is 25% of gross.

What it costs you in fees

In the aged care income test, 50 cents in every dollar above the income free area is counted. On $21,600 of net rent, if you are already above the free area, $10,800 a year is added to the income tested amount — about $29.67 a day before caps.

Where that lands depends on your position. If you were a supported resident with headroom below the $72.30 line, it may push you over it and cost you the accommodation supplement entirely — a swing of tens of thousands. If you were already well above the line, it feeds into the hotelling and non-clinical care formulas, both of which cap out, so the marginal cost eventually falls to zero.

What it costs you in pension

The Age Pension income test takes 50 cents in the dollar above $226 a fortnight for a single person. On $21,600 of net rent — $831 a fortnight — that is a reduction of about $303 a fortnight, or $7,878 a year, if you were on a part pension and the income test was the binding one.

Note the ordering: the home itself stays exempt from the pension assets test for two years whether you rent it or not. It is the income that bites immediately. See how aged care changes your Age Pension.

Putting it together

Take a part pensioner with a $900,000 home who is above the supported resident line:

Positive, but roughly 42 cents in the dollar of the headline rent, and nowhere near the $46,366 a year daily accommodation payment on a $550,000 room. That is the gap between the intuition and the arithmetic.

The rule that no longer exists

Before 1 January 2016, if you rented out the former home and paid your accommodation by daily payment, the home stayed exempt indefinitely from the pension assets test and the rent was exempt too. That was a genuinely powerful strategy and it is still repeated as advice.

It was abolished for anyone entering care from 1 January 2016. Only residents who entered before that date and have maintained the arrangement continuously still have it. If someone tells you renting keeps the home exempt, check the date they are working from.

Practical matters

• Capital gains tax. The main residence exemption generally continues for six years after you move out while the home is rented. Sell inside that window and there is usually no liability.
• Land tax. Renting can create a liability in some states once the home stops being a principal place of residence.
• Insurance. A landlord policy is required; an owner occupier policy will not respond.
• Who manages it. An attorney or family member has to deal with tenants, tradespeople and inspections, often at a distance and at a difficult time.
• Condition. Homes vacated for aged care frequently need work before they can be let, and that cost lands before any rent does.

What changed on 1 November 2025

Home Care Packages had four levels, a basic daily fee, an income tested care fee, and a well documented waiting list. Support at Home has eight levels, no daily fee, contributions charged as a percentage of each service, and separate short term pathways for restorative care, end of life care, and assistive technology.

The most important structural change is how you pay. Under packages you paid a flat fee whether or not you used services. Under Support at Home you pay only for what you actually receive, and the rate depends on what kind of service it is.

The eight classifications

Your classification comes from an aged care needs assessment, not from your finances. Budgets are indexed on 1 July each year and released quarterly — the full quarter's amount is available on day one, pro rated if you join mid quarter.

Anyone who transitioned from a Home Care Package kept an equivalent funding level: transitioned Level 1 is $11,272.15 a year, Level 2 $19,821.76, Level 3 $43,148.74 and Level 4 $65,415.91.

The three service categories

What you pay depends entirely on which category a service falls into.

Clinical care is free to everyone, at every income level. And from 1 October 2026 the government fully funds personal care as well, which removes the largest independence cost for anyone approved for it. Where you sit within the independence and everyday living ranges depends on your income and assets — see how the contribution taper works.

The 10% that never reaches services

Ten per cent of every quarterly budget is allocated to your provider for care management: coordinating services, reviewing your plan, producing your monthly statement, and dealing with compliance. On a Level 6 budget that is $4,937 a year.

It carries a 0% contribution rate, so it costs you nothing directly — but it does reduce the budget available for actual services. A Level 6 participant has $44,428 to spend, not $49,365. Providers can also receive a supplement for additional care management where needs are complex.

Carrying budget forward

You can carry unspent budget into the next quarter, capped at $1,000 or 10% of the quarterly budget, whichever is higher. On a Level 8 budget that is $2,003 a quarter. Anything above that is lost at the end of the quarter and does not return.

The carry over exists so you can absorb an unplanned need — an informal carer going away, a period of illness. It is not a savings account, and deliberately underspending to build a reserve does not work.

Unspent Home Care Package funds are treated differently and much more generously. If you transitioned with a balance, you keep it, there is no cap on using it, and it can go towards assistive technology and home modifications or towards ongoing services once the quarterly budget is exhausted.

The short term pathways

• Restorative Care Pathway. About $6,000 over up to 16 weeks, primarily allied health, rising to about $12,000 where eligible. Aimed at recovering function after a fall, an illness or a hospital stay.
• End-of-Life Pathway. About $25,000 over up to 16 weeks for people with a prognosis of three months or less who want to remain at home.
• Assistive Technology and Home Modifications scheme. Separate funding in low, medium and high tiers for equipment, rails, ramps and bathroom modifications, with a remote supplement for Modified Monash 6 and 7 areas.

These sit alongside your ongoing budget rather than consuming it, which is a genuine improvement on the packages system where a wheelchair could swallow a quarter's funding.

The lifetime cap you share with residential care

Contributions are capped at $137,917.01 over a lifetime, indexed on 20 March and 20 September. Crucially this is a combined cap with the non-clinical care contribution in residential aged care. Years spent contributing at home reduce what you can be charged if you later move into a home.

Participants protected by the no worse off principle keep the older, lower cap of $86,185.23.

Waiting times, and what to do meanwhile

Support at Home releases funding in priority order rather than strict date order, and waits for higher classifications remain substantial. While you wait, the Commonwealth Home Support Programme continues to operate — it transitions into Support at Home no earlier than 1 July 2027 — and it can provide basic services at low cost in the interim.

Is home care cheaper than residential care?

Out of pocket, almost always. In total system cost, often not. A Level 8 budget of $80,137 buys a defined number of service hours; a residential place buys 24 hours a day of supervision. The two are genuinely comparable only while care needs are modest. The side by side comparison works through where the crossover sits.

The three bands

"Pensioner" includes anyone on an income support payment, not only the Age Pension. And if your income and assets happen to match those of a full pensioner, you can qualify for the lowest rates even without receiving a payment — but only if you actually disclose them to Services Australia.

How the taper works

For part pensioners and Seniors Health Card holders, one calculation places you between the two bounds.

income reduction = 50% × (assessable income − income free area)
asset reduction = 7.8% × (assessable assets − asset free area)
taper point = the greater of the two ÷ the maximum reduction amount, capped at 1

independence rate = 5% + 45% × taper point
everyday living rate = 17.5% + 62.5% × taper point

Note that it uses the greater of the income and asset reductions, not their sum — which is the opposite of how the residential aged care means test works. The free areas are the Age Pension test free areas, so they differ for homeowners and non-homeowners and for singles and couples.

A worked example. A single part pensioner, homeowner, with $200,000 in financial assets and total income including the pension of $45,500. The income reduction dominates, and the taper point lands around 20%, producing an independence rate of about 14% and an everyday living rate of about 30%.

What that means in dollars

Contributions are a percentage of what is actually spent, so your service mix matters as much as your rate. On a Level 4 budget of $30,469, with 10% removed for care management, $27,422 is available for services. Spend it 30% clinical, 45% independence, 25% everyday living:

$3,785 a year, or about $73 a week, for $30,469 of care. That blended rate falls further if more of the budget goes on clinical services, and rises if more goes on gardening and cleaning.

The no worse off principle

If you were receiving, or had been approved for, a Home Care Package on or before 12 September 2024, you are protected. Your contributions can never exceed what you would have paid under the old programme, even if you are later reassessed into a higher classification.

A grandfathered full pensioner pays nothing at all, ever, on any Support at Home service. Their lifetime cap also stays at the older $86,185.23 rather than $137,917.01.

If you think you might qualify, check. The date turns on when you were approved, not when services started, and plenty of people approved in mid 2024 do not realise they are covered.

The "means not disclosed" trap

If you do not provide your income and assets to Services Australia, you are recorded as means not disclosed and charged at the maximum rates — 50% and 80%. On a Level 6 budget with a typical mix that is the difference between paying about $6,000 a year and about $20,000.

There is no penalty for disclosing and no benefit to withholding. If you already receive a payment from Services Australia or the Department of Veterans' Affairs, they use what they hold and you need do nothing.

What is capped and what is not

The lifetime cap of $137,917.01 is shared with residential aged care's non-clinical care contribution. Once reached, you contribute nothing further to either.

There is no annual cap and no time cap on Support at Home contributions. And if you cannot afford them, financial hardship assistance is available through form SA462, which can cover some or all of your contributions.

How you pay

Contributions are collected directly by your provider, after services have been delivered, on whatever cycle you agree — weekly, fortnightly or monthly. Your provider must issue an itemised monthly statement showing exactly what was spent, what the government paid, and what you contributed. Read it. Errors in service category coding are the most common source of overcharging, because the difference between an independence service and an everyday living service can be 16 percentage points.

The out of pocket comparison

Take a single part pensioner, homeowner, $200,000 in financial assets.

The out of pocket gap is roughly $62,600 a year. That is not a marginal difference and it explains why the overwhelming majority of older Australians who can stay home, do.

Why the comparison is not the whole story

A Support at Home budget buys a finite number of service hours. At typical rates of $75 to $95 an hour for personal care, $49,365 buys roughly 10 to 12 hours a week after the 10% care management allocation. A Level 8 budget buys 16 to 20.

That is enough for someone who needs help showering, some domestic assistance, a weekly nurse and transport to appointments. It is not enough for someone who cannot be left alone, who wanders at night, or who needs two people to transfer. Residential care buys continuous supervision, and there is no home care budget at any level that replicates it.

Where the crossover sits

As a rule of thumb, once genuine care needs pass 25 to 30 hours a week, the funded home care budget runs out and the gap has to be filled privately at full rates. At $85 an hour, an extra 15 hours a week is $66,300 a year paid entirely by you — at which point residential care is usually cheaper as well as safer.

The other trigger is unpaid care. Most people at home are supported by a spouse or adult child doing 30 to 60 unpaid hours a week. The financial comparison silently assumes that continues. When the carer becomes ill, or simply exhausted, the whole arrangement changes overnight — which is why the respite pathway matters and why families should price residential care before they need it, not after.

What each option does to the house

This is the part that rarely makes it into the conversation.

Staying home. The house is your principal residence. Fully exempt from the Age Pension assets test, fully exempt from any aged care assessment. Your pension is untouched.

Moving into residential care. The house becomes a former home. It counts at $214,884 in the aged care means test unless a protected person lives there, and it becomes fully assessable for the Age Pension after two years.

For a homeowner with no partner remaining, that shift alone can be worth more than the difference in fees — and it is one more reason the two options are not comparable on a single number.

What you are actually buying in each case

The lifetime cap connects them

Contributions in either setting count towards the same $137,917.01 lifetime cap. Years spent contributing at home reduce what you can be charged if you later move into residential care. That is a genuine advantage of the home care route that most families do not know about, and it is worth asking Services Australia for your running total.

The honest summary

Home care is cheaper out of pocket, keeps the house out of every means test, and preserves the pension. It works while care needs fit inside a funded budget and while informal support holds. Residential care costs far more and triggers the whole means testing apparatus, but it is the only option that provides continuous care, and past a certain level of need it becomes the cheaper option too.

The useful exercise is not choosing between them today. It is pricing both, now, so that when the transition comes — and for most people it does — it is a decision rather than an emergency.

Why the two systems have to be solved together

The Age Pension you receive counts as income in the aged care means test. The decisions you make about aged care change your assessable assets, which changes your pension, which changes your aged care fees. They are circular, and any calculation that solves one without the other gets both wrong.

The pension tests, briefly

The pension is worked out under both an income test and an assets test, and you receive whichever produces the lower payment. The maximum single rate is $1,200.90 a fortnight and the maximum for each member of a couple is $905.20.

Financial assets are not assessed on what they earn; they are deemed to earn 1.25% up to $64,200 for a single person and 3.25% above that.

Decision one: paying a refundable deposit

This is the big one. A refundable accommodation deposit is an exempt asset for the pension. Move $400,000 out of the bank and into a deposit and $400,000 disappears from the assets test.

At $3 a fortnight per $1,000, that is up to $1,200 a fortnight — $31,200 a year — of pension restored, if the assets test was the binding one and there is enough entitlement to restore. The deemed income on that $400,000 also disappears, which helps under the income test too.

The catch, and it is a real one: the deposit is fully assessable in the aged care means test. So it lifts your pension while doing nothing at all for your aged care fees. That asymmetry is the single most important thing to understand about aged care finance, and it is why the RAD versus DAP decision cannot be made on interest rates alone.

Decision two: the two year home exemption

When you enter residential care, your former home stays exempt from the pension assets test for two years from the date of entry. On day 731 it becomes fully assessable at its net market value.

For a home worth $900,000, that is an extra $900,000 in the assets test — which for a single homeowner wipes out the pension entirely and permanently. Families frequently discover this in the third year, as a letter, having budgeted on the pension continuing.

Two things pause or remove that clock. A protected person living in the home keeps it exempt indefinitely. And selling it before the two years are up, with the proceeds going into a deposit, converts a soon to be assessable asset into an exempt one.

Decision three: renting the former home

Rent counts as income from the first day, in both systems. The home itself remains exempt for the same two years, so the assets position is unchanged, but the income position worsens immediately.

The concession that used to exempt rented former homes indefinitely was abolished on 1 January 2016. Anyone entering care since then does not have it, however often the strategy is still repeated. The full arithmetic of renting works it through.

Decision four: selling the home

Selling changes your homeowner status, which raises the assets test free area substantially — from $333,000 to $600,000 for a single person. That is worth up to $801 a fortnight in itself.

But the proceeds count in full. Whether you finish ahead depends on how much goes into an exempt deposit and how much stays as counted cash. Selling a $900,000 home and putting $550,000 into a deposit leaves roughly $327,500 counted after selling costs — comfortably under the raised free area, so the pension may well improve. Selling and holding the whole amount in cash does the opposite. See keep, rent or sell.

Gifting does not work the way people hope

You may gift $10,000 in a financial year and $30,000 over five years. Anything above that is a deprived asset: it continues to count in both the pension and aged care assessments for five years from the date of the gift, and it is deemed to earn income as well.

Gifting in the weeks before entering care therefore achieves nothing except reducing the money available to pay fees. Gifting five years earlier is a different conversation entirely — and one for a licensed adviser, not a calculator.

Practical points

• Tell Services Australia within 14 days of any change in circumstances. Overpayments are recovered.
• Illness separated couples may each qualify for the higher single rate of pension while still being assessed as a couple for assets. This is frequently missed and is worth checking.
• The pensioner concession card continues for a period even if the pension itself drops to nil, and it is worth real money in pharmaceuticals and utilities.
• Ask for the assessment in writing and check the figures. Errors in the treatment of the former home are the most common.

What you actually get for the money

An aged care statement of advice from a specialist adviser typically contains six things:

1. A calculation of your assessable income and assets.
2. Your means tested amount and supported status.
3. A projection of your fees over an assumed length of stay.
4. Two or three accommodation funding options, modelled.
5. The Age Pension consequence of each.
6. A recommendation, in writing, with the adviser's licence and professional indemnity behind it.

Items one to five are modelling. They apply published rules to your numbers. The rules are not secret and the arithmetic is not hard — it is simply spread across several documents, indexed twice a year, and tedious to do by hand. That is precisely the kind of work software does well.

Item six is different. A personal recommendation — "you should do this" — is a regulated financial service in Australia. It requires an Australian Financial Services Licence, it carries legal liability, and no calculator can or should provide it.

What the fees look like

Some advisers charge a percentage of assets instead, which on a $1.2 million portfolio is considerably more. Others bundle aged care advice into a broader retirement engagement.

The timing problem

You have 28 days from entering care to choose how you pay for accommodation, and room offers are typically held for a week or two. A statement of advice that takes five weeks arrives after both deadlines have passed.

In practice that means many families make the decision first and get it reviewed afterwards. That is not an argument against advice. It is an argument for having the numbers in front of you on day one, so that whatever you decide inside the 28 days is at least an informed decision rather than a default.

When advice is genuinely worth it

There are situations where a licensed adviser earns the fee several times over, and a calculator is not a substitute:

• Complex structures. Family trusts, self managed super funds, private companies, business assets.
• Estate planning that has to be redone. Wills, binding death benefit nominations, testamentary trusts.
• Large capital gains on the sale of a property, where timing and structure matter.
• Family conflict. An independent professional in the room is worth a great deal when siblings disagree.
• Financial products — annuities, insurance bonds, funeral bonds — which are sometimes used to shelter assets and always require a licence to recommend.
• Someone who needs to be told what to do, and to have it in writing from a person who carries the responsibility.

When it is mostly arithmetic

For the large majority of households — a home, some superannuation, a bank account, a part pension — the decision reduces to three questions:

• Am I above or below the $72.30 a day supported resident line?
• Should I pay a lump sum, a daily payment, or a split?
• Do I keep, rent or sell the home?

All three are answerable from published rules and your own figures. The step by step guide shows the order to work them in, and the calculator does the whole thing in about three minutes.

Free help that is genuinely good

• Services Australia Financial Information Service — 132 300. Free, independent, and considerably better than its profile suggests. They will not recommend, but they will explain.
• My Aged Care — 1800 200 422. Assessments, provider room prices, and the official fee estimator.
• Older Persons Advocacy Network — 1800 700 600. Free, confidential, independent of both government and providers.

If you do engage an adviser

Ask four questions before you sign anything. What is the total fee, in dollars, including implementation? How many aged care statements of advice have you written in the past year? Do you hold the Accredited Aged Care Professional designation? And how long will it take, given I have 28 days?

Then take your own numbers with you. An adviser who starts from a modelled baseline you have already checked will spend the engagement on the part you are actually paying for — the judgement — rather than on data entry.

What you pay

$66.80 a day. That is the whole of it. Respite residents pay the same basic daily fee as permanent residents — 85% of the single basic Age Pension — and are exempt from every means tested charge in the system.

No income and assets assessment is required for respite. You do not need to have completed form SA457 and you do not need a Services Australia determination.

Where the extra charges creep in

Because the fee structure is so simple, respite is where inappropriate charging most often shows up. The things a home cannot charge a respite resident are:

• A refundable accommodation deposit or any lump sum "bond".
• A daily accommodation payment or contribution.
• A hotelling contribution.
• A non-clinical care contribution or means tested care fee.
• A "booking fee", "holding fee" or "administration fee" as a condition of entry.

What a home can charge is an additional service fee for genuine extras you have agreed to in writing — a premium room, hairdressing, a newspaper. These must be optional and must be disclosed before you arrive. If a fee is presented as compulsory, ask which provision of the Aged Care Act 2024 authorises it.

How much respite you are entitled to

63 days a financial year of subsidised residential respite, on an approval from an aged care assessment. Extensions of 21 days at a time are available where there is a demonstrated need — carer illness, carer absence, or a deterioration in the person's condition.

Respite can be planned or emergency. Planned respite needs to be booked well ahead, particularly over summer and around Christmas when carers most need it.

Respite as a way in

A great many permanent placements begin as respite. It is a genuinely useful way to see whether a particular home works, without paying a deposit or triggering any means testing.

But understand the switch. The moment a stay converts to permanent, the entire means testing apparatus engages: an income and assets assessment, a means tested amount, an accommodation payment, and a 28 day window to choose how to fund it. The bill goes from $66.80 a day to potentially $200 a day overnight.

If permanent care is a realistic possibility, price it during the respite stay rather than after it. The calculator will do it free, and having the numbers before the conversation is worth more than having them after.

Respite at home

Support at Home funds in home and centre based respite through the independence service category, so a contribution of between 5% and 50% applies depending on your rates. There is also a dedicated carer support pathway.

Transition care, for people leaving hospital, is charged at $13.75 a day in a home or community setting and $66.80 a day in a residential setting.

Before you book

• Confirm the daily fee in writing, and confirm that no accommodation charge applies.
• Ask what additional services are offered, what they cost, and confirm they are optional.
• Ask what happens if the stay needs to be extended.
• Ask what happens if the stay converts to permanent — specifically, what the room price would be.
• Check how many of your 63 days you have already used this financial year.

Every cap in the system

The four year cap, and why it usually wins

This is the most valuable protection in the reformed system and the least well known. The non-clinical care contribution stops after 1,460 days of paying it, regardless of how much has actually accumulated. From that point the government funds the full cost of care for the rest of the stay.

Which cap arrives first depends entirely on your daily rate. The crossover is $94.46 a day — the rate at which $137,917.01 takes exactly four years to accumulate.

Since most residents who pay this contribution pay well under $94 a day, the four year cap is what actually stops them — usually before they have paid anything close to $137,917.

The cap that is shared

The $137,917.01 lifetime cap covers both the residential non-clinical care contribution and Support at Home contributions. They draw on the same balance.

Somebody who spent four years on a Level 6 Support at Home budget contributing $6,500 a year arrives in residential care having used $26,000. Their remaining cap is $111,917 — and the four year clock starts fresh, since it counts days in residential care only.

Services Australia tracks the running total. Ask for it in writing before you enter care; it is the single number that tells you how long this charge has left to run.

What the caps never cover

This is the part that matters most. Reaching every available cap does not stop:

A resident who has reached every cap available to them still pays $88.95 a day in fees, plus accommodation. Over a further three years that is $97,400 before a dollar of room cost. Budgeting on the assumption that the caps solve the problem is the most expensive mistake in this whole area.

How indexation affects them

Caps rise on 20 March and 20 September. Rising is not straightforwardly good news: a higher cap means more to pay before you reach it. If you are already at or near the cap, the increase means you resume paying until the new ceiling is met.

The four year cap does not index, because it is measured in days. Over a long stay that makes it the more reliable of the two.

What to do about it

Three things, all of them free.

1. Ask Services Australia for your running total against the lifetime cap, including anything used under Support at Home.
2. Confirm which set of rules you are on. The old and new caps are very different, and a misclassification is worth tens of thousands.
3. Diarise the four year date from your entry to permanent residential care. Fees should visibly change. If they do not, that is a conversation to have.

What it is

Financial hardship assistance is a determination by Services Australia that you cannot reasonably pay some or all of your aged care fees. If granted, the government pays a fee reduction supplement directly to your provider and you are not charged the covered amount.

It applies in residential aged care and in Support at Home, and it can cover the basic daily fee, the hotelling contribution, the non-clinical care contribution, the means tested care fee, and accommodation payments or contributions.

Who qualifies

The test asks whether you have the means to pay, not whether the fees feel expensive. Broadly you need to show:

• Assets below roughly $40,000, excluding assets you genuinely cannot access.
• Insufficient income — typically less than 15% of the basic Age Pension remaining after reasonable essential expenses.
• That you have no reasonable ability to realise assets, and that any recent gifts were not made to create the hardship.

Essential expenses are counted properly and generously: medical and pharmaceutical costs, private health insurance, essential travel, and the reasonable costs of maintaining a property that has to be maintained.

The assets that can be excluded

This is where most successful applications are won, and where most people give up too early. An asset you cannot realistically turn into money may be excluded from the assessment. Common examples:

• A home a protected person still lives in and cannot be asked to leave.
• A property that is genuinely unsaleable — remote, in dispute, or subject to a caveat.
• A gift you cannot recover, provided it was not made to manufacture hardship.
• Money tied up in a deceased estate not yet distributed.
• Assets frozen by a court order or family law proceeding.

Each of these needs documentary evidence, and the quality of the evidence usually determines the outcome.

How to apply

1. Complete form SA462, the Aged Care Claim for financial hardship assistance.
2. Attach evidence: bank statements, a valuation or agent's appraisal, medical expense records, correspondence explaining why an asset cannot be realised.
3. Lodge with Services Australia, or with the Department of Veterans' Affairs if you receive a DVA means tested payment.
4. A decision is normally made within 28 days. It can be backdated to the date you entered care.

Determinations run for a set period and are reviewed. If you are already receiving assistance you do not need to reapply until the current determination expires.

Tell the provider immediately

Do not wait for the outcome before speaking to your aged care home. Providers must make every effort to resolve payment difficulties and must comply with continuity of care obligations under the Aged Care Act 2024. In Support at Home a provider must give at least 14 days written notice before ceasing services, and must attempt alternative payment arrangements first.

An unpaid account with an application in progress is a very different conversation from an unpaid account with no explanation.

Options short of hardship

Before applying, or alongside it, several other levers exist:

• Draw the daily payment from the deposit. If a refundable deposit has been paid, the provider can deduct fees from it by agreement. This preserves cash flow at the cost of the eventual refund.
• Change the accommodation split. Moving from a lump sum to a daily payment, or the reverse, can materially change the cash position. See RAD vs DAP.
• Reconsider the home. Renting the former home produces income, though it also raises assessable income.
• Cancel additional services. These are optional by law. A $30 a day package is $10,950 a year.
• Check the assessment itself. Errors in the treatment of the former home and of gifts are common, and a correction is faster than a hardship application.

Where to get help with the application

• Services Australia Financial Information Service — 132 300. Free and independent.
• Older Persons Advocacy Network — 1800 700 600. Free advocacy, and they will help with the form.
• My Aged Care — 1800 200 422.

None of these charge, and all of them deal with these applications regularly.

Step 1 — Build your assessable assets

Add up, at market value:

• Cash, term deposits, shares, managed funds.
• Superannuation in full — at any age, drawn down or not.
• Investment property, cars, boats, contents at what they would actually fetch.
• Money owed to you, and any private trust or company interest.
• Gifts above $10,000 in a year or $30,000 over five years, made in the past five years.
• Any refundable accommodation deposit already paid.
• The former home — but capped at $214,884, and only if no protected person lives in it.

If a spouse, dependent child, long term close relative or eligible carer still lives in the home, it is fully exempt. That single fact changes more outcomes than any other. The home, in detail.

If you are a member of a couple, halve the combined total.

Step 2 — Build your assessable income

Add up, annually:

• Your Age Pension. Yes, it counts.
• Deemed income on financial assets — 1.25% up to $64,200 for a single person, 3.25% above. Not what they actually earn.
• Defined benefit and overseas pensions, employment income.
• Net rent, including from the former home if you let it.

Members of a couple: halve the combined total.

Step 3 — Calculate the means tested amount

income tested = 50% × (assessable income − $35,313.20)
asset tested = 17.5% × (assessable assets − $64,500)
means tested amount = (income tested + asset tested) ÷ 364

Both components are added. This is not the Age Pension, where the lower of the two tests wins. And the divisor is 364. Using 365 will give you an answer that looks right and is consistently wrong. The full means test.

Worked example. $355,000 in assessable assets, $42,000 in assessable income.
Income tested: 50% × ($42,000 − $35,313.20) = $3,343.40
Asset tested: 17.5% × ($355,000 − $64,500) = $50,837.50
Means tested amount: ($3,343.40 + $50,837.50) ÷ 364 = $148.85 a day

Step 4 — Establish your supported status

Compare the means tested amount to $72.30 a day, the maximum accommodation supplement.

• Below it → you are a supported resident. You pay a daily accommodation contribution equal to your means tested amount and the government pays the rest. No market room price applies.
• Above it → you pay the advertised room price and choose how to fund it.

In the example above, $148.85 is well above $72.30, so this resident pays full price. This is a step, not a taper — there is no partial version, and the difference on a $550,000 room is about $46,000 a year.

Step 5 — Price the accommodation

If you are a full price resident, you have three options and any split between them.

DAP = room price × 8.43% ÷ 365

• Lump sum. Pay the room price as a refundable deposit. No daily payment. 2% a year retention applies for up to five years.
• Daily payment. $127.03 a day on a $550,000 room. Indexed twice a year.
• Combination. Any split. The daily payment applies only to the unpaid balance.

You must be left with at least $64,500 in assets after paying a deposit. Which one wins, and the break even return.

Step 6 — Add the contributions

hotelling = [ 7.8% × (assets − $258,000) + 50% × (income − $101,105) ] ÷ 364, capped at $22.15
non-clinical care = [ 7.8% × (assets − $536,384) + 50% × (income − $141,252.80) ] ÷ 364, capped at $107.32

Continuing the example: assets of $355,000 give a hotelling contribution of 7.8% × $97,000 ÷ 364 = $20.79 a day. Assets are below $536,384, so no non-clinical care contribution applies.

Add the basic daily fee of $66.80 and any additional service fees you agreed to.

The three checks that matter afterwards

Having a number is not the same as having an answer. Three tests separate the two.

Check the length of stay. Re-run everything on a stay twice as long as you expect. If the same funding choice still comes out ahead, you can stop worrying about that assumption. If it flips, you have found the real risk in your plan.

Check the cash flow, not just the total. Fees of $78,336 against income of $45,000 means $33,000 a year of capital consumed. Work out when the accessible money runs out, because that date is when the decision gets made for you.

Check the pension. Every one of these choices moves it, and the pension effect frequently exceeds the fee effect. A calculation that ignores it is not finished.

What makes this hard by hand

Nothing above is difficult on its own. What makes it hard is that the pieces are circular — the pension depends on the assets, the assets depend on how you fund the room, the fees depend on the pension — and that doing it once tells you about one option out of fourteen.

That is the part worth automating. Our calculator does all six steps in about three minutes and tells you free which side of the $72.30 line you sit on. The full report then prices every option, ranks them, and projects each one year by year.