Means-Tested Care Fee in Aged Care: Complete 2026 Guide
Andre Smith
Co-founder & CEO
Important update (current as at 20 March 2026): Home Care Packages were replaced by the Support at Home program on 1 November 2025. The old home-care basic daily fee and income-tested care fee no longer exist. Under Support at Home you make service-based contributions instead (0% for clinical care, 5 to 50% for independence services, and 17.5 to 80% for everyday living services, depending on your means). The means-tested care fee described below now applies to residential aged care only. For exact current figures, check Services Australia.
If you or a loved one is entering residential aged care, you have probably come across the term “means-tested care fee” and wondered what it means for your finances. This is one of the most misunderstood parts of the aged care system, and the uncertainty can be stressful during an already difficult time.
The good news is that the system is designed with protections. Not everyone pays this fee, and there are caps to limit how much you will ever pay. This guide explains the residential aged care means-tested care fee in plain language, with worked examples. Figures are current as at 20 March 2026; thresholds are indexed and change each year, so confirm the latest amounts with Services Australia.
Want a quick estimate of your aged care costs? Use our aged care fees calculator to see what fees may apply to your situation.
What is the means-tested care fee?
The means-tested care fee is an additional contribution that some residential aged care residents pay toward the cost of their care. It sits on top of the basic daily fee that everyone in residential care pays.
This fee is not a flat amount. It is calculated individually by Services Australia based on your assessable income and assets. The higher your means, the more you may be asked to contribute, up to certain caps.
Home care note: The means-tested care fee applies to residential aged care only. Home care no longer uses an income-tested or means-tested care fee. Since 1 November 2025, home-based care runs under Support at Home, which uses service-based contributions (a percentage of each service’s cost, set by service category and your means) rather than a single means-tested fee.
If your income and assets fall below certain thresholds, you will not pay the means-tested care fee at all. Full Age Pension recipients with minimal other income and assets are generally exempt.
How it fits into the overall fee structure
The residential aged care fee structure has several components. Understanding where the means-tested care fee fits helps you see the full picture:
| Fee type | Who pays | Purpose |
|---|---|---|
| Basic daily fee | Every resident | Contribution to daily living costs (meals, utilities, laundry) |
| Means-tested care fee | Residents above income/asset thresholds (pre-1-Nov-2025 entrants) | Contribution to care costs based on capacity to pay |
| Refundable accommodation deposit (RAD) | Residential care recipients (not supported residents) | Accommodation payment, refundable when you leave |
| Daily accommodation payment (DAP) | Residential care recipients who choose daily payments | Alternative to RAD, paid as a daily rental-style fee |
| Extra services fee | Optional | Premium services like better meals, larger rooms |
The means-tested care fee is the one that causes the most confusion because it varies from person to person. Two people in the same aged care facility can pay very different amounts based on their financial circumstances.
Two different residential systems
Which care-contribution rules apply to you depends on when you entered permanent residential care:
- Entered before 1 November 2025: You stay on the means-tested care fee described in this guide, with the annual and lifetime caps below. The “no worse off” principle protects existing residents.
- Entered from 1 November 2025: Under the new Aged Care Act, the means-tested care fee is replaced by a Non-Clinical Care Contribution (capped at $107.32 per day, with a combined lifetime and four-year cap of $137,917.01) plus a Hotelling Contribution toward everyday living costs. The principles of income and asset testing are similar, but the amounts and structure differ. See our residential aged care cost guides and Services Australia for detail.
The rest of this guide focuses on the means-tested care fee for pre-1-November-2025 residents. Figures are current as at 20 March 2026.
How is the means-tested care fee calculated?
Services Australia uses a combined income and assets test to determine your fee. You do not calculate this yourself. When you apply for aged care, My Aged Care and Services Australia will conduct a financial assessment.
The income test
Your assessable income includes:
- Age Pension payments (or equivalent DVA payments)
- Superannuation income streams (account-based pensions, annuities)
- Employment income (wages, salary, self-employment)
- Investment income (rent, dividends, interest)
- Deemed income from financial assets (using the government’s deeming rates, not actual returns)
- Foreign income and pensions
- Income from trusts or companies where applicable
Deeming is an important concept. The government assumes your financial assets (bank accounts, shares, managed funds, superannuation in account-based pensions) earn a set rate of return regardless of what they actually earn. For 2025-26:
| Deeming rate | Singles threshold | Couples (combined) threshold |
|---|---|---|
| Lower rate: 0.25% | First $60,400 | First $100,200 |
| Upper rate: 2.25% | Above $60,400 | Above $100,200 |
This means if you have $200,000 in the bank earning 4.5% interest, the government does not use your actual interest. Instead, they deem a portion at 0.25% and the rest at 2.25%.
The assets test
Your assessable assets include:
- Financial assets (bank accounts, shares, managed funds, bonds)
- Superannuation (in account-based pension phase)
- Investment properties
- Motor vehicles, boats, caravans
- Business assets
- Personal effects above a certain value
- Gifted assets (subject to deprivation rules if gifted within five years)
Key exclusions from the assets test:
- Your home (with important conditions; see the section on home treatment below)
- Funeral bonds (up to the allowable limit, currently $15,000 per person)
- Prepaid funeral expenses
- Accommodation bonds/RADs paid to an aged care facility (for residential care)
- Special disability trusts in some circumstances
Combined assessment
Services Australia takes both your income test result and your assets test result and applies the one that produces the higher fee. This is similar to how the Age Pension income and assets tests work, but in reverse: instead of reducing a payment, it increases a fee.
Income and asset thresholds
The thresholds determine whether you pay a means-tested care fee and how much. These are indexed each year on 20 March and 20 September, so always confirm the current figures with Services Australia before relying on them.
No home care thresholds here: Home care no longer uses a means-tested care fee, so there are no home-care means-test thresholds. Home-based contributions are now set under Support at Home by service category and your means. See the Support at Home guide.
Residential care thresholds
For residential aged care (pre-1-November-2025 residents), the income and asset test still applies. The asset-free area, the first asset threshold and other amounts are indexed each March and September. Because these figures change, check the current amounts on the Services Australia residential aged care fees page rather than relying on a fixed number here. If your assessable income and assets are below the relevant free areas, you will not pay a means-tested care fee. Full pensioners with limited assets are generally exempt.
The means-test treatment of the family home for residential care includes a capped home value. As at 20 March 2026 the home value cap used in the means test is $214,884.
How the fee amount is calculated
Once your income or assets exceed the free thresholds, the means-tested care fee is calculated as follows:
- Income above the threshold: 50% of income above the income-free area (up to a certain level), reducing to 25% above a higher threshold
- Assets above the threshold: A formula based on the value of assets above the asset-free area, calculated at approximately 17.5% of the asset value divided by 364 days
The higher of the income-tested fee or the asset-tested fee becomes your means-tested care fee.
Annual and lifetime caps
One of the most important protections in the aged care system is the cap on means-tested care fees. No matter how high your income or assets, there is a limit to what you will pay. The caps below are for pre-1-November-2025 residential residents and are current as at 20 March 2026.
| Cap type | Amount (as at 20 March 2026) |
|---|---|
| Annual cap | $35,910.43 |
| Lifetime cap | $86,185.23 |
These amounts are indexed twice a year. Residents who entered from 1 November 2025 are instead subject to the Non-Clinical Care Contribution cap (lifetime and four-year cap of $137,917.01). Confirm current figures with Services Australia.
How the caps work
- The annual cap limits how much you pay in means-tested care fees in any 12-month period. Once you reach this cap, you stop paying the means-tested care fee for the rest of that period.
- The lifetime cap limits the total amount of means-tested care fees you will ever pay across your entire time in aged care. Once reached, you will never pay the means-tested care fee again, even if you change providers or move between home care and residential care.
- The caps are cumulative. Fees paid in home care count toward your caps in residential care, and vice versa.
- Only the means-tested care fee counts toward the caps. The basic daily fee, accommodation payments, and extra services fees are separate and do not count.
What happens when you hit a cap
When you reach the annual cap, Services Australia will notify your aged care provider. Your provider will stop charging you the means-tested care fee for the remainder of that 12-month period. The government increases its subsidy to your provider to make up the difference.
When you reach the lifetime cap, the same thing happens permanently. You continue receiving care, but the means-tested care fee drops to zero for the rest of your life.
Home care vs residential care: how contributions differ
Home care and residential care now use completely different contribution systems. The means-tested care fee belongs to residential care.
| Feature | Home care (Support at Home) | Residential care |
|---|---|---|
| Basic daily fee | None under Support at Home | $66.80/day |
| Care contribution | Service-based contributions (0% clinical; 5 to 50% independence; 17.5 to 80% everyday living) by means | Means-tested care fee (pre-1-Nov-2025) or Non-Clinical Care Contribution (from 1-Nov-2025) |
| Accommodation costs | Not applicable | RAD, DAP, or combination |
| Out-of-pocket cap | Support at Home lifetime cap (~$130,000, indexed) | Annual and lifetime caps (see above) |
| Home treatment in assets test | Excluded (you live there) | Capped at $214,884 if applicable |
In home care, you remain living in your own home, so your home is naturally excluded from any assessment. In residential care, the treatment of your home depends on whether a “protected person” still lives there (more on this below).
Note that home care does not feed into your residential means-tested care fee caps. The two systems are separate.
Worked examples
These examples show how the residential aged care means-tested care fee works for different financial situations. All figures are approximate and current as at 20 March 2026.
Example 1: Full Age Pension recipient receiving home care (Margaret)
Situation:
- Single, aged 78
- Receives the full Age Pension
- Owns her home and lives there
- Has modest savings
- Receiving home-based care under Support at Home
Outcome: Margaret does not pay any means-tested care fee, because that fee no longer exists for home care. Under Support at Home she pays no basic daily fee and no contribution toward clinical care. As a full pensioner with limited means she pays only a small share of independence and everyday living services, and there is no charge she cannot avoid for staying at home. Her home is not assessed while she lives in it. See the Support at Home guide for how home-care contributions work.
Example 2: Part Age Pension recipient (Robert and June)
Situation:
- Married couple, both aged 82
- Robert is entering residential aged care
- June remains living in the family home (value: $850,000)
- Combined assets: $380,000 (excluding the home)
- Combined income: $52,000 per year (part pension plus super income stream)
- Robert’s individual income: $26,000
Assessment:
- The home is excluded from the assets test because June (a “protected person”) still lives there
- Robert’s assessable income is modest (part pension plus a small share of the super income stream)
- Robert’s assessable assets ($190,000, his share) sit near the lower asset thresholds
Result: Robert pays no means-tested care fee or a very small amount. He pays the basic daily fee of $66.80 per day and will need to arrange accommodation payments (RAD or DAP) separately. See our RAD guide for more on accommodation costs.
Example 3: Self-funded retiree (David)
Situation:
- Single, aged 75
- Does not receive the Age Pension
- Owns his home (value: $1.2 million)
- Has $800,000 in superannuation (account-based pension)
- Draws $55,000 per year from super
- Has $120,000 in savings and shares
- Entering residential aged care; no protected person in the home
Assessment:
- David’s home is included in the assets test (no protected person living there), but capped at $214,884
- Total assessable assets: $214,884 (capped home value) + $800,000 (super) + $120,000 (savings/shares) = approximately $1,134,884
- Assessable income includes deemed income from financial assets plus actual super income
Income and assets test:
- David’s assessable income and assets are both well above the free areas, so Services Australia applies whichever test produces the higher daily fee
- On these figures the calculated means-tested care fee would be high
Result: David would pay a significant means-tested care fee, but it is capped at the annual cap of $35,910.43 per year (as at 20 March 2026). Once he has paid $86,185.23 in total means-tested care fees (the lifetime cap), he stops paying this fee entirely.
This is why the caps matter. Without them, David’s fee could be much higher. The system ensures that even self-funded retirees are protected from unlimited costs.
Comparison summary
| Scenario | Care type | Total assets (excl. home) | Home included? | Means-tested care fee |
|---|---|---|---|---|
| Margaret (full pensioner) | Home care (Support at Home) | Modest | No (lives there) | Not applicable (no MTCF for home care) |
| Robert (part pensioner, couple) | Residential | $190,000 (his share) | No (spouse lives there) | $0 or minimal |
| David (self-funded retiree) | Residential | $920,000 | Yes (capped at $214,884) | Up to $35,910/year (capped) |
How the family home is treated
The treatment of your home in the means-tested care fee assessment is one of the most common questions families have. The rules differ depending on your care type and living situation.
Home care
If you are receiving home-based care under Support at Home, your home is not assessed while you live in it. This makes sense because you are living in it.
Residential care
If you are entering residential aged care (a nursing home), your home is treated as follows (home value cap current as at 20 March 2026):
| Situation | Home treatment |
|---|---|
| A “protected person” lives in your home | Fully excluded from assets test |
| No one lives in your home | Included, but capped at $214,884 |
| You rent out your home | Included (capped), plus rental income is assessable |
| You sell your home while in care | Sale proceeds become financial assets (fully assessable) |
Who is a “protected person”?
A protected person is someone who was living in your home when you entered residential care. This includes:
- Your spouse or partner
- A dependent child
- A close relative who has lived with you for at least five years and who receives an income support payment (such as the Age Pension, Disability Support Pension, or Carer Payment)
- A carer who has lived with you for at least two years and who receives an income support payment
If a protected person lives in your home, it is completely excluded from the means-tested care fee assessment, regardless of its value.
Important considerations about the home
- Do not rush to sell your home. Many families feel pressure to sell quickly to fund aged care. In many cases, keeping the home (especially if a partner still lives there) is the better financial outcome because it is excluded or capped in the assessment.
- Renting out your home makes it an income-producing asset. The rental income becomes assessable income, and the home’s value (capped) remains in the assets test.
- Gifting your home or transferring it to family members may trigger deprivation rules if done within five years of entering care. Services Australia may still count the value as if you still own it.
Financial hardship provisions
If you are struggling to pay your means-tested care fee, the government offers a financial hardship supplement.
When hardship provisions may apply
- You have been assessed as needing to pay means-tested care fees
- Your assets are primarily tied up in your home (which you cannot easily sell)
- You have limited liquid assets and income
- Paying the fee would leave you unable to meet basic living expenses
- Unexpected changes in your financial circumstances (for example, investment losses or a partner’s illness)
How to apply for hardship assistance
- Contact Services Australia on 1800 227 475 to discuss your situation
- Complete a financial hardship application with supporting documentation
- Services Australia will review your case and may reduce or waive the means-tested care fee
- The hardship supplement is reviewed periodically (usually every 12 months)
What the hardship supplement covers
The financial hardship supplement can reduce your means-tested care fee partially or fully. The government pays the difference to your aged care provider, so your care is not affected.
You can also ask your aged care provider about payment plans or fee arrangements. Many providers are willing to work with residents and home care recipients to find manageable payment structures.
How to reduce your means-tested care fee
While you cannot avoid the means-tested care fee if your income and assets exceed the thresholds, there are legitimate strategies to manage it.
Ensure your assessment is accurate
- Check that Services Australia has the correct information about your income and assets
- Make sure all applicable exemptions have been applied (home, funeral bonds, special disability trusts)
- If your circumstances have changed (for example, your partner has moved into your home), notify Services Australia to update your assessment
Understand the timing of your entry into care
- The means-tested care fee is calculated based on your circumstances at the time of your assessment
- If you are a couple and one partner enters care, the assets split between you can affect the assessment
- Seek financial advice before making major financial decisions like selling property or withdrawing super
Consider the caps
- If you are a self-funded retiree who will reach the annual or lifetime cap quickly, the total cost is predictable
- Once you hit the lifetime cap (as at 20 March 2026, $86,185.23 for pre-1-November-2025 residents), you never pay the means-tested care fee again
- This can be factored into your overall aged care financial planning
Get professional financial advice
Aged care financial planning is a specialised area. An accredited aged care financial adviser can help you:
- Model different scenarios (keeping vs selling the home, RAD vs DAP, drawdown strategies)
- Understand the interaction between Age Pension entitlements and aged care fees
- Structure your finances to minimise fees while maintaining your quality of life
- Plan for the long term, including the impact of the lifetime cap
Key changes under the new Aged Care Act
The aged care system underwent significant reforms under the new Aged Care Act. The Support at Home program was originally legislated to start on 1 July 2025 but was deferred to 1 November 2025, when it commenced. The biggest change for fees is that home care no longer has a basic daily fee or means-tested care fee at all; it now uses service-based contributions. For residential care, key points include:
- Increased transparency: Providers must give you a clear fee schedule before you enter care
- Improved hardship provisions: The hardship application process has been simplified
- Annual indexation: Thresholds and caps are adjusted twice yearly (March and September) to reflect changes in costs
- No Worse Off principle: If you were already receiving aged care before 1 November 2025, transitional arrangements ensure you are not financially disadvantaged by the new rules
Keep an eye on the Services Australia website for the latest threshold updates, or check our aged care fees calculator which is updated regularly.
Frequently asked questions
What is the means-tested care fee in aged care?
In residential aged care, the means-tested care fee is an additional fee that some residents pay based on their income and assets, calculated by Services Australia. Not everyone pays it. For home care, the income-tested and means-tested care fee model was abolished on 1 November 2025 when Support at Home began. Home care now uses service-based contributions instead.
Does everyone pay the means-tested care fee?
No. In residential aged care it only applies if your income and assets exceed certain thresholds, and full Age Pension recipients with minimal assets typically do not pay it. The basic daily fee applies to every residential resident. Home care has no means-tested care fee at all.
How is the means-tested care fee calculated?
For residential aged care, Services Australia assesses your income (including deemed income from financial assets) and the value of your assets. They apply the income test and assets test separately, then use whichever produces the higher fee. Your home is generally excluded from the assets test if a protected person such as your partner still lives there.
Is there a cap on the means-tested care fee?
Yes. For pre-1-November-2025 residential residents, as at 20 March 2026 there is an annual cap of $35,910.43 and a lifetime cap of $86,185.23. Once you reach the annual cap, you stop paying for the rest of that 12-month period. Once you reach the lifetime cap, you never pay the means-tested care fee again. Residents who entered from 1 November 2025 are instead subject to the Non-Clinical Care Contribution cap. These caps are indexed twice a year; confirm current figures with Services Australia.
Can I get the means-tested care fee reduced?
Yes. You can apply to Services Australia for a financial hardship supplement if you cannot afford the fee. You should also ensure your income and assets assessment is accurate and up to date. If your circumstances change (for example, a change in income or a partner moving into your home), contact Services Australia to request a reassessment.
Does my home count in the means-tested care fee assessment?
The means-tested care fee assessment is for residential care. Your home is excluded if a “protected person” (such as your spouse, dependent child, or qualifying carer) still lives there. If no protected person lives in your home, it is included in the assets test but capped (as at 20 March 2026, $214,884). For home care under Support at Home, your home is not assessed while you live in it.
What happens if I sell my home while in aged care?
If you sell your home while in residential care, the sale proceeds become financial assets. These are fully assessable under the assets test (no cap applies to cash or investments). This could increase your means-tested care fee. It is important to get financial advice before selling.
Is the means-tested care fee the same for home care and residential care?
No. The means-tested care fee applies to residential care only. Home care no longer has a means-tested care fee. Since 1 November 2025, home-based care under Support at Home uses service-based contributions (a percentage of each service’s cost by category and your means), with its own separate lifetime contribution cap.
How often is the means-tested care fee reviewed?
Services Australia reviews your fee when your financial circumstances change or when the thresholds are indexed (usually in March and September each year). You can also request a review at any time if your income or assets have changed significantly.
March 2026: Ministerial Investigation Into Premium Service Fees
On 16 March 2026, the Aged Care Minister announced an investigation into claims that some aged care providers are charging premium fees for basic services that should be covered under standard care arrangements. The Minister specifically named Opal Healthcare as one provider under scrutiny, calling the practice “disgusting sidestepping” of aged care regulations.
While the means-tested care fee is calculated by Services Australia and is separate from provider-charged fees, this investigation highlights the importance of understanding exactly what services are covered by your assessed fees. Providers should not be charging separately for basic care services that are already funded through government subsidies and the fees you pay (basic daily fee and means-tested care fee).
If you believe you are being charged inappropriately for services that should be included in your standard care package, lodge a complaint with the Aged Care Quality and Safety Commission on 1800 951 822. The Minister emphasized that Australians expect and deserve dignity in aged care, not exploitative pricing practices.
Source: ABC News, 16 March 2026
Next steps
Understanding the means-tested care fee is an important part of planning for residential aged care. If you are looking at home-based care, see the separate Support at Home contribution rules instead, as home care no longer has a means-tested care fee. The key takeaways are:
- Not everyone pays the residential means-tested care fee. It depends on your income and assets.
- Annual and lifetime caps protect you from unlimited costs.
- Your home is excluded or capped in most circumstances.
- Financial hardship provisions exist if you are struggling to pay.
- Professional financial advice can help you plan and potentially reduce your fees.
Navigating aged care fees can feel overwhelming, but you do not have to figure it out alone. Carevo connects you with experienced aged care providers across Australia who can help you understand your fee obligations and find the right care arrangement for your situation.
Call 1800 953 253 to find the right aged care provider through Carevo, or explore our aged care services directory to browse providers in your area.
You can also read our related guides to build a complete picture of aged care costs:
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About the author
Back to Blog Co-founder & CEO · Updated
Andre is the co-founder and CEO of Carevo. He holds a Bachelor of Commerce, majoring in Marketing, and a Bachelor of Arts from UNSW Sydney, where his majors were International Relations, Politics, Information Systems, and Media and Communications, graduating in 2014, and went through the UNSW 10x Founders accelerator in 2023.
