When it comes to residential aged care in Australia, one of the biggest concerns families face is Aged Care cost. Fortunately, the Australian Government provides significant financial support to help make aged care costs more affordable. The Aged Care cost system can feel complex—especially when it comes to who pays what, and how eligibility is assessed.
This article breaks it down in plain English, so you can understand the kinds of government help available, how Centrelink fits in, and what you or your loved one might be expected to pay.
How Does Government Assistance with Aged Care Cost Work?
Aged care in Australia is a mix of government funding and personal contributions. The government provides subsidies to aged care homes to help cover the cost of accommodation, daily living, and personal care—based on a person’s financial situation.
Aged Care cost is influenced by various factors, including government subsidies and personal contributions.
Here’s how it works:
- You apply for an ACAT (or ACAS in Victoria) assessment to determine eligibility.
- Centrelink (or DVA) assesses your income and assets to work out how much you can contribute.
- The government subsidises the rest, ensuring you can access aged care, regardless of your financial situation.
The overall Aged Care cost can vary significantly based on individual circumstances and needs.
Key Subsidies and What They Cover
1. Basic Daily Fee Subsidy
Understanding Aged Care cost is vital for making informed decisions about financial support and care options.
While everyone pays the Basic Daily Fee (currently 85% of the Age Pension), the government may subsidise other costs like care and accommodation.
2. Means-Tested Care Subsidy
This is a subsidy paid to the aged care provider to help cover your personal and clinical care. It’s calculated based on your:
- Assessable income (e.g. pensions, rental income, super)
- Assessable assets (e.g. savings, property, shares)
If you have low income and assets, your contribution will be small or even zero. If you’re wealthier, you’ll pay more—but the government still contributes.
3. Accommodation Supplement
If you cannot afford the full cost of accommodation, the government may pay all or part of your room cost through the Accommodation Supplement. This is usually available to:
- Full Age Pensioners
- Low-income retirees with limited assets
Income and Asset Assessment: How It Works
To determine your level of government support, you’ll undergo an income and assets assessment, managed by Centrelink (or the Department of Veterans’ Affairs for eligible veterans).
What’s Included?
Assets:
- Real estate (including the family home, in some cases)
- Cash and savings
- Superannuation (if over Age Pension age)
- Investments, shares, managed funds
- Vehicles and personal belongings
Many families are concerned about the Aged Care cost when considering the best care for their loved ones.
To help manage Aged Care cost, it’s important to understand the eligibility for the various subsidies available.
Income:
- Age Pension or DVA Pension
- Superannuation payments
- Rental income
- Income from investments
Centrelink uses these figures to determine how much you’ll pay toward:
- Means-Tested Care Fee
- Accommodation
💡 Note: Your family home is generally exempt for up to 2 years if a protected person (like a spouse or carer) still lives in it.
What Will You Actually Pay?
It depends on your financial situation. Here’s a simple breakdown:
| Financial Position | What You Might Pay |
|---|---|
| Full Pensioner | Basic Daily Fee only |
| Part Pensioner | Basic Daily Fee + Some Means-Tested Care Fee |
| Self-Funded Retiree | All fees (Basic + Means-Tested + RAD/DAP) |
Maximum Limits:
- Annual cap for Means-Tested Care Fee: $33,309.29
- Lifetime cap for Means-Tested Care Fee: $79,942.44
Even if you’re wealthy, you won’t pay above these caps for care.
Example Scenarios
✅ Pensioner with No Property
- Receives full government subsidy
- Pays Basic Daily Fee only
- Government covers accommodation and care
✅ Homeowner with Moderate Assets
- Pays Basic Daily Fee + partial Means-Tested Care Fee
- Government subsidises part of accommodation
✅ Self-Funded Retiree with Investment Property
- Pays all fees (Basic, full Means-Tested, accommodation)
- May not receive accommodation subsidy
Frequently Asked Questions (FAQs)
Q2: What if I have no income or assets?
You will still receive aged care support. The government will cover the cost of your accommodation and care, and you’ll only need to pay the Basic Daily Fee.
Q3: Does the government pay for aged care accommodation?
Yes, if you are assessed as having low means. The government may pay a full or partial Accommodation Supplement to the provider.
Q4: How does Centrelink decide how much I pay?
Centrelink looks at your income and assets to determine your contribution to care and accommodation fees. They apply formulas that are updated regularly.
Q5: Is my family home included in the assets test?
Sometimes. It’s exempt for up to 2 years if you enter care, and may be fully exempt if a protected person (like a spouse or carer) still lives in the home.
Q6: Can I still get help if I’m self-funded?
Yes. Even self-funded retirees may qualify for partial government subsidies depending on their asset structure and income streams.
Ultimately, understanding Aged Care cost can lead to better planning and financial security for families.
Staying informed about Aged Care cost can alleviate some of the stress associated with finding suitable care.
To better understand Aged Care cost, consider speaking with financial advisors who specialise in this area.
💭 Final Thoughts: You’re Not Alone
Government help with aged care fees can make a massive difference to your financial security and peace of mind. But understanding the rules, exemptions, and subsidies takes time.
Rather than trying to decode it all yourself, there are tools and support services designed to simplify the process—and ensure you don’t miss out on valuable assistance.
👉 Ready to explore aged care options with confidence?
Visit Aged Care Made Easy to compare facilities, understand costs, and get expert support every step of the way.
Many individuals underestimate the Aged Care cost, considering the potential for government assistance.
It’s essential to keep updated on changes in Aged Care cost regulations to make informed decisions.
Raising awareness about Aged Care cost can help families better prepare for future needs.
Here are some more related articles:
What Does Residential Aged Care Really Cost in Australia?
RAD vs DAP Explained — Choosing How to Pay for Aged Care
7 Signs Your Loved One May Need Aged Care Support
How to Reduce My Aged Care Fees
Aged Care Entry Checklist: 10 Essential Steps Before Moving In
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How can I determine what it will cost us if i need to put my wife who has dementia in a full time care facility. We do not have any property but also do not qualify for pension as our assets are above the cut off amount for persons without a home?
Please.
Seek Financial Advice from an Aged Care Specialist
• Because you fall into a non-homeowner but asset-rich category, it’s essential to:
• Speak with an accredited aged care financial adviser.
• They can show how different asset structures affect your fees and any pension entitlements.
• Look for advisers registered under the Aged Care Steps or Financial Planning Association (FPA).
Some aged care providers also offer free initial financial consultations.