Aged care costs: how the system works

Aged care has two main doors, and they lead to very different arrangements. The first is help at home — support services delivered where you already live. Moneysmart's aged care page splits it into two programs: the Commonwealth Home Support Program for entry-level support with things like cleaning, meals or transport, and the Support at Home program for ongoing support such as personal care, nursing support or help with daily activities. The second door is residential aged care — a home (you'll also hear "nursing home" or "facility") where care is available 24 hours a day.

There's a third, easily missed door: short-term care. Respite care is care for a short time when you and your carer need a break; transition care supports recovery after a hospital stay; restorative care is short-term help to regain independence. The money side of short-term care is deliberately simpler — My Aged Care's costs page says you don't complete a means assessment for it, and residential respite carries no accommodation payments or means-tested contributions: a basic daily fee, sometimes a booking fee, agreed with the provider before the care starts.

Whichever door fits, they all open the same way: contact My Aged Care, the government's entry point to the system. Moneysmart's list of what they do is the whole first move — explain your options, check if you're eligible, arrange an assessment of your care needs, and provide information about costs and fees. The assessment comes before the services. It's worth starting early, too: some aged care services have waiting lists, and every provider in the official Find a provider tool delivers government-subsidised care — care where the government pays part or all of the cost — so going through the front door is also how the subsidy reaches you.

The system's core deal is simple to state: the government subsidises your care, and you contribute according to your finances. My Aged Care puts the moving parts in one sentence — how much you pay depends on the type of help you need, the provider you choose, your financial situation, and the services you receive. The instrument that measures the "your financial situation" part is the means assessment — an assessment of your income and assets that sets your share of the cost. Notice what this page won't tell you: any actual amount. Every rate, cap and threshold in aged care is set by government and changes over time, so the honest move is to show you the shape and send you to the source for today's numbers.

The shape differs by door. For Commonwealth Home Support Program services there's no income and assets assessment at all — you agree a contribution with your provider before services start, you pay it if you can afford it, there are no exit fees, and if you can't afford to contribute you won't miss out on help. Support at Home is means-based and tiered by service type: clinical supports like nursing are fully funded by the government, independence services like personal care and transport carry a moderate contribution, and everyday living services like domestic help and gardening carry the highest — with your share scaled by the assessment, so full pensioners contribute the least and self-funded retirees the most.

For residential care the means assessment does the heaviest lifting: it determines whether you're eligible for help with your accommodation costs and what your care contributions will be, and the outcome arrives as a fee advice letter — the document, issued through Services Australia, that turns the general fee categories into your personal ones. Until that letter exists, any dollar figure attached to your situation is a guess. The current rates and thresholds live in the fee estimators on My Aged Care, which let you model your own circumstances before anything is signed.

In residential care, the room is its own bill, separate from the care. My Aged Care calls these accommodation costs — an amount some people pay to contribute towards, or fully cover, the price of their room, with the means assessment deciding which camp you're in: some residents get government help with the room, others pay their own way. The price itself isn't fixed by the government either — it's set by the home and negotiated with the provider, which makes comparing rooms across homes a real shopping decision, not a formality.

If you do pay for the room, Moneysmart describes three ways to structure it. A refundable accommodation deposit (RAD) is a lump sum paid upfront — the aged care home refunds the balance when you leave, though a retention amount may apply for some people who moved in under the arrangements that began in November 2025. A daily accommodation payment (DAP) is the same room paid for as an ongoing daily amount instead of a lump sum. And a combination splits the difference: part lump sum, part daily payment.

Two features soften what looks like a huge decision. First, Moneysmart notes the RAD can be paid in full or in part at any time after you enter care — moving in doesn't lock the mix on day one. Second, you don't have to reason about it alone: My Aged Care's guidance is to seek independent financial advice before deciding how to pay for your aged care, because the lump-sum-versus-daily choice touches everything else — what the money would otherwise earn, what selling or keeping assets does to the rest of the picture, and what's left for the family later. The right mix is personal arithmetic, and the current rules live at the source, not on this page.

The single cheapest thing in aged care is a conversation held early. Moneysmart's advice is to talk with family, friends or someone you trust about what matters most to you — and to plan ahead, because some aged care services have waiting lists. Most families do the opposite: the topic feels far away until the week it's urgent, and then every decision is made under pressure, in hospital corridors, against a deadline. A calm chat about preferences — home or residential, which suburb, what matters in a room — costs nothing now and is worth a great deal later.

The question hovering over most family conversations is the home. Its treatment depends on what happens to it, and the scenarios differ: Moneysmart notes that if the home is sold, its value counts towards the Age Pension assets test; if it's rented out, its value may count towards both the assets and income tests; and if it's kept without being rented, it's treated differently again for a period. The interactions also vary with when you entered care and your circumstances, so this is squarely a check-the-source topic — the current treatment is on Moneysmart's aged care page, and the decision usually deserves professional eyes.

Which is the last piece: help exists, and much of it is free. Moneysmart's view is that professional financial advice can help you compare your options, and Services Australia's Aged Care Specialist Officers offer free face-to-face appointments (1800 227 475) alongside its Financial Information Service. Keep the paperwork as you go — the fee advice letter and every agreement you sign with a provider are the documents that set your fees, and they're what an adviser will ask for first. And if the costs genuinely don't fit, financial hardship assistance exists: if you're eligible, the government pays some or all of your aged care costs, so affordability is a conversation, not a wall.