Residential aged care fee scenarios for people entering care from 1 July 2014

Residents will pay different fees depending on the outcome of their means assessment and their negotiations with their provider. Find out how to calculate residential aged care fees and how the means assessment works for people entering care from 1 July 2014.

How to use these scenarios

People entering an aged care home require a means assessment to find out if they’re eligible for Australian Government assistance with their care fees and accommodation costs. Depending on the outcome of their means assessment and their negotiations with their provider, a resident may pay up to 5 types of fees:

  • a basic daily fee
  • a means-tested care fee
  • accommodation costs
  • an extra service fee
  • additional service fees.

Use the simplified scenarios below to help you understand how fees are calculated and how the means assessment works for people entering residential aged care from 1 July 2014. The rates, thresholds and subsidies used in these scenarios were current on 20 March 2022.

Aged care rates, thresholds and subsidies do not remain constant but change over time. This means a resident’s fees will also change while they receive care in an aged care home. For a complete listing of the latest rates, refer to:

Read more about fees for people entering residential aged care from 1 July 2014 and how they change over time.

Please note: These fee scenarios do not constitute financial advice. We encourage residents to seek independent financial advice to determine the best way to pay for their care.

Full pensioner – Michael

Michael is 79 years old and receives the full age pension. He rents an apartment and does not own a home. After a stroke, Michael needs full time care. An Aged Care Assessment Team (ACAT) finds him eligible for a Government-funded place in an aged care home.

To find out what fees he will need to pay when he enters care, Michael needs his means (income and assets) assessed by Services Australia. As he is on the age pension and does not own his home, Services Australia already has enough information about his financial circumstances to complete his means assessment. This means that Michael does not need to fill in a means assessment form. Instead, he makes sure his Centrelink income and assets details are up to date. Then he calls Services Australia on 1800 227 475 to ask for a fee advice letter.

Michael has $1850 in the bank and an annual income of $26,000.

Michael cannot be asked to pay a means-tested care fee or an accommodation payment because, as a full pensioner:

  • his annual income is below the income free area ($28,974.40) and
  • his assets are below the asset free threshold ($52,500).

The Australian Government will pay his accommodation costs and contribute the full Government subsidy to the cost of his care.

When Michael chooses an aged care home, he will still need to agree on a room price with the provider, but he will not pay this agreed room price upon moving in.

Given his current personal and financial circumstances (and using the rates current on 20 March 2022), Michael is eligible to pay a basic daily fee of $54.69 per day.

He cannot be asked to pay4

  • a contribution towards his accommodation costs
  • a means-tested care fee.

Depending on the aged care home and the type of room he chooses, Michael might also be asked to pay:

  • an extra service fee if he accepts a place in an extra service room
  • an additional service fee if he agrees to purchase additional services beyond those his aged care home is required to provide.

Self-funded retiree – Sofia

Sofia, 92, is a self-funded retiree who owns her own home. Her husband has passed away. She has been approved for a Government-funded place in an aged care home.

To find out what aged care fees she is eligible to pay, Sofia completes Service Australia's Aged Care Calculation of your cost of care form (SA486). She sends it to Services Australia to give them the information they need about her finances to complete her means assessment and determine her maximum aged care fees.

Sofia’s annual income is $62,000. Her home is valued at $860,000 and her remaining assets are valued at $240,000. In the aged care means assessment, the assessable value of her home is capped at $178,839.20, the home exemption cap. This puts her total assessable assets at $418,839.20.

Services Australia will use these figures to calculate Sofia’s means tested amount and determine whether she is eligible for Government assistance. They use an income test and an assets test to work out her means tested amount. This determines:

  • if she will receive Government support with her accommodation costs, or if she will need to pay the room price negotiated with her aged care provider
  • if she will pay a means-tested care fee.

Income test

Sofia’s assessed annual income ($62,000) is checked against the single person rate of the income free area ($28,974.40).

Her income tested amount is 50 per cent of her income in excess of the income free area divided by 364.

Sofia’s income tested amount  = 50% x ($62,000 - $28,974.40) / 364
                                                  = $45.36

Assets test

Sofia’s total assessable assets ($418,839.20) are checked against three indexed asset thresholds:

  • Asset free threshold = $52,500
  • First asset threshold = $178,839.20
  • Second asset threshold = $431,517.60

Her asset tested amount is calculated by taking:

  • 17.5% of her assets in excess of $52,500 up to $178,839.20; plus
  • 1% of her assets in excess of $178,839.20 up to $431,517.60; plus
  • 2% of her assets in excess of $431,517.60

and expressing it as a daily amount (dividing by 364).

Sofia’s asset tested amount
= [(17.5% x $126,339.20) + (1% x $240,000) + (2% x $0)] / 364
= [$22,109.36 + $2,400 + $0] / 364
= $67.33

 

Means tested amount

This is the sum of Sofia’s income tested amount and her asset tested amount.

Sofia’s means tested amount  
= income tested amount + asset tested amount
= $45.36 + $67.33
= $112.69

Sofia’s means tested amount is greater than the maximum accommodation supplement ($60.74), so she is not eligible for Government assistance with her accommodation costs.

Sofia will need to negotiate a room price with her chosen aged care provider before she moves in. She will pay this agreed price as an accommodation payment. The maximum price that a provider can charge for a room is $550,000, unless they have first received approval from the Aged Care Pricing Commissioner.

Sofia agrees on a room price of $550,000 at her chosen home. She has the choice to pay her accommodation payment as:

  • a lump sum refundable accommodation deposit (RAD)
  • a rental-style daily accommodation payment (DAP) or
  • a combination of the two.

Sofia can benefit from seeking financial advice to determine the best way to fund her accommodation costs, as the different payment options can have a different effect on her means-tested care fee.

Refundable Accommodation Deposit (RAD)

If Sofia chooses to pay her full accommodation costs as a RAD, she has 6 months from the date she enters the aged care home to pay her agreed room price of $550,000.

She will need to pay a DAP until her aged care home receives the RAD payment.

Sofia’s RAD   = $550,000

When she leaves the aged care home, the RAD will be fully refunded to Sofia or her estate, less any amounts that she has agreed to draw from it to pay other aged care fees.

Daily accommodation payment (DAP)

Sofia can choose to pay for her accommodation entirely by non-refundable daily payments.

The maximum permissible interest rate (MPIR) is used to convert Sofia’s RAD ($550,000) into a DAP of $60.88 per day. The MPIR applied is the rate current on the day Sofia agrees the room price. 

Sofia’s DAP
= RAD × MPIR / 365
= $550,000 x 4.04% / 365
= $60.88

Accommodation payment – combination RAD and DAP

Sofia can choose to pay a partial RAD and pay the remainder as a DAP. It is up to Sofia what amount she would like to pay as a RAD or DAP.

If Sofia decides to pay $150,000 of her accommodation cost as a RAD and the remainder as a DAP, her reduced DAP will be calculated using her outstanding room price amount.

Sofia can require her provider to draw down her reduced DAP from her $150,000 RAD. As her RAD balance decreases due to being drawn down on, her DAP will increase to maintain equivalence.

Sofia’s agreed room price  = $550,000

Sofia’s RAD paid  = $150,000

Sofia’s reduced DAP  
= (Agreed room price - RAD paid) x MPIR / 365
= ($550,000 - $150,000) x 4.04% / 365
= $44.27

Sofia’s aged care provider must allow her to draw her DAP from her paid RAD if she requests to do so. Her provider may also allow her to draw other aged care fees from her RAD balance.

Means-tested care fee

Sofia’s means-tested care fee is calculated by subtracting the maximum accommodation supplement ($60.74) from her means-tested amount ($112.69).

Sofia’s means-tested care fee  
= means tested amount - maximum accom. supplement
= $112.69 - $60.74
= $51.95

This fee may change if Sofia’s financial circumstances change.

Sofia cannot be asked to pay a means-tested care fee greater than the cost of her care. Her cost of care (Government subsidy plus primary supplements) can only be confirmed once she has undergone an Aged Care Funding Instrument (ACFI) assessment after one month in her aged care home. Should it turn out that her cost of care is less than her means-tested care fee as assessed before entry, her provider must refund any overcharged fees. This occurs at the next quarterly review of fees by Services Australia.

For example, if Sofia’s ACFI assessment finds her eligible for a daily care subsidy of $38.70, her means-tested care fee would be reduced to $38.70 per day. Sofia and her provider would each be sent a letter by Services Australia notifying them that Sofia is due a refund of $51.95 - $38.70 = $13.25 per day for the time she has been paying a means-tested care fee of $51.95. 

Under her current personal and financial circumstances (and using the rates current on 20 March 2022), Sofia can be asked to pay the following when she enters her chosen aged care home:

  • basic daily fee of $54.69 per day
  • means-tested care fee of $51.95 per day
  • the accommodation payment she agreed with her provider. She can choose to pay this as a lump sum RAD of $550,000, a DAP of $60.88 per day, or any combination of RAD and DAP.

Depending on the room she has chosen and her negotiations with her provider, Sofia might also be asked to pay:

  • an extra service fee if she enters an extra service room in the home
  • an additional service fee if she agrees to purchase additional services beyond those her aged care home is required to provide.

Sofia can benefit from seeking financial advice to determine the best way to fund her aged care costs.

Part pensioner – Jane

Jane, 84, and her husband, Roger, 85, are part-pensioners who live in their family home. Jane has limited mobility and is finding it difficult to manage without full-time care at home. She and Roger have decided that she should move into an aged care home. Jane is approved for a subsidised place in an aged care home by an Aged Care Assessment Team (ACAT).

After receiving her ACAT approval letter, Jane and Roger look for suitable aged care homes in their area and start to investigate the fees she will need to pay.

Jane knows she will need to pay a basic daily fee. To find out if she will pay a means-tested care fee or accommodation costs, she needs an aged care means assessment from Services Australia

Services Australia already has Jane’s income information as she is on a means-tested Government pension. However, because she owns her own home, Jane will need to provide Services Australia with details about her home which were not collected when she applied for the age pension. To do this she completes Services Australia's digital Aged Care Calculation of your cost of care form (SA486). After receiving Jane’s completed form and assessing her home, Services Australia will send Jane a fee advice letter outlining:

  • the types of fees she is eligible to pay
  • the maximum fees she can be charged when she enters care. 

Roger and Jane’s family home is valued at $600,000. As Roger will continue to live in the home once Jane moves out, Services Australia will consider it occupied by a ‘protected person’: it will not be included as an assessable asset. Jane and Roger have other combined assets valued at $142,000 and a combined annual income of $88,000. As a member of a couple, half of their combined income and assets is taken to belong to Jane. This means Jane has assessable assets valued at $71,000 and an assessable income of $44,000. 

Services Australia will use these figures to calculate Jane’s means tested amount to determine the level of Government support she is eligible for. They use an income test and an assets test to work out Jane’s means tested amount. This is then used to determine:

  • if she will receive Government support with her accommodation costs or if she will need to pay the room price negotiated with her aged care provider
  • if she will be asked to pay a means-tested care fee.

Income test

Jane’s assessed annual income ($44,000) is checked against the income free area for a couple living apart due to illness ($28,454.40, single rate).

Her income tested amount is 50 per cent of her income in excess of the income free area divided by 364.

Jane’s income tested amount
= 50% x ($44,000 - $28,454.40) / 364
= $21.35

Assets test

Jane’s total assessable assets ($71,000) are checked against three indexed asset thresholds:

  • Asset free threshold = $52,500
  • First asset threshold = $178,839.20
  • Second asset threshold = $431,517.60

Her asset tested amount is calculated by taking

  • 17.5% of her assets in excess of $52,500 up to $178,839.20; plus
  • 1% of her assets in excess of $178,839.20 up to $431,517.60; plus
  • 2% of her assets in excess of $431,517.60

and expressing it as a daily amount (dividing by 364).

Jane’s asset tested amount
= [(17.5% x $18,500) + (1% x $0) + (2% x $0)] / 364
= [$3,237.50 + $0 + $0] / 364
= $8.89

Means tested amount

This is the sum of Jane’s income tested amount and her asset tested amount.

Jane’s means tested amount   
= income tested amount + asset tested amount
= $21.35 + $8.89
= $30.24

Jane’s means tested amount is less than the maximum accommodation supplement ($60.74), so she is eligible for Government assistance with her accommodation costs.

After choosing an aged care service, Jane agrees on a room price of $440,000 with her provider. As someone eligible for Government support, she will not be asked to pay this negotiated room price when she moves into the home. However, as Jane’s means tested amount is greater than zero, she will be asked to make a contribution towards her accommodation costs.

Jane has the choice to pay her accommodation contribution as:

  • a lump sum refundable accommodation contribution (RAC)
  • a rental-style daily accommodation contribution (DAC)
  • a combination of both.

Daily accommodation contribution (DAC)

If Jane chooses to pay her accommodation contribution as a DAC, she will pay the lower of:

  • her means tested amount ($30.24 per day)
  • the accomm. supplement applicable to her aged care service for that day ($60.74). 

Jane’s DAC   = $30.24

The Australian Government will pay her provider the difference between the accommodation supplement applicable for that day ($60.74) and Jane’s DAC ($30.24), which is $30.50 per day.

Jane’s DAC will vary from time to time depending on the accommodation supplement applicable to her service for the day and her means tested amount.

Accommodation contribution – combination RAC and DAC

If Jane chooses to pay a partial RAC of $20,000, her aged care provider will calculate her reduced DAC by converting her RAC into an equivalent daily amount and subtracting it from the full DAC.

The maximum permissible interest rate (MPIR) current on the day Jane enters care in the service is used to calculate the DAC equivalent to the paid partial RAC.

Jane can require her provider to draw down her reduced DAC from her $20,000 RAC. As her RAC balance decreases due to being drawn down on, her DAC will increase to maintain equivalence.

Equivalent daily amount for RAC paid  
= RAC x MPIR / 365
= $20,000 x 4.04% / 365
= $2.21

Jane’s reduced DAC  
= Full DAC - Equivalent daily amount for RAC paid
= $30.24 - $2.21
= $28.03

Means-tested care fee

Jane’s means-tested care fee is calculated by subtracting the maximum accommodation supplement ($60.74) from her means-tested amount ($30.24).

Jane’s means-tested care fee  
= means tested amount - maximum accom. supplement
= $30.24 - $60.74
= -$30.50 (less than zero)

As this gives an amount less than zero, Jane will not be charged a means-tested care fee. This may change in the future if her financial circumstances change.

Under her current personal and financial circumstances (and using the rates current on 20 March 2022), Jane is eligible to pay

  • basic daily fee of $54.69 per day
  • an accommodation contribution of $30.24 per day (if she chooses to pay by DAC).

She cannot be asked to pay

  • a means-tested care fee.

Depending on the type of room she has chosen and her negotiations with her provider, Jane might also be asked to pay

  • an extra service fee if she enters an extra service place in her aged care home
  • an additional service fee if she agrees to purchase additional services beyond those her aged care home is required to provide.

Before Jane signs an agreement with her chosen aged care home, she and Roger should seek financial advice to help them determine the best way to pay for her care.

Part pensioner – Roger

Roger, 85, has been approved for a place in an aged care home. He is on a part pension and has lived alone in his family home since his wife, Jane, moved to an aged care home several months ago. He will join her in the same home. 

Services Australia has Roger’s income information because he’s on a means-tested Government pension. However, because he owns his own home, Roger will need to provide Services Australia with details about his home which were not collected when he applied for the age pension.

He completes Services Australia's digital Aged Care Calculation of your cost of care form (SA486). After assessing Roger’s income and assets, Services Australia send him a fee advice letter outlining the types of fees he is eligible to pay and the maximum fees he can be charged when he enters care.

As Roger intends to move out of the family home, it will no longer be occupied by a ‘protected person’. This means Services Australia will include it as an assessable asset at a capped value of $178,839.20, the home exemption cap. Any value above this amount will be excluded from the assessment of Roger’s (and Jane’s) assets. This cap on the value of a home applies separately to both members of a couple.

Roger and Jane have a combined annual income of $88,000. Their home is valued at $600,000, and their other combined assets are valued at $142,000. As a couple, half of their combined income and assets is taken to belong to Roger. This means Roger’s assessable income is $88,000 / 2 = $44,000 and his assessable assets are valued at $142,000 / 2 + $178,839.20 = $249,839.20.

Services Australia assesses Roger’s income and assets to determine whether he is eligible for Government assistance. They use an income test and an assets test to work out his means tested amount. Services Australia then use this amount to decide:

  • if he will receive Government support with his accommodation costs or if he will need to pay the room price negotiated with his aged care provider
  • if he will be asked to pay a means-tested care fee.

Income test

Roger’s assessed annual income ($44,000) is checked against the income free area for a couple living apart due to illness ($28,454.40, single rate).

His income tested amount is 50 per cent of his income in excess of the income free area divided by 364.

Roger’s income tested amount  
= 50% x ($44,000 - $28,454.40) / 364
= $21.35

Assets test

Roger’s total assessable assets ($249,839.20) are checked against three indexed asset thresholds:

  • Asset free threshold = $52,500
  • First asset threshold = $178,839.20
  • Second asset threshold = $431,517.60

His asset tested amount is calculated by taking

  • 17.5% of his assets in excess of $52,500 up to $178,839.20; plus
  • 1% of his assets in excess of $178,839.20 up to $431,517.60; plus
  • 2% of his assets in excess of $431,517.60

and expressing it as a daily amount (dividing by 364).

Roger’s asset tested amount
= [(17.5% x $126,339.20) +(1% x $71,000) + (2% x $0)] / 364
= [$22,109.36 + $710 + $0] / 364
= $62.69

Means tested amount

This is the sum of Roger’s income tested amount and his asset tested amount.

Roger’s means tested amount
= income tested amount + asset tested amount
= $21.35 + $62.69
= $84.04

Roger’s means tested amount is greater than the maximum accommodation supplement ($60.74), so he is not eligible for Government assistance with his accommodation costs and will be asked to make an accommodation payment rather than a contribution.

Means-tested care fee

Roger’s means-tested care fee is calculated by subtracting the maximum accommodation supplement ($60.74) from his means-tested amount ($84.04).

Roger’s means-tested care fee
= means tested amount - maximum accom. supplement
= $84.04 - $60.74
= $23.30

Roger’s means-tested care fee is $23.30 per day under his current personal financial circumstances. 

Roger and his provider agree on a room price of $450,000. He has the choice to pay this price as:

  • a lump sum refundable accommodation deposit (RAD)
  • a non-refundable daily accommodation payment (DAP)
  • a combination of the two.

Refundable Accommodation Deposit (RAD)

If Roger chooses to pay his full accommodation costs as a RAD, he has 6 months from the date he enters the aged care home to pay his agreed room price.

He will need to pay a DAP until his aged care home receives the RAD payment.

Roger’s RAD = $450,000

When he leaves the aged care home, the RAD will be fully refunded to Roger or his estate, less any amounts that he has agreed to draw from it to pay other aged care fees.

Daily accommodation payment (DAP)

Roger can choose to pay for his accommodation entirely by non-refundable daily payments.

The maximum permissible interest rate (MPIR) is used to convert Roger’s RAD ($450,000) into a DAP of $49.81 per day. The MPIR applied is the rate current on the day Roger agrees the room price. 

Roger’s DAP
= RAD × MPIR / 365
= $450,000 x 4.04% / 365
= $49.81

Accommodation payment – combination RAD and DAP

If Roger decides to pay $100,000 of his accommodation cost as a RAD and the remainder as a DAP, his DAP will be calculated using his outstanding room price amount.

Roger’s agreed room price  = $450,000

Roger’s RAD paid = $100,000

Roger’s DAP
= (Agreed room price - RAD paid) x MPIR / 365
= ($450,000 - $100,000) x 4.04% / 365
= $38.74

Roger’s aged care provider must allow him to draw his DAP from his paid RAD if he requests to do so. His provider may also allow him to draw other aged care fees from his RAD balance.

Under his current financial circumstances (and using the rates current on 20 March 2022), Roger is eligible to pay

  • basic daily fee of $54.69
  • means tested care fee of $23.30 per day
  • the accommodation payment he agreed with his provider. He can pay this as a DAP of $49.81 per day, a RAD of $450,000, or any combination of DAP and RAD.

Depending on the type of room he has chosen and his negotiations with the provider, Roger might also pay

  • an extra service fee if he enters an extra service room
  • an additional service fee if he agrees to purchase additional services beyond those his aged care home is required to provide.

Jane and Roger should seek financial advice to determine the best way to pay for their aged care costs. As a couple, each of their aged care payment methods may impact the other’s aged care fees. Their chosen payment methods may also affect their age pensions.

Couple – Jane and Roger

Couple Jane and Roger have both moved into an aged care home. Jane moved in first and then Roger joined her in the same home. 

When Roger moved into the home, both his and Jane's personal financial circumstances changed. As well as affecting his own residential aged care fees, this also has an impact on Jane’s aged care fees. Jane can now be asked to pay a means-tested care fee, and her accommodation contribution has increased.

Roger’s accommodation payment method will also affect both of their fees.

There are many things for Jane and Roger to consider when determining the best way to pay for their aged care costs, including:

  • whether or not to sell their family home
  • whether or not Roger should pay a RAD
  • how different payment methods will affect their age pensions.

Below are some examples of how different choices with their finances and aged care payment methods might affect Jane’s and Roger’s aged care fees (using the rates current on 20 March 2022).

If they keep the family home, Roger pays a DAP and Jane pays a DAC

Roger’s and Jane’s assets and income are divided equally between them in the means assessment. Before her husband moved into care, Jane was not eligible to pay a means-tested care fee. However, from the time Roger entered aged care, Jane’s assessable assets increased from $71,000 to $249,839.20. This is because of the addition of the capped value of Jane’s home, which is no longer occupied by her partner, a protected person.

Once the family home is no longer occupied by Roger, Jane’s means tested amount increases to $84.04 (the same as Roger’s) and she will now pay a means-tested care fee of up to $23.30 per day (depending on her cost of care).

Before her husband entered care, Jane was eligible to pay an accommodation contribution equivalent to a DAC of $30.24 per day. If she now chooses to pay her full accommodation contribution by DAC, she will still be required to pay the lower of

  • her means tested amount (previously $30.24, now increased to $84.04 per day) and
  • the accommodation supplement applicable to her aged care service for that day ($60.74 per day). 

This means Jane’s DAC will increase to $60.74 per day once Roger moves out of the family home.

Note that if Jane and Roger decide to rent out their family home for some extra income to help pay their aged care fees, this additional income will also be included in the means assessment and may increase their means-tested care fees. It will also be included in the pension assessment and may impact their age pensions.

Jane and Roger will also need to be mindful of how their home will be assessed for age pension purposes and any time limits that may apply to the assessment.

If they sell the family home, Roger pays a DAP and Jane pays a DAC

If Roger and Jane decide to sell their house and keep the proceeds in the bank, the amount they get for the house is counted as an assessable asset in the means assessment. It will affect their individual means-tested care fees. It will also be included in the pension assessment and may impact their age pensions.

In contrast to the family home, no cap is applicable to the value of financial assets. If they receive $600,000 for the house, the couple’s total assets of $600,000 and $142,000 are split equally between them to give each an assessable asset amount of $371,000. This will affect their means tested amount and, in turn, their means-tested care fees. The increase in financial assets will also increase deemed income for Roger and Jane. However, the increase in deemed income has not been included in this example.

Asset tested amount 
= [(17.5% x $126,339.20) + (1% x $192,160.80) + (2% x $0)] / 364
= [$22,109.36 + $1,921.608 + $0] / 364
= $66.01

Means tested amount 
= income tested amount + asset tested amount
= $21.35 + $66.01
= $87.36

Means-tested care fee
= means tested amount - maximum accom. supplement
= $87.36 - $60.74
= $26.62

Upon selling the family home, Roger’s means-tested care fee increases to $26.62. There is no change to Roger’s DAP of $49.81 per day, as it is based on the room price he agreed with his provider.

Jane’s assets also increase by half of the value of the proceeds from the home, and she is now eligible to pay a means-tested care fee equivalent to Roger’s means-tested care fee of $26.62.

Before her husband entered care, Jane was eligible to pay an accommodation contribution equivalent to a DAC of $30.24 per day. If she chooses to pay by DAC after selling the house, she will be required to pay the lower of:

  • her means tested amount (now $87.36 per day) and
  • the accommodation supplement applicable to her aged care service for that day ($60.74 per day). 

Thus, Jane’s DAC will increase to $60.74 per day if the couple sell their family home and keep the proceeds in the bank.

If they sell the family home, Roger pays a RAD and Jane pays a DAC

If Roger and Jane decide to pay a RAD of $450,000 for Roger, this will affect their individual means-tested care fees.

If they receive $600,000 for their house and use $450,000 of this to pay Roger’s RAD, both the paid RAD and the remaining $150,000 are counted as assessable assets. No cap is applicable to the value of the RAD or the financial assets. While the RAD is included as an asset, it is not considered a financial asset and therefore no income is deemed to be earned on this amount. Any amount paid as a RAD is also excluded from the age pension asset test and may impact their age pensions.

The couple’s total assets of $600,000 and $142,000 are split equally between them to give each of them an assessable asset amount of $371,000.

The increase in Roger’s assets will increase his asset tested amount to $66.01 and increase his means-tested care fee to $26.62.

When she entered her aged care home, Jane did not have to pay a means-tested care fee. Upon selling the family home, Jane’s assets increased by half of the value of the proceeds from the home, and she will now be assessed as eligible to pay a means-tested care fee. This fee will be equivalent to Roger’s means-tested care fee of $26.62.  

Before her husband entered care, Jane was eligible to pay an accommodation contribution equivalent to a DAC of $30.24 per day. If Jane has chosen to pay her full accommodation contribution by DAC, she will still be required to pay the lower of:

  • her means tested amount (now $87.36 per day) and
  • the maximum accommodation supplement for her provider ($60.74 per day). 

Thus, Jane’s DAC will increase to $60.74 per day if the couple decide to sell their family home to pay Roger’s RAD.

Jane and Roger should seek financial advice to determine the best way to pay for their aged care costs. As a couple, each of their aged care payment methods may impact the other’s aged care fees and the amount of money they have available to pay these fees. Their payment methods may also impact their age pensions.

To talk to someone who can help them understand the implications of their aged care costs, they can call Services Australia’s free Financial Information Service (FIS) on 132 300 and say “financial information service” when asked why they are calling.

Last updated: 
27 April 2022

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