How to use these scenarios
Use the scenarios below to help you understand how fees are calculated and how the means assessment works for people entering residential care from 1 July 2014.
Aged care rates and resident fees change over time. The rates, thresholds and subsidies used in these scenarios were current on 20 March 2025.
For the full list of current aged care rates, refer to:
Read more about fees for permanent residential aged care.
Note: These fee scenarios do not constitute financial advice. We encourage individuals to seek independent financial advice to determine the best way to pay for their care.
Terms used
The following terms are used in the scenarios:
- Residential aged care fees – contributions from the resident to their provider for the cost of their care and accommodation in an aged care home
- Basic daily fee – payable by everyone in residential care
- Means tested care fee – payable if a person’s income and assets are above a certain amount, calculated by Services Australia based on a means assessment
- Accommodation costs – payable to cover (accommodation payment) or contribute towards (accommodation contribution) the cost of accommodation in an aged care home
- Extra service fee – payable by residents in an extra service place
- Additional service fees – payable if a person agrees to receive additional services beyond what the aged care home is required to provide
- Means assessment form – a form some people need to fill in to provide their financial details to Services Australia or the Department of Veterans’ Affairs for their aged care means assessment
- Fee advice letter – a letter Services Australia sends to residents and their providers outlining the fees and type of accommodation costs that apply for the resident.
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 assessor finds him eligible for a government-funded place in an aged care home.
To find out what fees he must 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 $2,150 in the bank and an annual income of $30,000.
Michael will not pay a means tested care fee or an accommodation payment because, as a full pensioner:
- his annual income is below the income free area ($33,849.40)
- his assets are below the asset free threshold ($61,500).
The 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 must agree on a room price with the provider, but he will not pay this room price.
Under his current personal and financial circumstances, Michael will pay a basic daily fee of $63.82 per day.
Depending on the room Michael has chosen and his negotiations with his provider, Michael may also pay:
- an extra service fee if he accepts a place in an extra service room
- an additional service fee if he agrees to buy additional services beyond those his aged care home must provide.
Michael's provider cannot ask him to pay:
- a contribution towards his accommodation costs
- a means tested care fee.
Self-funded retiree – Sofia
Sofia, 92, is a self-funded retiree who owns her own home. Her partner has passed away. She has been approved for a government-funded place in an aged care home.
To find out what fees she must pay when she enters care, Sofia fills in Service Australia's Residential Aged Care Calculation of your cost of care form (SA457). Services Australia will complete her means assessment and advise Sofia of her maximum aged care fees.
Sofia’s annual income is $52,000. Her home is valued at $960,000 and her remaining assets are valued at $340,000. The aged care means assessment caps the assessable value of her home at $206,663.20 – the home exemption cap. This puts her total assessable assets at $546,663.20.
Services Australia will use these figures to calculate Sofia’s means tested amount and determine whether she is eligible for government support. Services Australia uses an income test and an assets test to work out Sofia's means tested amount. This determines whether Sofia will:
- receive government support for her accommodation costs or pay the room price negotiated with her aged care provider
- pay a means tested care fee.
Income test
Sofia’s assessed annual income ($52,000) is checked against the single person rate of the income free area ($33,849.40).
Her income tested amount is 50% of her income in excess of the income free area divided by 364.
Sofia’s income tested amount
= 50% x ($52,000 - $33,849.40) / 364
= $24.93
Assets test
Sofia’s total assessable assets ($546,663.20) are checked against 3 indexed asset thresholds:
- Asset free threshold = $61,500
- First asset threshold = $206,663.20
- Second asset threshold = $496,989.60
Her asset tested amount is calculated by taking the sum of:
- 17.5% of her assets in excess of $61,500 up to $206,663.20
- 1% of her assets in excess of $206,663.20 up to $496,989.60
- 2% of her assets in excess of $496,989.60
and expressing it as a daily amount (dividing by 364).
Sofia’s asset tested amount
= [(17.5% x $145,163.20) + (1% x $290,326.40) + (2% x $49,673.60)] / 364
= [$25,403.56 + $2,903.264 + $993.472] / 364
= $80.49
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
= $24.93 + $80.49
= $105.42
Sofia’s means tested amount is greater than the maximum accommodation supplement ($69.79), so she is not eligible for government support for her accommodation costs.
Sofia must negotiate a room price before she moves in. She will pay this agreed price as an accommodation payment.
Sofia agrees on a room price of $650,000. She has the choice to pay her accommodation payment as:
- a daily accommodation payment (DAP)
- a lump sum refundable accommodation deposit (RAD)
- any combination of both.
Refundable accommodation deposit (RAD)
If Sofia chooses to pay her full accommodation costs as a RAD, she has 6 months from entry to pay her agreed room price of $650,000.
She must pay a DAP until her provider receives the RAD payment.
Sofia’s RAD = $650,000
When Sofia leaves the aged care home, her provider must refund the RAD to her or her estate. Any amounts that she has agreed to have deducted will not be refunded.
Daily accommodation payment (DAP)
Sofia can choose to pay for her accommodation entirely by non-refundable daily payments.
Sofia’s provider converts her RAD ($650,000) into a DAP of $149.94 per day using the maximum permissible interest rate (MPIR). The MPIR applied is the rate current on the day Sofia agrees the room price.
Sofia’s DAP
= RAD × MPIR / 365
= $650,000 x 8.42% / 365
= $149.95
Accommodation payment – combination RAD and DAP
Sofia can choose to pay a partial RAD and pay the rest 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 $250,000 of her accommodation cost as a RAD and the rest as a DAP, her provider will calculate her reduced DAP using her outstanding room price amount.
Sofia’s agreed room price = $650,000
Sofia’s RAD paid = $250,000
Sofia’s reduced DAP
= (agreed room price – RAD paid) x MPIR / 365
= ($650,000 – $250,000) x 8.42% / 365
= $92.27
Sofia's aged care provider must allow her to draw her reduced DAP from her paid RAD if she requests to do so. As her RAD balance decreases, her DAP will increase to maintain equivalence. Her provider may also allow her to draw other aged care fees from her RAD balance.
Means tested care fee
Subtracting the maximum accommodation supplement ($69.79) from Sofia's means tested amount ($105.42) gives her means tested care fee.
Sofia’s means tested care fee
= means tested amount – maximum accommodation supplement
= $105.42 – $69.79
= $35.63
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 (adjusted basic subsidy plus primary supplements).
A residential aged care funding assessor will use the Australian National Aged Care Classification (AN-ACC) assessment tool to confirm Sofia's cost of care after she enters her aged care home. If her cost of care is less than her means tested care fee as assessed before entry, her provider must refund any overcharged fees. Services Australia will determine and advise her provider of the refund amount at the next regular review of aged care fees.
For example, if Sofia’s residential aged care funding assessment outcome is a daily care subsidy of $245.72, her means tested care fee will remain at $35.63 per day as calculated based on her means tested amount. No refund will be due.
Under Sofia's current personal and financial circumstances, she will pay the following when she enters her chosen aged care home:
- a basic daily fee of $63.82 per day
- a means tested care fee of $35.63 per day
- the accommodation payment she agreed with her provider. She can pay this as either: a RAD of $650,000; a DAP of $149.95 per day; or any combination of RAD and DAP.
Depending on the room Sofia has chosen and her negotiations with her provider, she may also pay:
- an extra service fee if she enters an extra service room
- an additional service fee if she agrees to buy additional services beyond those her aged care home must provide.
Sofia may benefit from seeking financial advice to decide the best way to fund her aged care costs. Different payment options can have a different effect on her means tested care fee.
Part pensioner – Jane
Jane, 84, and her partner, 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 has approval for a subsidised place in an aged care home by an aged care assessor.
After receiving her approval, Jane and Roger look for suitable aged care homes and start to find out about the fees she will need to pay.
Jane knows she must pay a basic daily fee. To find out whether 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 must give Services Australia extra details about her home. To do this, she completes Services Australia's Residential Aged Care Property details for Centrelink and DVA customers form (SA485).
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 can be asked to pay
- the maximum fees she could pay 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’. This means their house will not be included as an assessable asset.
Jane and Roger have other combined assets valued at $156,000 and a combined annual income of $88,000. As a member of a couple, half of their combined income and assets belongs to Jane. This means Jane has assessable assets valued at $78,000 and an assessable income of $44,000.
Services Australia uses an income test and an asset test to work out Jane’s means tested amount to determine whether she will:
- receive government support with her accommodation costs or pay the negotiated room price
- 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 because of illness ($33,173.40, single rate).
Her income tested amount is 50% of her income in excess of the income free area divided by 364.
Jane’s income tested amount
= 50% x ($44,000 – $33,173.40) / 364
= $14.87
Assets test
Jane’s total assessable assets ($78,000) are checked against 3 indexed asset thresholds:
- Asset free threshold = $61,500
- First asset threshold = $206,663.20
- Second asset threshold = $496,989.60
Her asset tested amount is calculated by taking the sum of:
- 17.5% of her assets in excess of $61,500 up to $206,663.20
- 1% of her assets in excess of $206,663.20 up to $496,989.60
- 2% of her assets in excess of $496,989.60
and expressing it as a daily amount (dividing by 364).
Jane’s asset tested amount
= [(17.5% x $16,500) + (1% x $0) + (2% x $0)] / 364
= [$2,887.50 + $0 + $0] / 364
= $7.93
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
= $14.87 + $7.93
= $22.80
Jane’s means tested amount is less than the maximum accommodation supplement ($69.79), so she is eligible for government support 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, Jane will not pay this room price. However, as Jane’s means tested amount is greater than zero, she must contribute towards her accommodation costs.
Jane has the choice to pay her accommodation contribution as:
- a lump sum refundable accommodation contribution (RAC)
- a 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 either:
- her means tested amount ($22.80 per day)
- the accommodation supplement applicable to her aged care service for that day ($69.79).
Jane’s DAC = $22.80
The government will pay her provider the difference between the accommodation supplement applicable for that day ($69.79) and Jane’s DAC ($22.80), which is $46.99 per day.
Jane’s DAC will vary from time to time, depending on changes to the amounts above.
Accommodation contribution – combination RAC and DAC
If Jane later chooses to pay a partial RAC of $40,000, her provider will calculate her reduced DAC by converting her RAC into an equivalent daily amount and subtracting it from the full DAC.
The provider uses the MPIR current on the day Jane enters the aged care home to calculate the DAC equivalent to the partial RAC paid.
Jane's provider must draw down her reduced DAC from her $40,000 RAC if she asks them to. As her RAC balance decreases, Jane's DAC will increase to maintain equivalence.
Equivalent daily amount for RAC paid
= RAC x MPIR / 365
= $40,000 x 8.42% / 365
= $9.23
Jane’s reduced DAC
= full DAC – equivalent daily amount for RAC paid
= $22.80 – $9.23
= $13.57
Means tested care fee
Subtracting the maximum accommodation supplement ($69.79) from Jane's means tested amount ($22.80) gives her means tested care fee.
Jane’s means tested care fee
= means tested amount – maximum accommodation supplement
= $22.80 – $69.79
= -$46.99 (less than zero)
As this gives an amount less than zero, Jane won't pay a means tested care fee. This may change in the future if her financial circumstances change.
Jane is eligible to pay:
- a basic daily fee of $63.82 per day
- an accommodation contribution of $22.80 per day (if she chooses to pay by DAC).
Depending on the type of room she has chosen and her negotiations with her provider, Jane might also need to pay:
- an extra service fee if she enters an extra service place
- an additional service fee if she agrees to buy additional services beyond those her aged care home must provide.
She cannot be asked to pay a means tested care fee.
Jane and Roger should seek financial advice to help them decide the best way to pay for Jane's 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 partner, Jane, moved to an aged care home. He will join her in the same home.
Services Australia has Roger’s income information, because he is on a means tested government pension. However, because he owns his own home, Roger must give Services Australia extra details about his home.
He completes Services Australia's Residential Aged Care Property details for Centrelink and DVA customers form (SA485).
After assessing Roger’s income and assets, Services Australia sends him a fee advice letter outlining:
- the types of fees he can be asked to pay
- the maximum fees he could pay 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 $206,663.20 – the home exemption cap.
The assessment of Roger’s (and Jane’s) assets will exclude any value above this amount. 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 $156,000. As a couple, half of their combined income and assets belongs to Roger. This means Roger’s:
- assessable income is $88,000 / 2 = $44,000
- assessable assets are valued at $156,000 / 2 + $206,663.20 = $284,663.20.
Services Australia uses an income test and an assets test to work out Roger's means tested amount to determine if he will:
- receive government support with his accommodation costs or pay the negotiated room price
- pay a means tested care fee.
After assessing Roger’s income and assets, Services Australia sends him a fee advice letter outlining:
- the types of fees he can be asked to pay
- the maximum fees he could pay when he enters care.
Income test
Roger’s assessed annual income ($44,000) is checked against the income free area for a couple living apart because of illness ($33,173.40, single rate).
His income tested amount is 50% of his income in excess of the income free area divided by 364.
Roger’s income tested amount
= 50% x ($44,000 – $33,173.40) / 364
= $14.87
Assets test
Roger’s total assessable assets ($284,663.20) are checked against 3 indexed asset thresholds:
- Asset free threshold = $61,500
- First asset threshold = $206,663.20
- Second asset threshold = $496,989.60
His asset tested amount is calculated by taking the sum of:
- 17.5% of his assets in excess of $61,500 up to $206,663.20
- 1% of his assets in excess of $206,663.20 up to $496,989.60
- 2% of his assets in excess of $496,989.60
and expressing it as a daily amount (dividing by 364).
Roger’s asset tested amount
= [(17.5% x $145,163.20) +(1% x $78,000) + (2% x $0)] / 364
= [$25,403.56 + $780 + $0] / 364
= $71.93
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
= $14.87 + $71.93
= $86.80
Roger’s means tested amount is greater than the maximum accommodation supplement ($69.79). He is not eligible for government support with his accommodation costs, and must 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 ($69.79) from his means tested amount ($86.80).
Roger’s means tested care fee
= means tested amount – maximum accommodation supplement
= $86.80 – $69.79
= $17.01
Roger’s means tested care fee is $17.01 per day.
Roger agrees on a room price of $450,000. He has the choice to pay this price as:
- a lump sum RAD
- a DAP
- any combination of DAP and RAD.
Refundable accommodation deposit (RAD)
If Roger chooses to pay his full accommodation costs as a RAD, he has 6 months from entry to pay his agreed room price.
He must pay a DAP until his provider receives the RAD payment.
Roger’s RAD = $450,000
When Roger leaves the aged care home, his provider must refund the full RAD to Roger or his estate. Any amounts Roger has agreed to have deducted will not be refunded.
Daily accommodation payment (DAP)
Roger can choose to pay for his accommodation entirely by non-refundable daily payments.
Roger’s provider converts his RAD ($450,000) into a DAP of $103.81 per day using the MPIR. The MPIR applied is the rate current on the day Roger agrees the room price.
Roger’s DAP
= RAD × MPIR / 365
= $450,000 x 8.42% / 365
= $103.81
Accommodation payment – combination RAD and DAP
If Roger decides to pay $100,000 of his accommodation cost as a RAD and the rest 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 8.42% / 365
= $80.74
Roger's provider must allow him to draw his DAP from his paid RAD if he requests to do so. The provider may also allow him to draw other aged care fees from his RAD balance.
Roger will pay:
- a basic daily fee of $63.82
- a means tested care fee of $17.01 per day
- the accommodation payment he agreed with his provider. He can pay this as either: a DAP of $103.81 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 his provider, Roger might also pay:
- an extra service fee if he enters an extra service room
- an additional service fee if he agrees to buy additional services beyond those his aged care home must provide.
Jane and Roger should seek financial advice to decide the best way to pay for their aged care costs. As a couple, each of their aged care payment methods may affect 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, and they updated their circumstances with Services Australia. This affects both their residential aged care fees. Jane now needs 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.
If they keep the family home and Roger pays by DAP, Jane pays by DAC
Roger’s and Jane’s income and assets are divided equally between them in the means assessment. Before Roger moved into care, Jane was not eligible to pay a means tested care fee.
From the time Roger entered aged care, Jane’s assessable assets increased from $78,000 to $284,663.20. This is because of the additional capped value of their home.
Now that the family home is no longer occupied by Roger, Jane’s means tested amount increases to $86.80 (the same as Roger’s). Jane will now pay a means tested care fee of up to $17.01 per day, depending on her cost of care.
Before Roger entered care, Jane was eligible to pay an accommodation contribution equivalent to a DAC of $22.80 per day.
If Jane now chooses to pay her full accommodation contribution by DAC, she will still need to pay the lower of either:
- her means tested amount (previously $22.80, now increased to $86.80 per day)
- the accommodation supplement applicable for that day ($69.79 per day).
This means Jane’s DAC will increase to $69.79 per day.
If Jane and Roger rent out their home for some extra income, this will be included in the means assessment and may increase their means tested care fees. The rent they receive may also affect their age pensions.
If they sell the family home and Roger pays by DAP, Jane pays by DAC
If Roger and Jane sell their home and keep the proceeds in the bank, those proceeds count as an assessable asset in the means assessment. This asset will affect their individual means tested care fees. It will also be included in the pension assessment and may affect 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 $156,000 are split equally between them.
This gives both an assessable asset amount of $378,000, and affects their means tested amount and means tested care fees. The increase in financial assets will also increase deemed income for Roger and Jane. However, these scenarios don't include deemed income.
Asset tested amount (Jane and Roger)
= [(17.5% x $145,163.20) + (1% x $171,336.80) + (2% x $0)] / 364
= [$25,403.56 + $1,713.368 + $0] / 364
= $74.49
Means tested amount (Jane and Roger)
= income tested amount + asset tested amount
= $14.87 + $74.49
= $89.36
Means tested care fee (Jane and Roger)
= means tested amount – maximum accommodation supplement
= $89.36 – $69.79
= $19.57
From selling the family home, Roger’s means tested care fee increases to $19.57. There is no change to Roger’s DAP of $103.81 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. She is now eligible to pay a means tested care fee equivalent to Roger’s means tested care fee of $19.57.
Before Roger entered care, Jane was eligible to pay an accommodation contribution equivalent to a DAC of $22.80 per day. If Jane chooses to pay by DAC after selling the house, she will need to pay the lower of:
- her means tested amount (now $89.36 per day)
- the accommodation supplement applicable to her aged care service for that day ($69.79 per day).
Jane’s DAC will increase to $69.79 per day if the couple sell their family home and keep the proceeds in the bank.
If they sell the family home and Roger pays by RAD, Jane pays by 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 to pay Roger’s RAD, both the paid RAD and remaining $150,000 are counted as assessable assets. No cap is applicable to the value of the RAD or the financial assets. The RAD is not considered a financial asset, so 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 affect their age pensions.
The couple’s total assets of $600,000 and $156,000 are split equally between them to give each of them an assessable asset amount of $378,000.
The increase in Roger’s assets will increase his:
- asset tested amount to $74.49
- means tested care fee to $19.57.
When she entered care, Jane did not have to pay a means tested care fee. From selling the family home, Jane’s assets increased by half of the value of the proceeds. Jane 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 $19.57.
Before Roger entered care, Jane was eligible to pay an accommodation contribution equivalent to a DAC of $22.80 per day. If Jane has chosen to pay her full accommodation contribution by DAC, she will still need to pay the lower of:
- her means tested amount (now $89.36 per day)
- the maximum accommodation supplement ($69.79 per day).
This means that Jane’s DAC will increase to $69.79 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. As a couple, each of their aged care payment methods may affect the other’s aged care fees and the amount of money they have available to pay these fees. Their payment methods may also affect their age pensions.
To talk to someone who can help them understand the implications of their aged care costs, residents can call Services Australia’s free Financial Information Service on 132 300 and say 'financial information service' when asked why they are calling.