How to use these scenarios
The scenarios on this page show how fees and contributions are calculated and how the means assessment works for people entering residential care on the 1 November 2025 arrangements.
Aged care rates are regularly indexed, and resident fees and contributions change over time. The rates and thresholds used in these scenarios were current on 20 March 2026.
For the full list of current residential care rates, refer to:
Learn about charging for residential aged care.
View the fee scenarios for residents on 1 July 2014 arrangements.
Note: These fee scenarios are examples for general information only. They do not constitute financial advice. Individuals should seek independent financial advice to determine the best way to pay for their care.
Terms used
The following terms are used in the scenarios:
- Basic daily fee – payable by everyone in residential care
- Means tested contributions (hotelling contribution and non-clinical care contribution) – 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
- Higher everyday living fee – 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 – Mario
1 November 2025 fee arrangements
Mario is 79 years old and receives the full age pension. He rents an apartment and does not own a home. After a stroke, Mario 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, Mario 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 Mario 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.
When Mario chooses an aged care home, he must agree on a room price with the provider. The means assessment will determine if he needs to pay the agreed room price, or if he is eligible for assistance with his accommodation costs.
Mario has $15,000 in assets and an annual income of $32,000.
Mario will not pay means tested contributions (hotelling contribution, non‑clinical care contribution) or an accommodation payment because, as a full pensioner:
- his annual income is below the income free area ($35,313.20)
- his assets are below the asset free area ($64,500).
The government will pay his accommodation costs and contribute the full government subsidy.
Under his current personal and financial circumstances, Mario will pay a basic daily fee of $66.80 per day.
Mario may also pay a higher everyday living fee if he chooses to buy additional services beyond those his aged care home must provide.
Under his current circumstances, Mario’s provider cannot ask him to pay:
- a contribution towards his accommodation costs
- means tested contributions.
However, these contributions may become payable for Mario if his income and assets increase.
Self-funded retiree – Sakura
1 November 2025 fee arrangements
Sakura, 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, Sakura goes to Service Australia's website to apply online for an aged care calculation of your cost of care. Services Australia will assess her means and advise Sakura of her maximum aged care fees.
Sakura’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 $214,884 – the home exemption cap. This puts her total assessable assets at $554,884.
Services Australia will use these figures to calculate Sakura’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 Sakura’s means tested amount. This determines whether Sakura will:
- receive government support for her accommodation costs or pay the room price negotiated with her aged care provider
- pay means tested contributions.
Income test
Sakura’s assessed annual income ($52,000) is checked against the single person rate of the 5 indexed income thresholds:
- Income free area = $35,313.20
- First income threshold = $87,947.60
- Second income threshold = $101,105
- Third income threshold = $117,230.20
- Fourth income threshold = $141,252.80
Her income tested amount is calculated by taking the sum of:
- 50% of her income in excess of $35,313.20 up to $87,947.60
- 0% of her income in excess of $87,947.60 up to $101,105
- 50% of her income in excess of $101,105 up to $117,230.20
- 0% of her income in excess of $117,230.20 up to $141,252.80
- 50% of her income in excess of $141,252.80
and expressing it as a daily amount (dividing by 364).
Sakura’s income tested amount
= [(50% x $16,686.80)) + (50% x $0)) + (50% x $0)] / 364
= [$8,343.40 + $0 + $0] / 364
= $22.92
Assets test
Sakura’s total assessable assets ($554,884) are checked against 5 indexed asset thresholds:
- Asset free area = $64,500
- First asset threshold = $214,884
- Second asset threshold = $258,000
- Third asset threshold = $361,366.66
- Fourth asset threshold = $536,384
Her asset tested amount is calculated by taking the sum of:
- 17.5% of her assets in excess of $64,500 up to $214,884
- 0% of her assets in excess of $214,884 up to $258,000
- 7.8% of her assets in excess of $258,000 up to $361,366.66
- 0% of her assets in excess of $361,366.66 up to $536,384
- 7.8% of her assets in excess of $536,384
and expressing it as a daily amount (dividing by 364).
Sakura’s asset tested amount
= [(17.5% x $150,384)) + (7.8% x $103,366.66)) + (7.8% x $18,500)] / 364
= [$26,317.20 + $8,062.60 + $1,443] / 364
= $98.41
Means tested amount
This is the sum of Sakura’s income tested amount and her asset tested amount.
Sakura’s means tested amount
= income tested amount + asset tested amount
= $22.92 + $98.41
= $121.33
Sakura’s means tested amount is greater than the maximum accommodation supplement ($72.30), so she is not eligible for government support for her accommodation costs.
Sakura must negotiate a room price before she moves in. She will pay her agreed room price as an accommodation payment.
Sakura 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.
She agrees on a room price of $650,000 as a RAD and an equivalent DAP of $136.23.
Refundable accommodation deposit (RAD)
If Sakura chooses to pay her full accommodation costs as a RAD, she will pay a DAP until her provider receives the RAD payment.
Sakura’s RAD = $650,000
When Sakura leaves the aged care home, her provider must refund the RAD balance to her or her estate. RAD retention amounts and any other amounts she has agreed to have deducted will not be refunded.
Daily accommodation payment (DAP)
Sakura can choose to pay for her accommodation entirely by non‑refundable daily payments.
Sakura’s provider converts her RAD ($650,000) into a DAP of $136.23 per day using the maximum permissible interest rate (MPIR). The MPIR applied is the rate current on the day Sakura agrees the room price.
Sakura’s DAP
= RAD × MPIR / 365
= $650,000 x 7.65% / 365
= $136.23
Sakura’s DAP will increase twice a year on 20 March and 20 September due to DAP indexation.
Accommodation payment – combination RAD and DAP
Sakura can choose to pay a partial RAD and pay the rest as a DAP. It is up to Sakura what amount she would like to pay as a RAD or DAP.
If Sakura 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.
Sakura’s agreed room price = $650,000
Sakura’s RAD paid = $250,000
Sakura’s reduced DAP
= (agreed room price – RAD paid) x MPIR / 365
= ($650,000 – $250,000) x 7.65% / 365
= $83.84
Sakura’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.
RAD retention deductions will apply to any amount of RAD Sakura pays. DAP indexation will apply to any amount of DAP Sakura pays.
Means tested contributions
Hotelling contribution
Sakura’s hotelling contribution will be the lower of:
- Sakura’s means tested amount ($121.33) less the maximum accommodation supplement ($72.30); or
- Maximum daily hotelling contribution ($22.15).
Sakura’s hotelling contribution
= means tested amount – maximum accommodation supplement
= $121.33 – $72.30
= $49.03
As $49.03 is greater than the maximum daily hotelling contribution, Sakura’s hotelling contribution will be $22.15.
Non-clinical care contribution
Sakura’s non-clinical care contribution will be the lesser of:
- Sakura’s means tested amount ($121.33) less the maximum accommodation supplement ($72.30) and hotelling contribution ($22.15); or
- the maximum daily non-clinical care contribution ($107.32).
Sakura’s non-clinical care contribution
= means tested amount – (maximum accommodation supplement + maximum hotelling supplement)
= $121.33 – ($72.30 + $22.15)
= $26.88
Sakura’s hotelling contribution and non-clinical care contribution may change if her financial circumstances change.
Under Sakura’s current personal and financial circumstances, she will pay the following when she enters her chosen aged care home:
- a basic daily fee of $66.80 per day
- means tested contributions
- a hotelling contribution of $22.15 per day
- a non-clinical care contribution of $26.88 per day
- the accommodation price she agreed with her provider. She can pay this as either: a RAD of $650,000; a DAP of $136.23 per day; or any combination of RAD and DAP.
Sakura may also pay a higher everyday living fee if she chooses to buy additional services beyond those her aged care home must provide.
A lifetime cap applies for the non-clinical care contribution. A resident will stop paying the non-clinical care contribution when they reach the lifetime cap dollar amount ($137,910.01), or once they have paid it for a total of 4 years. The cap dollar amount is indexed and the amount that applies for a resident is the amount in effect when they reach it.
Sakura should seek financial advice to decide the best way to pay for her aged care costs. Different payment options can have a different effect on her means tested contributions.
Part pensioner – Julie
1 November 2025 fee arrangements
Julie, 84, and her partner, Raj, 85, are part-pensioners who live in their family home. Julie has limited mobility and is finding it difficult to manage without full-time care. She and Raj have decided that she should move into an aged care home. Julie gets an aged care needs assessment and receives approval for a subsidised place in an aged care home.
After receiving her approval, Julie and Raj look for suitable aged care homes and start to find out about the fees she will need to pay.
Julie knows she must pay a basic daily fee. To find out whether she will pay any means tested contributions or accommodation costs, she needs an aged care means assessment from Services Australia.
Services Australia already has Julie’s income information as she is on a means tested government pension. However, because she owns her own home, Julie must give Services Australia extra details about her home. To do this, she applies online for an aged care calculation of your cost of care.
After assessing Julie’s home, Services Australia will send her 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.
Raj and Julie’s family home is valued at $600,000. As Raj will continue to live in the home once Julie moves out, Services Australia will consider it occupied by a ‘protected person’. This means their house will not be included as an assessable asset.
Julie and Raj 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 belong to Julie. This means Julie 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 Julie’s means tested amount to determine whether she will:
- receive government support with her accommodation costs or pay the room price negotiated with her aged care provider
- pay means tested contributions.
Income test
Julie’s assessed annual income ($44,000) is checked against the 5 indexed income thresholds for a couple living apart because of illness:
- Income free area = $34,585.20
- First income threshold = $87,219.60
- Second income threshold = $101,105
- Third income threshold = $117,230.20
- Fourth income threshold = $138,340.80
Her income tested amount is calculated by taking the sum of:
- 50% of her income in excess of $34,585.20 up to $87,219.60
- 0% of her income in excess of $87,219.60 up to $101,105
- 50% of her income in excess of $101,105 up to $117,230.20
- 0% of her income in excess of $117,230.20 up to $138,340.80
- 50% of her income in excess of $138,340.80
and expressing it as a daily amount (dividing by 364).
As Julie’s income is above the income free area but below the first income threshold ($87,219.60), her income tested amount is 50% of her income in excess of the income free area divided by 364.
Julie’s income tested amount
= 50% x ($44,000 – $34,585.20) / 364
= $12.93
Assets test
Julie’s total assessable assets ($78,000) are checked against 5 indexed asset thresholds:
- Asset free area = $64,500
- First asset threshold = $214,884
- Second asset threshold = $258,000
- Third asset threshold = $361,366.66
- Fourth asset threshold = $536,384
Her asset tested amount is calculated by taking the sum of:
- 17.5% of her assets in excess of $64,500 up to $214,884
- 0% of her assets in excess of $214,884 up to $258,000
- 7.8% of her assets in excess of $258,000 up to $361,366.66
- 0% of her assets in excess of $361,366.66 up to $536,384
- 7.8% of her assets in excess of $536,384
and expressing it as a daily amount (dividing by 364).
Julie’s asset tested amount
= [(17.5% x $13,500) + (7.8% x $0) + (7.8% x $0)] / 364
= [$2,362.50 + $0 + $0] / 364
= $6.49
Means tested amount
This is the sum of Julie’s income tested amount and her asset tested amount.
Julie’s means tested amount
= income tested amount + asset tested amount
= $12.93 + $6.49
= $19.42
Julie’s means tested amount is less than the maximum accommodation supplement ($72.30), so she is eligible for government support with her accommodation costs.
After choosing an aged care service, Julie agrees on a room price of $440,000 as a RAD and an equivalent DAP of $92.22. As someone eligible for government support, Julie will not pay this room price. However, as Julie’s means tested amount is greater than zero, she must contribute towards her accommodation costs.
Julie 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 Julie chooses to pay her accommodation contribution as a DAC, she will pay the lower of:
- her means tested amount ($19.42 per day)
- the accommodation supplement applicable to her aged care service for that day ($72.30)
- the room price she agreed, expressed as a DAP ($92.22 per day, indexed).
Julie’s DAC = $19.42
The government will pay her provider the difference between the accommodation supplement applicable for that day ($72.30) and Julie’s DAC ($19.42), which is $52.88 per day.
Julie’s DAC will vary from time to time, depending on changes to the amounts above.
Accommodation contribution – combination RAC and DAC
If Julie 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 Julie enters the aged care home to calculate the DAC equivalent to the partial RAC paid.
Julie’s provider must draw down her reduced DAC from her $40,000 RAC if she asks them to. As her RAC balance decreases, Julie’s DAC will increase to maintain equivalence.
Equivalent daily amount for RAC paid
= RAC x MPIR / 365
= $40,000 x 7.65% / 365
= $8.38
Julie’s reduced DAC
= full DAC – equivalent daily amount for RAC paid
= $19.42 – $8.38
= $11.04
RAD/RAC retention deductions will be applied to any amount of RAC that Julie pays.
Means tested contributions
Hotelling contribution
Subtracting the maximum accommodation supplement ($72.30) from Julie’s means tested amount ($19.42) gives her hotelling contribution.
Julie’s hotelling contribution
= means tested amount – maximum accommodation supplement
= $19.42 – $72.30
= -$52.88 (less than zero)
As this gives an amount less than zero, Julie won't pay a hotelling contribution. This may change in the future if her financial circumstances change.
Non-clinical care contribution
Julie’s hotelling contribution ($0) is less than the maximum hotelling contribution amount ($22.15), so she cannot be asked to pay a non-clinical care contribution.
Julie’s hotelling contribution and non-clinical care contribution may change if her financial circumstances change.
Julie will pay:
- a basic daily fee of $66.80 per day
- an accommodation contribution of $19.42 per day (if she chooses to pay by DAC).
Julie may also pay a higher everyday living fee if she chooses to buy additional services beyond those her aged care home must provide.
She will not pay means tested contributions under her current circumstances.
Julie and Raj should seek financial advice to help them decide the best way to pay for Julie’s care.
Part pensioner – Raj
1 November 2025 fee arrangements
Raj, 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, Julie, moved to an aged care home. He will join her in the same home.
Services Australia has Raj’s income information, because he is on a means tested government pension. However, because he owns his own home, Raj must give Services Australia extra details about his home. He does this by applying online for an aged care calculation of your cost of care.
As Raj 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 $214,884 – the home exemption cap.
The assessment of Raj’s (and Julie’s) assets will exclude any value of the home above this amount. This cap on the value of a home applies separately to both members of a couple.
Raj and Julie 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 belong to Raj. This means Raj’s:
- assessable income is $88,000 / 2 = $44,000
- assessable assets are valued at $156,000 / 2 + $214,884 = $292,884.
Services Australia uses an income test and an assets test to work out Raj’s means tested amount to determine if he will:
- receive government support with his accommodation costs or pay the negotiated room price
- pay means tested contributions.
After assessing Raj’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 if his circumstances remain the same.
Income test
Raj’s assessed annual income ($44,000) is checked against 5 indexed income thresholds for a couple living apart because of illness:
- Income free area = $34,585.20
- First income threshold = $87,219.60
- Second income threshold = $101,105
- Third income threshold = $117,230.20
- Fourth income threshold = $138,340.80
His income tested amount is calculated by taking the sum of:
- 50% of his income in excess of $34,585.20 up to $87,219.60
- 0% of his income in excess of $87,219.60 up to $101,105
- 50% of his income in excess of $101,105 up to $117,230.20
- 0% of his income in excess of $117,230.20 up to $138,340.80
- 50% of his income in excess of $138,340.80
and expressing it as a daily amount (dividing by 364).
As Raj’s income is above the income free area but below the first income threshold ($87,219.60), his income tested amount is 50% of his income in excess of the income free area divided by 364.
Raj’s income tested amount
= 50% x ($44,000 – $34,585.20) / 364
= $12.93
Assets test
Raj’s total assessable assets ($292,884) are checked against 5 indexed asset thresholds:
- Asset free area = $64,500
- First asset threshold = $214,884
- Second asset threshold = $258,000
- Third asset threshold = $361,366.66
- Fourth asset threshold = $536,384
His asset tested amount is calculated by taking the sum of:
- 17.5% of his assets in excess of $64,500 up to $214,884
- 0% of his assets in excess of $214,884 up to $258,000
- 7.8% of his assets in excess of $258,000 up to $361,366.66
- 0% of his assets in excess of $361,366.66 up to $536,384
- 7.8% of his assets in excess of $536,384
and expressing it as a daily amount (dividing by 364).
Raj’s asset tested amount
= [(17.5% x $150,384) +(7.8% x $34,884) + (7.8% x $0)] / 364
= [$26,317.20 + $2,720.95 + $0] / 364
= $79.77
Means tested amount
This is the sum of Raj’s income tested amount and his asset tested amount.
Raj’s means tested amount
= income tested amount + asset tested amount
= $12.93 + $79.77
= $92.70
Raj’s means tested amount is greater than the maximum accommodation supplement ($72.30). He is not eligible for government support with his accommodation costs and must make an accommodation payment rather than a contribution.
Raj agrees on a room price of $450,000 as a RAD and an equivalent DAP of $94.32. 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 Raj chooses to pay his full accommodation costs as a RAD, he must pay a DAP until his provider receives the RAD payment.
Raj’s RAD = $450,000
When Raj leaves the aged care home, his provider must refund the RAD less any deductions to Raj or his estate. RAD retention amounts and any other amounts Raj has agreed to have deducted will not be refunded.
Daily accommodation payment (DAP)
Raj can choose to pay for his accommodation entirely by non‑refundable daily payments.
Raj’s provider converts his RAD ($450,000) into a DAP of $94.32 per day using the MPIR. The MPIR applied is the rate current on the day Raj agrees the room price.
Raj’s DAP
= RAD × MPIR / 365
= $450,000 x 7.65% / 365
= $94.32
Raj’s DAP will increase twice a year on 20 March and 20 September due to DAP indexation.
Accommodation payment – combination RAD and DAP
If Raj 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.
Raj’s agreed room price = $450,000
Raj’s RAD paid = $100,000
Raj’s DAP
= (agreed room price – RAD paid) x MPIR / 365
= ($450,000 – $100,000) x 7.65% / 365
= $73.36
Raj'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.
RAD retention deductions will apply to any amount of RAD Raj pays. DAP indexation will apply to any amount of DAP he pays.
Means tested contributions
Hotelling contribution
Raj’s hotelling contribution will be the lower of:
- Raj’s means tested amount ($92.70) less the maximum accommodation supplement ($72.30); or
- Maximum daily hotelling contribution ($22.15).
Raj’s hotelling contribution
= means tested amount – maximum accommodation supplement
= $92.70 – $72.30
= $20.40
As $20.40 is lower than the maximum daily hotelling contribution, Raj’s hotelling contribution is $20.40.
Non-clinical care contribution
As Raj’s hotelling contribution ($20.40) is less than the maximum hotelling contribution ($22.15), he cannot be asked to pay a non‑clinical care contribution.
Raj’s hotelling contribution and non-clinical care contribution may change in the future if his financial circumstances change.
Raj will pay:
- a basic daily fee of $66.80
- means tested contributions
- a hotelling contribution of $20.40 per day
- the accommodation payment he agreed with his provider. He can pay this as either: a DAP of $94.32 per day; a RAD of $450,000; or any combination of DAP and RAD.
Raj may also pay a higher everyday living fee if he chooses to buy additional services beyond those his aged care home must provide.
He will not pay a non-clinical care contribution under his current circumstances.
Julie and Raj 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 – Julie and Raj
1 November 2025 fee arrangements
Couple Julie and Raj have both moved into an aged care home. Julie moved in first and then Raj joined her in the same home.
When Raj moved into the home, both his and Julie’s personal financial circumstances changed, and they updated their circumstances with Services Australia. This affects both their residential aged care fees. Julie now needs to pay means tested contributions, and her accommodation contribution has increased.
Raj’s accommodation payment method will also affect both of their fees.
There are many things for Julie and Raj 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 Raj should pay a RAD
- how different payment methods will affect their age pensions.
If they keep the family home and Raj pays by DAP, Julie pays by DAC
Raj’s and Julie’s income and assets are divided equally between them in the means assessment. Before Raj moved into care, Julie was not liable to pay means tested contributions.
From the time Raj entered aged care, Julie’s assessable assets increased from $78,000 to $292,884. This is because of the additional capped value of their home.
Now that the family home is no longer occupied by Raj, Julie’s means tested amount increases to $92.70 (the same as Raj’s). Julie will now pay means tested contributions of $20.40 per day.
Before Raj entered care, Julie was required to pay an accommodation contribution equivalent to a DAC of $19.42 per day.
If Julie now chooses to pay her full accommodation contribution by DAC, she will still need to pay the lower of:
- her means tested amount (previously $19.42, now increased to $92.70 per day)
- the accommodation supplement applicable for that day ($72.30 per day).
- the room price she agreed expressed as a DAP ($92.22 per day, indexed)
This means Julie’s DAC will increase to $72.30 per day.
If Julie and Raj rent out their home for some extra income, this will be included in the means assessment and may increase their means tested contributions. The rent they receive may also affect their age pensions.
If they sell the family home and Raj pays by DAP, Julie pays by DAC
If Raj and Julie 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 contributions. 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 each of them an assessable asset amount of $378,000, and affects their means tested amount and means tested contributions. The increase in financial assets will also increase deemed income for Raj and Julie. These scenarios don't include deemed income.
Asset tested amount (Julie and Raj)
= [(17.5% x $150,384) + (7.8% x $103,366.66) + (7.8% x $0)] / 364
= [$26,317.20 + $8,062.60 + $0] / 364
= $94.45
Means tested amount (Julie and Raj)
= income tested amount + asset tested amount
= $12.93 + $94.45
= $107.38
Means tested contribution (Julie and Raj)
Hotelling contribution
= means tested amount – maximum accommodation supplement
= $107.38 – $72.30
= $35.08
As $35.08 is greater than the maximum daily hotelling contribution, Julie and Raj will each pay a hotelling contribution of $22.15 per day.
Non-clinical care contribution
= means tested amount – (maximum accommodation supplement + hotelling contribution)
= $107.38 – ($72.30 + $22.15)
= $12.93
From selling the family home, Raj’s means tested contributions increase to $35.08. There is no change to Raj’s DAP of $94.32 per day (indexed), as it is based on the room price he agreed with his provider.
Julie’s assets also increase by half of the value of the proceeds from the sale of the home. She is now required to pay $35.08 in means tested contributions the same amount as Raj.
Before Raj entered care, Julie was required to pay an accommodation contribution equivalent to a DAC of $19.42 per day. If Julie chooses to pay by DAC after selling the house, she will need to pay the lower of:
- her means tested amount (now $107.38 per day)
- the accommodation supplement applicable to her aged care service for that day ($72.30 per day).
- the room price she agreed expressed as a DAP– ($92.22 per day, indexed)
Julie’s DAC will increase to $72.30 per day if the couple sell their family home and keep the proceeds in the bank.
If they sell the family home and Raj pays by RAD, Julie pays by DAC
If Raj and Julie decide to pay a RAD of $450,000 for Raj, this will affect their individual means tested contributions.
If they receive $600,000 for their house and use $450,000 to pay Raj’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 Raj’s assets will increase his:
- means tested amount to $107.38
- means tested contributions to $35.08.
When she entered care, Julie did not have to pay means tested contributions. From selling the family home, Julie’s assets increased by half of the value of the proceeds. Julie will now be required to pay means tested contributions of $35.08, the same amount as Raj.
Before Raj entered care, Julie was required to pay an accommodation contribution equivalent to a DAC of $19.42 per day. If Julie has chosen to pay her full accommodation contribution by DAC, she will still need to pay the lower of:
- her means tested amount (now $107.38 per day)
- the maximum accommodation supplement ($72.30 per day).
- the room price she agreed expressed as a DAP ($92.22 per day, indexed)
This means that Julie’s DAC will increase to $72.30 per day if the couple decide to sell their family home to pay Raj’s RAD.
Julie and Raj 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.