When aged care feels out of reach.

The Short Answer

No one is turned away from aged care because they cannot pay. The Australian aged care system is designed so that fees are proportional to the person’s income and assets. People with fewer resources pay less. Government subsidies cover the gap.

If your parent has very limited income and assets, they will likely pay only the basic daily fee ($66.80/day), with the government subsidising their care and accommodation costs. Financial hardship provisions exist for situations where even the assessed fees are unaffordable.

No One Is Turned Away

This is the most important principle to understand: approved aged care providers cannot refuse a resident solely because of their financial circumstances.The system works as follows:

• The government pays a care subsidy directly to the facility for every resident (the amount varies based on care needs, assessed by the ACAT).
• The government pays an accommodation supplement for low-means residents who cannot afford a full RAD or DAP.
• The basic daily fee is the only fee that every resident must pay, regardless of means.
• The means-tested care fee is calculated based on ability to pay — it can be $0 for people with low income and assets.

Low-Means Residents

If the Services Australia financial assessment determines that a resident has assets below approximately $76,000 (for a single person), they are classified as a low-means resident. This provides significant protection:

Accommodation

• The resident does not need to pay a Refundable Accommodation Deposit (RAD). Instead, the facility receives a government accommodation supplement.
• The resident may be asked to pay a small daily accommodation contribution, calculated by Services Australia based on their means. This is significantly less than a standard DAP.
• For residents with very low assets (below approximately $55,000), the daily accommodation contribution may be $0.

Care fees

• The basic daily fee still applies ($66.80/day).
• The means-tested care fee is calculated normally, but for someone with low income and assets, it will be very small or $0.

Example: minimum-cost scenario

A single person receiving the full Age Pension ($31,223.40/year) with $30,000 in savings and no home (or an exempt home):

• Basic daily fee: $24,398.70/year ($66.80/day × 365.25)
• Means-tested care fee: $0 (income below threshold, assets below $55,000)
• Accommodation: Government-subsidised (small or no daily contribution)
• Total: approximately $24,398.70/year

This is covered almost entirely by the Age Pension, leaving a small amount for personal expenses.

Financial Hardship Provisions

If a resident has been assessed as needing to pay a means-tested care fee but genuinely cannot afford it, they (or their representative) can apply to Services Australia for financial hardship assistance.

Financial hardship may apply when:

• The person’s income is insufficient to cover their assessed fees and basic living expenses
• Assets exist on paper but are not accessible (e.g., jointly owned property that cannot be sold, assets frozen in a legal dispute)
• Unexpected changes in circumstances have reduced the person’s ability to pay (loss of income, investment losses, partner entering care)

If hardship is approved, Services Australia may:

• Reduce the means-tested care fee for a specified period
• Waive the means-tested care fee entirely for a period
• Adjust the accommodation payment requirements

Accommodation Payment Options

The accommodation payment is often the most daunting cost. Understanding your options can reduce the financial pressure:

• You don’t have to pay a lump-sum RAD. You can choose to pay entirely via DAP (daily payments). This avoids needing a large upfront sum.
• You can pay a combination. Pay whatever lump sum you can afford as a partial RAD, and pay the remainder as DAP. For example, on a $350,000 RAD, you could pay $100,000 upfront and the remaining $250,000 as DAP ($57.74/day at 8.43%MPIR).
• You have 28 days to decide. After admission, you have 28 days to choose your payment method. Use this time to complete the financial assessment and understand your options.
• The RAD is refundable. If you do pay a RAD, remember it is returned when the resident leaves or passes away. It is not lost money — it comes back to the estate.

Ways to Reduce Your Fees

Several legitimate strategies can reduce aged care costs:

• Complete the financial assessment. Without a financial assessment, you are charged the maximum means-tested care fee and maximum accommodation cost. The assessment almost always results in lower fees.
• Understand the family home exemption. If the home is occupied by a partner or left vacant (not rented), it may be exempt from the asset test. This can dramatically reduce the means-tested care fee. See our Family Home guide.
• Apply for the illness-separated pension rate. If one partner enters care and the other stays home, each may receive the higher single pension rate ($31,223.40/year each) instead of the lower couple rate ($23,535.20/year each) — an increase of about $15,376/year combined.
• Check the lifetime cap. The means-tested care fee has an annual cap of $35,910.43 and a lifetime cap of either $86,185.23 (residents with “no worse off” protections, approved before 12 September 2024) or $137,917.01 (general new-Act rules). Once the lifetime cap is reached, the fee stops. If your parent has been in care for several years, check whether they have reached or are approaching their applicable cap.
• Compare facilities. RAD prices vary significantly between facilities and regions. Choosing a facility with a lower RAD (or opting for a shared room) reduces the accommodation cost.
• Get specialist advice. An aged care financial adviser can identify strategies specific to your situation — the fee for a consultation ($300–$500) can save thousands in correctly structured arrangements.

Family Contributions

Families are not legally required to pay for a parent’s aged care fees. The fees are the responsibility of the person receiving care. However, many families choose to contribute:

• Topping up personal spending: Providing pocket money for hairdressing, outings, phone bills, and personal items beyond what the pension covers.
• Contributing to the RAD: Family members sometimes contribute to or lend money for the RAD. This should be documented clearly (gift vs loan) as it may have Centrelink and tax implications.
• Managing the family home: Covering maintenance, rates, and insurance on a vacant home to preserve the asset test exemption.

Support at Home as a Lower-Cost Alternative

If residential care costs are a concern, Support at Home may be a more affordable option — provided the person’s care needs can be safely met at home.

Home care is not suitable for everyone — people with advanced dementia, high nursing needs, or significant fall risk may need the 24/7 support of residential care. But for people with moderate care needs, a Support at Home classification can provide meaningful support at a fraction of the cost.

Learn more about home care options, including legacy Home Care Package arrangements, in our Home Care Packages guide.

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