Aged Care Costs Australia (2026): Plain-English Guide

1. The 4 Statutory Aged Care Fees Explained

Navigating aged care costs in Australia can seem overwhelming due to government acronyms and complex Centrelink rules. In reality, residential aged care billing is structured around four distinct statutory categories:

2. The 3 Financial Tiers: Low, Moderate & High Means

Centrelink categorises residents into three main funding profiles following their means test:

3. How Centrelink Assesses Your Income & Assets

To determine whether you qualify as a supported resident or must contribute a Means-Tested Care Fee, Services Australia conducts a combined assessment:

• Assessable Income: Includes Age Pension payments, deemed income from financial assets, superannuation income streams, foreign pensions, and net rental property income.
• Assessable Assets: Includes bank accounts, term deposits, shares, investment properties, vehicles, caravans, and superannuation accumulation balances.

4. Annual and Lifetime Fee Caps ($82,018.15 Limit)

To protect Australian families from catastrophic long-term healthcare expenses, the Aged Care Act establishes strict legislative limits on clinical care contributions:

• Annual Cap: $34,174.16 per resident per year. Once reached, your Means-Tested Care Fee is $0 for the rest of that 12-month period.
• Lifetime Cap: $82,018.15 indexed across a resident's lifetime. Read our comprehensive guide on Statutory Aged Care Fee Caps.

5. How the Family Home Affects Aged Care Fees

The family home is the single greatest area of anxiety for adult children navigating aged care. Under Australian legislation:

• Protected Person Exemption: If your spouse, an eligible carer (lived there 2+ years), or close relative (lived there 5+ years on income support) continues residing in the home, the house is 100% exempt from the aged care asset test.
• Capped Value: If the home is assessable, its value is capped at a statutory maximum of $206,039.20, regardless of whether the home is worth $800,000 or $3,000,000.

Read our detailed analysis on Do You Have to Sell the Family Home to Pay for Aged Care?

6. Aged Care Fees for New Entrants (From 1 November 2025)

On 1 November 2025, the new Aged Care Act 2024 commenced, introducing a reformed fee framework for people entering permanent residential aged care on or after that date. If you or your loved one is entering care now, a different set of contribution rules applies than the Means-Tested Care Fee system described in older guides. Understanding which framework governs your entry date is essential, because the two systems run side by side.

The Two New Contribution Types

Under the reformed framework, means-tested residents contribute through two new daily contributions instead of the former single Means-Tested Care Fee:

• Hotelling Contribution: A contribution toward everyday living costs, meals, cleaning, laundry, heating, and utilities. This reflects the principle that people in residential care should contribute to their living costs in a similar way to living at home. The amount is means-tested, so residents with lower means pay less, and there are protections for those with very limited resources.
• Non-Clinical Care Contribution: A contribution toward the non-clinical care costs of running the service, assistance with daily activities, lifestyle and social programs, and general care support that is not delivered by clinicians. Like the Hotelling Contribution, it is means-tested against income and assets, with legislated caps limiting total lifetime contributions.

Importantly, the Basic Daily Fee and accommodation costs (a lump-sum RAD, a daily DAP, or a combination) continue under both the old and new frameworks. What changed is how the means-tested portion is calculated and named, not the existence of daily living or accommodation charges.

Old System vs New System: Side-by-Side

Which System Applies to You?

The determining factor is your date of permanent entry into residential aged care. If you entered before 1 November 2025, you remain under the previous framework (including the Means-Tested Care Fee) for the duration of your stay, you are not moved to the new system. If you enter on or after 1 November 2025, the new Hotelling and Non-Clinical Care Contribution framework applies from day one. People moving between facilities should confirm with My Aged Care whether a transfer counts as a new entry for framework purposes.

7. Interactive Fee Calculators & Deep Guides