The big picture: who pays for aged care in Australia?
Most aged care in Australia is paid for by the Australian Government, with means-tested co-contributions from those who can afford to pay. The exact split depends on:
- The type of care (home care vs residential, etc.)
- Your assessed need (determined by My Aged Care)
- Your financial situation (assessed by Services Australia)
Most families pay either nothing or a moderate co-contribution. Lifetime caps protect against excessive contributions.
The four main funding pathways
1. Commonwealth Home Support Programme (CHSP)
Entry-level, low-intensity in-home support. Government-subsidised with a small client contribution. Common services include domestic help, meals, transport, and minor home modifications. As Support at Home rolls out, CHSP services are gradually being absorbed.
2. Support at Home Program
The new (from 1 July 2025) main funding program for in-home aged care. Replaces Home Care Packages. Provides an individual budget based on assessed need, spent across a wide menu of clinical, personal, social, equipment and home modification services. Full Support at Home guide.
3. Residential aged care
Funded under the Aged Care Act 2024. Residents may pay a combination of:
- Basic daily fee — set at 85% of the single age pension rate (paid by everyone)
- Means-tested care fee — based on assessable income and assets
- Accommodation contribution or payment — RAD/DAP (see below)
- Additional services fee — optional, for premium services
4. Department of Veterans’ Affairs (DVA)
Veterans, war widows and war widowers may have aged care costs partially or fully funded by DVA. The provider works directly with DVA on the resident’s behalf.
The means assessment
For higher-needs care (Support at Home or residential), a means assessment determines what you contribute. Services Australia conducts the assessment based on:
- Your assessable income (pensions, investments, etc.)
- Your assessable assets (savings, investments, your home in some cases)
If your means are low, the Government pays everything. If your means are higher, you co-contribute up to a maximum. Lifetime caps mean you’ll never pay more than a set total contribution over your aged care years.
Understanding RAD vs DAP for residential care
For residential aged care, the accommodation cost can be paid in three ways:
- RAD (Refundable Accommodation Deposit) — a lump-sum deposit, fully refundable when you leave
- DAP (Daily Accommodation Payment) — a daily fee equivalent in present-value terms
- Combination — part RAD, part DAP
Choosing between RAD and DAP is a financial decision worth getting professional advice on. Your aged care provider must publish the maximum RAD they charge for each room.
Real-world cost examples (illustrative only)
Mary, 78, low-needs Support at Home
Mary lives in Point Cook, has Age Pension as her main income and modest savings. She’s assessed for Support at Home with a budget covering 4 hours a week of help.
What Mary pays: Likely $0–$50 per fortnight in co-contribution.
John, 82, higher-needs Support at Home
John has multiple chronic conditions, lives at home with his wife, has a Self-Funded Retiree income and significant savings. He needs daily personal care, weekly nursing and ongoing allied health.
What John pays: A larger co-contribution, but well within Government lifetime caps.
Margaret, 86, residential aged care
Margaret has the Age Pension and owns her home (now sold). She moves into residential aged care and pays a combination of basic daily fee, means-tested care fee, and RAD.
What Margaret pays: Total cost varies — but Government lifetime caps protect her family from excessive depletion of her assets.
How to find out what you’ll pay
- Get a My Aged Care assessment
- Get a means assessment from Services Australia (form SA456 / SA457)
- Talk to your chosen provider — they’ll provide a written cost estimate
- Consider speaking to a financial planner specialising in aged care
Government caps and protections
The Aged Care Act 2024 includes several protections:
- Lifetime caps on means-tested contributions
- Hardship provisions for those facing financial difficulty
- Refundable deposits backed by the Aged Care Accommodation Bond Guarantee scheme
- Mandatory price disclosure by all providers
Common myths about aged care funding
“I’ll have to sell my house”
Not necessarily. Your home may be exempt from means testing in many situations — for example, if your spouse still lives there. There are options to pay accommodation costs without selling.
“It costs $100,000+ per year”
Some private high-end residential care does. But the vast majority of Australians pay far less, and Government caps limit lifetime contribution.
“It’s all government-funded”
Most of it is, but those with means generally co-contribute. The system is designed to be fair while ensuring no-one is forced into hardship.
Get a personalised cost estimate
Aged care funding is complex because everyone’s situation is different. The fastest way to understand what you’ll pay is to talk to a provider who’ll do a transparent costing for your situation. Contact My Evervale for a free, no-obligation discussion. We’ll explain what funding you may be entitled to and provide a written estimate.