When an older Australian moves into permanent Commonwealth regulated Residential Aged Care (often called a nursing home), they may be asked to pay a contribution called the Means Tested Care Fee.
The Means Tested Care Fee is an extra amount, on top of the Basic Daily Fee, that some residents pay based on their financial situation.
It’s designed to make sure that those who have the capacity to contribute more towards their personal and clinical care costs do so, while people with fewer means continue to receive affordable, quality care subsidised by the Australian Government.
Residential aged care in Australia is partly funded by the government and partly funded by residents. The Means Tested Care Fee ensures that funding is fair and sustainable — people who can afford to contribute more toward the cost of their personal and clinical care are asked to do so, which reduces the burden on taxpayers and helps support people who cannot afford to pay as much.
Unlike the Basic Daily Fee, which covers everyday living costs like meals, cleaning, and laundry, the Means Tested Care Fee goes specifically towards the cost of your personal and nursing care. This includes things like help with bathing, dressing, mobility, medication management, and clinical support provided by qualified staff.
Not everyone pays the Means Tested Care Fee. Whether you pay it — and how much you pay — depends on your assessed income and assets.
Your residential aged care provider cannot decide this amount — it is calculated by Services Australia (Centrelink) or the Department of Veterans’ Affairs (DVA) based on your means test assessment.
To work out how much you need to contribute, the government uses an income and assets test. This is similar to the test used for the Age Pension but with different thresholds and rules.
Here’s how it works:
The fee can be up to your total cost of care subsidy, but there are limits:
The assessment looks at:
Some assets may be exempt or only partially counted — such as the family home, which is exempt if a protected person still lives there (like a spouse, dependent child, or carer who is eligible under the rules).
It’s important to know that the rules can be complex and change periodically. Always check the latest thresholds and deeming rates on the Services Australia website.
It is not compulsory to complete the SA485 and SA457 forms — but if you don’t, you’ll be charged the maximum Means Tested Care Fee by default. Most people choose to provide their information to ensure they only pay what they are legally required to pay.
The annual and lifetime caps are indexed yearly. As of 20th March 2025:
Once you reach the annual cap, you won’t pay any more Means Tested Care Fees for the rest of that year. Once you reach the lifetime cap, you won’t pay any more Means Tested Care Fees ever again — even if you move to a new residential care facility.
Note: These figures change every year, so always check the latest rates on My Aged Care or speak to a qualified adviser.
It is not compulsory to complete the SA485 and SA457 forms — but if you don’t, you’ll be charged the maximum Means Tested Care Fee by default. Most people choose to provide their information to ensure they only pay what they are legally required to pay.
Here’s an example of how it might work:
Margaret moves into permanent residential care. She fills out the SA457 and SA485 forms and Services Australia calculates her means-tested amount. Her income and assets place her in a bracket where she must pay a Means Tested Care Fee of $30 per day, in addition to her Basic Daily Fee and accommodation payment. She keeps paying this until she reaches her annual cap. Once she hits her lifetime cap, she will no longer pay any Means Tested Care Fees.
For couples, a portion of income and assets is usually allocated to each person — so each member of a couple may pay a different Means Tested Care Fee depending on their individual share of the combined finances.
The Means Tested Care Fee is paid directly to your residential aged care provider. Your provider must give you a clear statement showing:
It’s usually paid fortnightly or monthly, but always check with your provider about their payment arrangements.
If your income or assets change significantly — for example, you sell your home or your super balance changes — you should update Services Australia so your fee can be recalculated. This can help you avoid paying too much or too little.
If you genuinely can’t afford to pay the Means Tested Care Fee, you may be eligible for financial hardship assistance. You’ll need to apply through Services Australia and provide evidence of your situation. If you qualify, the government may cover some or all of the fees you can’t pay.
You have the right to:
Your Resident Agreement must outline your Means Tested Care Fee and any other fees and charges you’re required to pay.
Understanding the Means Tested Care Fee can feel overwhelming — you don’t have to figure it out alone. Here are some trusted resources:
Above all, don’t be afraid to ask questions, seek clear written information, and get independent advice. Aged care is complicated, but you’re not alone — help is always available.