Aged care and the Age Pension: how the two tests fit together

The pension keeps being paid

The Age Pension is not cancelled when someone moves into an aged care home, and there is no separate "aged care pension" to claim. Services Australia says most people keep getting the same amount of income support payment after the move. It can change later, depending on the payment and on changes in the person's circumstances.

Every resident pays the government's basic daily fee, which is set at 85% of the single basic Age Pension: $68.93 a day as at 20 September 2026.

• The pension can be paid to the aged care home. The provider takes out what is owed for aged care costs and holds the rest in a trust account or passes it on to the person or their nominee.
• One report covers both. Tell Services Australia about a change once, and it updates the details for both the pension and the aged care costs.

If the person gets Rent Assistance, ask Services Australia how the move affects it. DVA, for its own clients, says income support payments continue after a move into an aged care home except for Rent Assistance.

Source: Services Australia: your Centrelink payments when you move into an aged care home

Two tests, one set of finances

Two different assessments look at the same income and assets:

• The Age Pension means test decides how much pension is paid.
• The aged care means assessment decides what the person contributes to their aged care: the hotelling contribution, the non-clinical care contribution, and whether the government helps with the cost of the room. Services Australia does it for most people; DVA does it for people on a DVA means-tested payment.

For pensioners, the aged care assessment draws on the information already held for the pension, but several things are counted differently:

For current fee figures see what aged care costs, and for the whole method see the aged care means test, step by step.

Source: My Aged Care: means assessments for residential aged care

The former home and the 2-year pension exemption

A person's home is normally exempt from the Age Pension assets test. When they leave it to move into care, Services Australia can keep treating it as exempt for 2 years from the date they entered care. DVA's guidance adds that the 2 years start from the day both the person and their partner have left the home. During those 2 years the homeowner asset limits still apply.

The home is not counted for the pension at all while the person's partner still lives in it.

When the 2 years end

If the home has not been sold and no partner lives in it, two things change together: the home is counted as an asset at its market value, and the person is assessed as a non-homeowner. Non-homeowners have higher asset limits, but the home's whole value now counts, so a part pension can fall or stop at this point. DVA asks its clients to get in touch about 6 months before the exemption ends to talk through the effect.

If the home is sold

If the home is sold during the 2 years, the person is assessed under the non-homeowner limits from then on, and the money from the sale becomes a financial asset that is deemed to earn income. Money from the sale that is paid to the aged care home as a RAD or RAC is not counted for the pension.

If the home is rented out

Rent from the former home counts as income for the pension, and the home itself is still counted as an asset once the 2 years end. The older concessions that kept rent out of the pension calculation apply only to some people who entered care before 2017.

Source: Services Australia: real estate assets (if you leave your principal home to enter care)

How a RAD is treated, and why it surprises families

A person who pays for their room can pay a refundable lump sum (a refundable accommodation deposit, or RAD), a daily payment (a daily accommodation payment, or DAP), or a mix. People with lower means pay a contribution instead, which can also be a lump sum (a refundable accommodation contribution, or RAC).

The two tests pull in opposite directions here:

• For the Age Pension, a refundable lump sum paid to the aged care home is exempt. It is not counted as an asset and is not deemed to earn income.
• For the aged care means assessment, the balance of the lump sum is counted as the person's asset. It is taken into account in working out the hotelling contribution, the non-clinical care contribution and any accommodation contribution.

So the same payment can move the pension one way and the care fees the other. How that nets out depends on the rest of the person's income and assets, which is why My Aged Care suggests getting financial advice before deciding how to pay. Services Australia's free Financial Information Service (132 300) can explain how the rules apply, and a licensed financial adviser can advise on the person's own situation.

Details that catch people out:

• A lump sum paid by a family member still counts as the resident's asset in the aged care means assessment.
• Paying a lump sum, or the balance falling because the daily payment is drawn from it, is a change to report to Services Australia (or DVA), because it can change other aged care fees.
• For people who first entered care from 1 November 2025, the home keeps 2% a year of the lump sum balance for up to 5 years (the retention amount), and that part is not refunded.
• The daily payment is worked out from the room price using the maximum permissible interest rate (8.51% for prices agreed from 1 October 2026). See RAD or DAP: paying for the room.

Source: My Aged Care: understanding aged care home accommodation costs

Couples: when one partner moves into care

When one partner moves into care and the other stays at home, they are still a couple, but they are treated as a couple living apart because of illness. That changes things in both tests.

For the Age Pension

• Each partner can be paid the single rate of pension instead of the couple rate, where the separation is likely to continue indefinitely.
• Their income and assets are still assessed together, but the cut-off points for a part pension are higher than for a couple living together.
• The former home stays exempt from the pension assets test for as long as the partner at home lives there.

For the aged care means assessment

• Half of the couple's combined income and assets is counted for each partner, no matter whose name they are in.
• The home is not counted at all while the partner, as a protected person, lives in it.
• The income free area for each member of an illness-separated couple is $35,726.60 a year, compared with $36,454.60 for a single person (as at 20 September 2026).
• If both partners need care, a lump sum one of them pays can affect the other's fees, because their assets are pooled.

If the partner at home later moves out, the home may start to count for aged care fees. That change must be reported within 28 days.

Source: Services Australia: how much Age Pension you can get (rates for a couple apart due to ill health)

Deeming: how savings and sale money are counted

Neither test looks at what savings actually earn. Both use deeming: financial assets are assumed to earn a set rate of income, whatever they really earn.

As at 20 September 2026, the first $66,800 of a single person's financial assets is deemed to earn 1.75% a year, and anything above that 3.75%. For a couple where at least one partner gets a pension, the lower rate applies to the first $110,600 of their combined financial assets.

• Deemed: bank accounts, term deposits, shares, managed investments, account-based income streams, and gifts above the allowed limits.
• Not deemed: the home and its contents, cars, and refundable deposits paid to an aged care home.

This is why selling a home changes the picture: the home itself is not deemed, but the money from a sale sitting in the bank is.

Assets given away, or sold for less than they are worth, can still be counted in both tests under the gifting rules.

Source: Services Australia: deeming

The means assessment forms: SA457, SA485, or none

To work out aged care home fees, Services Australia needs the person's financial details. Which form, if any, depends on two questions: do they get a relevant income support payment, and do they own a home?

Services Australia holds the financial details of people on the Age Pension, Disability Support Pension or Carer Payment, among others, but not for the Age Pension (Blind) or a War Widow(er)s Pension.

The assessment is not compulsory, but anyone who does not complete it can be asked to pay the maximum contributions and cannot get government help with the room. It can be done before moving in, and the fee advice letter is valid for 120 days. Aged Care Specialist Officers can help with the forms: call 1800 227 475 (Monday to Friday, 8am to 5pm).

Source: Services Australia: who should apply for an aged care calculation of your cost of care

What to tell Services Australia, and when

Two reporting rules run side by side:

• For the Age Pension, changes in circumstances, including income and assets, must be reported within 14 days.
• For aged care fees, once the means assessment is done, changes must be reported within 28 days. Since 1 November 2025 this is a legal requirement. A change reported on time does not lead to a backdated fee increase; a late one can.

In practice that means telling Services Australia (or DVA) about the move and the new address, paying a RAD or RAC or the balance going down, selling or renting the former home, a partner or other protected person moving out of it, and changes in income, assets or relationship.

Report through the Centrelink online account in myGov, the Express Plus Centrelink app, or by phone: the Aged Care line is 1800 227 475 and the Older Australians line is 132 300. You can ask for a review of the aged care fee assessment at any time through the Aged Care line.

To understand how the rules apply to your family, Services Australia's Financial Information Service is free on 132 300 (say "Financial Information Service" when asked). For advice on what to do, see a licensed financial adviser who works in aged care.

Source: My Aged Care: changes to fees, contributions and accommodation costs while in an aged care home