Aged Care and Your Age Pension: 2026 Australia Guide

This is the question families ask first, usually while sitting in a hospital car park or a care home foyer, and the answer is good news. Moving a parent into residential aged care does not cancel their Age Pension. Services Australia keeps paying it, and in most cases the fortnightly amount does not change on day one. The maximum single Age Pension is $1,200.90 per fortnight and $905.20 each for a couple (rates effective 20 March 2026, indexed each March and September).

What can change over time is the means test that sits behind the pension, because the family home and any sale proceeds may eventually become assessable. But the move itself does not trigger a cut. There is also no separate 'aged care pension' to apply for - it is the same Age Pension, paid the same way.

One practical note: the resident still has to tell Services Australia they have entered care, usually within 14 days, because it can affect Rent Assistance and the home's treatment. The easiest way is to call the Aged Care line on 1800 227 475 or update details online via myGov. If this is overwhelming, a free Aged Care Specialist Officer can walk a family member through it.

This is general information, not personal financial advice. Every family's numbers are different, so use the free official help listed at the end before making a decision you cannot undo.

Your home is normally exempt from the Age Pension assets test. When you leave it to enter care, that exemption continues - but with a clock on it. Under the Social Security Guide (4.6.3.70), the former home stays an exempt asset for 2 years from the date you leave, and you keep your 'homeowner' status during that time. This applies whether or not you intend to return.

The big exception protects couples: if your spouse (or partner) keeps living in the home, it stays exempt for as long as they live there - effectively indefinitely, not just two years. A similar protection can apply where an eligible carer or close family member who received an income support payment was living there.

After the 2 years, if the home has not been sold and no spouse is living in it, two things happen together: the home becomes an assessable asset at its net market value, and you are reassessed as a non-homeowner. Non-homeowners have higher assets-test thresholds, but the home's full value being counted usually outweighs that, so a part-pensioner can lose some or all of their pension at the 2-year mark. This is a known cliff edge - plan for it before it arrives, not after.

Renting the home out changes the income side. For anyone who entered care on or after 1 January 2016, rent received from the former home is assessed under the Age Pension income test (the old exemption that paired with paying accommodation by DAP was removed). Keeping, selling or renting the home is one of the highest-stakes decisions here - get free FIS guidance before you act.

If you are asked to pay for your room (not everyone is - low-means residents are subsidised), you choose how: a Refundable Accommodation Deposit (RAD), a Daily Accommodation Payment (DAP), or a mix. A RAD is a refundable lump sum, like an interest-free loan to the provider, repaid (less any agreed deductions) when you leave. A DAP is a daily rental-style fee on the unpaid room price, calculated using the Maximum Permissible Interest Rate, which is 7.96% from 1 April 2026. You get up to 28 days after entry to decide, and you can switch a RAD to a DAP balance later.

Here is the detail families most often get wrong, because the two systems pull in opposite directions. For the Age Pension, money paid as a RAD is EXEMPT from the assets test and is NOT deemed under the income test - so paying a large RAD can actually preserve or even increase an Age Pension. But for the separate aged care means assessment, the very same RAD IS counted as an assessable asset, which can push up the hotelling contribution and non-clinical care contribution you pay.

So 'should we pay a big RAD' has no one-size answer. It can help the pension while raising care fees, or vice versa, depending on the rest of someone's assets and income. This is precisely the calculation the free Financial Information Service exists to model - and where a paid aged-care financial adviser can earn their fee on a six-figure decision.

From 1 November 2025 there is one more wrinkle for new residents: providers now deduct a retention amount from RAD/RAC balances over time, so not 100% of a RAD is refunded. Residents who entered on or before 31 October 2025 are protected from this under the 'no worse off' rules below.

The new Aged Care Act started on 1 November 2025 and is the biggest change in a generation. For people already in care it mostly does NOT change their fees, thanks to a 'no worse off' principle: anyone in permanent residential care on or before 31 October 2025 stays on their old fee arrangements, keeps the old means-tested care fee and the old (~$130,000) lifetime cap, and is shielded from the new RAD retention deductions.

For new residents from 1 November 2025, the fee structure was rebuilt. The fees are: the basic daily fee of $66.80/day (still 85% of the single Age Pension, indexed); a means-tested hotelling contribution for everyday living costs (meals, laundry, cleaning) capped at $22.15/day; and a means-tested non-clinical care contribution (NCCC) for personal care, capped at $105.30/day. Clinical care is fully government-funded - residents never pay for that.

The NCCC has a lifetime cap of $135,318.69, or 4 years of paying it, whichever comes first. After that you stop paying it. Low-means residents (broadly, income below about $35,313 and assets below $64,500 on the aged care means assessment) have these contributions reduced or fully covered by the government - so a full pensioner with modest assets pays little beyond the basic daily fee.

In the aged care means assessment, if you keep your home its value is capped at $214,884 (20 March 2026) - the assessment never counts the full value of an expensive home. The Age Pension means test, by contrast, counts the home's full value once the 2-year exemption ends. Same house, two different rules - which is why so many families find this confusing.

The SA457 'Residential aged care calculation of your cost of care' form is how Services Australia works out, from your income and assets, how much you contribute to your room (accommodation) and your care fees. It feeds the means assessment described above. You complete it if you need a means assessment and you do NOT already get a means-tested income support payment like the Age Pension.

If you already receive the Age Pension and own real estate (typically the former home), you generally complete the shorter SA485 'Residential aged care property details' form instead, because Services Australia already holds most of your income and asset information. Many full pensioners with no property may not need to lodge either form, as the department can assess them from records it already has.

Whether to fill it in is itself a decision. If you do not provide your details, you are treated as having the means to pay the maximum, so you could be charged the full hotelling and non-clinical care contributions and the full room price - even if you would actually qualify for government help. For most people, completing the assessment is the way to pay LESS, not more.

The forms are at servicesaustralia.gov.au (search SA457 or SA485). The current SA457 is a detailed booklet, so set aside time, gather statements, and ask a free Aged Care Specialist Officer (1800 227 475) for help if it is daunting. You can lodge before or shortly after entering care; do it promptly so the correct (often lower) fees apply from the start.

Commonwealth Rent Assistance is a top-up for pensioners who pay rent for their principal home. Permanent residential aged care residents generally cannot get Rent Assistance, because the accommodation payment (RAD/DAP) is treated as an aged care cost, not 'rent', and the care home becomes the principal home. The exception that matters: people receiving care AT HOME (Support at Home) who genuinely rent the home they live in can still qualify, with the maximum single rate $215.40 per fortnight (20 March 2026).

Support at Home replaced Home Care Packages from 1 November 2025 and uses the Age Pension means test to set your contributions. The government pays 100% of clinical care for everyone - you never contribute to nursing or clinical services. You only contribute to 'independence' services and 'everyday living' services. For a FULL Age Pensioner those rates are low: 0% of clinical care, 5% of independence services, and 17.5% of everyday living services.

Part-pensioners and Commonwealth Seniors Health Card holders pay a sliding rate between the full-pensioner and self-funded levels, and self-funded retirees pay the most (up to 50% of independence and 80% of everyday living services). A $135,318.69 lifetime cap also applies across home and residential care contributions, so long-term care does not bankrupt anyone.

Receiving Support at Home does not reduce your Age Pension - it is funded separately. But your pension status (full, part or self-funded) is exactly what sets your contribution rate, which is why keeping your means assessment current matters.

You do not have to work this out alone, and you should not pay anyone before you have used the free services first. Start with My Aged Care on 1800 200 422 (Monday-Friday 8am-8pm, Saturday 10am-2pm) for assessments, eligibility and service information.

For the money side, Services Australia's free Financial Information Service (FIS) can model how a RAD vs DAP choice, selling vs keeping the home, or a gift will affect both the Age Pension and aged care fees - book through 132 300. Aged Care Specialist Officers offer in-depth, in-person help with forms and fees; call 1800 227 475.

If you feel pressured, treated unfairly, or unsure of your rights, the Older Persons Advocacy Network (OPAN) runs a free, confidential, independent advocacy line on 1800 700 600 (Monday-Friday 8am-8pm, Saturday 10am-4pm). For complaints about care quality, contact the Aged Care Quality and Safety Commission on 1800 951 822.

A final, honest word: this is general information current to mid-2026, not personal financial or legal advice. The figures here are indexed twice a year and the reform settings are still bedding in, so confirm the current numbers with Services Australia or My Aged Care, and consider a specialist aged-care financial adviser for a decision involving hundreds of thousands of dollars. You are not being a burden by asking for help - that is exactly what these services are funded to do.