Aged Care Income and Assets Test: How the Means Assessment Works

What the Aged Care Means Test Actually Determines

The aged care income and assets test is a financial assessment administered by Services Australia that calculates how much a resident contributes toward their daily care fees. It directly determines whether (and how much) a resident pays in Hotelling Contribution, Non-Clinical Care Contribution (NCCC), and accommodation costs.

This is separate from the Age Pension means test, though the two share much of the same information. You submit one disclosure — Form SA457 (for self-funded retirees or non-means-tested pensioners) or Form SA485 (for means-tested pensioners who own a home). Non-home-owning pensioners do not need to lodge a form if their Centrelink records are up to date, and Services Australia uses the available information for both calculations.

The key output is the Means-Tested Amount (MTA), a daily dollar figure that represents the resident's assessed capacity to contribute. The higher the MTA, the higher the means-tested fees.

What Counts as an Assessable Asset

Services Australia assesses nearly everything the resident owns or has a beneficial interest in:

• Bank accounts — all personal and joint account balances. Joint accounts are divided equally between holders regardless of who deposited the funds.
• Superannuation — the current account balance of any accumulation or pension phase super accounts.
• Investments — shares, managed funds, bonds, term deposits, and any financial products held in the resident's name.
• Real property — investment properties at full market value. The family home has special rules (see below).
• Business interests and trusts — if the resident holds units in a trust or shares in a private company, the assessable value is determined by Services Australia based on the trust deed or company financials.
• Motor vehicles, caravans, boats — assessed at current market value.
• Gifted assets — any amount gifted above the allowable limits within the past five years is treated as if the resident still owns it.

What's exempt: Personal effects and household contents (within reasonable limits), eligible funeral bonds and prepaid funeral expenses, proceeds of a life insurance policy that have not been invested, and — critically — any Refundable Accommodation Deposit (RAD) paid to an aged care provider is exempt from the Age Pension assets test but is still assessable for aged care means-testing purposes.

How the Family Home Is Assessed

This is where the means test creates the most confusion, because the aged care assessment and the Age Pension assessment treat the family home differently.

For aged care means-testing: If no "protected person" (spouse, dependent child, eligible carer with 2+ years co-residence, or close relative with 5+ years co-residence) is living in the home, the property is assessed from Day 1 of entering care — but only up to the home exemption cap of $214,884 (as of March 2026). Any market value above that cap is excluded. A $1.2 million home and a $300,000 home are assessed at the same $214,884 for aged care purposes, as long as the home is retained.

If a protected person is living in the home, it is assessed at $0 — fully exempt for aged care means-testing.

For Age Pension purposes: The home is exempt for the first two years after the owner enters care. After that, the full market value becomes assessable, which often reduces or eliminates the pension. This two-year pension exemption does not apply to the aged care means test — the capped assessment starts from Day 1.

How Income Is Assessed

The income side of the assessment captures:

• Pension income — Age Pension payments, DVA pensions, and any foreign government pensions.
• Employment and business income — if the resident has any ongoing income from work or business interests.
• Deemed income from financial assets — Services Australia does not use actual investment returns. Instead, it applies statutory deeming rates to the total value of financial assets: 1.25% on the first $66,800 (single, from July 2026) and 3.25% on everything above that threshold. This means an actual investment return of 8% is irrelevant — Services Australia deems the income as if it earned the deeming rate.
• Rental income — net rental income from investment properties or a rented-out family home.
• Superannuation income streams — assessed differently depending on whether the super is in accumulation or pension phase.

How the Means-Tested Amount Drives Fees

Once Services Australia calculates the MTA, the daily fees are determined in a cascading structure:

1. First, the Hotelling Contribution is calculated. The MTA is reduced by the value of the Maximum Accommodation Supplement (currently $72.30/day). If the result is positive, the resident pays a Hotelling Contribution up to the maximum of $22.15/day.

2. Second, if — and only if — the resident is paying the maximum Hotelling Contribution and their assessable assets exceed $532,055, the NCCC is triggered. The NCCC can reach up to $107.32/day and has a lifetime cap of $137,917.01 or four cumulative years of payments.

3. The Basic Daily Fee ($66.80/day) is the universal baseline fee, although eligible residents may seek financial hardship assistance.

The net effect is a tiered system: low-means residents pay only the BDF and may receive government accommodation support. Mid-means residents add the Hotelling Contribution. High-means residents pay both the Hotelling Contribution and the NCCC, up to the lifetime cap.

Couples: The 50/50 Asset Split

When one partner enters residential care and the other remains at home, Services Australia treats them as "separated due to illness." This triggers two changes:

• Each partner is eligible for the higher single rate of the Age Pension.
• Combined assets (excluding the protected family home if the at-home partner lives in it) are split 50/50 for both pension and aged care assessment purposes — regardless of whose name they are in.

This 50/50 split can produce unexpected results. A couple with $800,000 in combined financial assets is assessed as if each partner holds $400,000, which may be higher or lower than the actual account balances in each person's name.

Getting the Assessment Right

Processing the means assessment typically takes six to eight weeks. During that period, providers can charge the maximum default fee rate, which is adjusted retrospectively once the final assessment arrives. Submitting a complete, accurate form upfront — with three months of bank statements, super statements, property valuations, and a five-year gifting history — avoids resubmission delays that extend this default-charging period.

The Paying for Residential Aged Care guide includes the full document checklist, form selection logic (SA457 vs SA485), and a step-by-step walkthrough of how each asset class is treated in the assessment.

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