In 2026, means testing for aged care in Australia determines how much you contribute toward your residential or home care costs, based on both your income and assets. Understanding the current thresholds is essential before choosing a provider, as your personal financial position directly affects your daily fees, accommodation payments, and any ongoing means-tested care fee.
What is aged care means testing and why does it matter in 2026?
Aged care means testing is the process by which Services Australia assesses your income and assets to calculate how much you are expected to contribute toward the cost of your care. The Australian Government subsidises a significant portion of aged care services, but individuals who have the financial capacity to contribute are required to do so — either partially or in full.
Since the Aged Care Act reforms were phased in from 2024 through 2025, the framework has been substantially modernised. As of 1 January 2026, a unified means assessment applies to both residential aged care and Home Care Packages (now referred to as Support at Home under the new system). This replaces the older two-part income and asset test structure with a single, combined assessment, reducing administrative complexity for families navigating the system.
According to the Australian Institute of Health and Welfare (AIHW), over 243,000 Australians were receiving residential aged care services as of mid-2025, with a further 280,000 enrolled in home-based care programs. Understanding where you sit against the 2026 thresholds could save your family tens of thousands of dollars annually.
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2026 income and assets thresholds at a glance
The means test combines assessable income and assessable assets into a single figure called your combined means tested amount. Services Australia applies the following key thresholds for the 2026–27 financial year (effective 1 July 2026):
Income thresholds (per fortnight): - Full subsidy threshold: up to $3,106.10 per fortnight (single person) - Partial contribution range: $3,106.10 – $6,212.20 per fortnight - Maximum contribution threshold: above $6,212.20 per fortnight Asset thresholds (total assessable assets): - Asset-free threshold: $59,500 (protected) - Partial means-tested range: $59,500 – $178,440 - Full means-tested threshold: above $178,440 Annual caps (2026–27): - Annual means-tested care fee cap: $33,309.16 - Lifetime means-tested care fee cap: $79,942.08These figures are indexed quarterly by the Australian Bureau of Statistics (ABS) Consumer Price Index and Wage Price Index, so it is worth checking Services Australia's online calculator before making final financial decisions.
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What counts as assessable income and assets?
Not every dollar you own or earn counts toward the means test. Understanding what is — and is not — included is one of the most practically important steps in aged care planning.
Assessable income typically includes: - Age Pension and other Centrelink payments - Superannuation income streams and account-based pensions (for those under deeming age) - Rental income from investment properties - Interest and dividends Assessable assets typically include: - Investment properties (excluding the principal home in most cases) - Superannuation balances not yet drawn down (if you are under Age Pension age) - Shares, term deposits, and managed funds - Vehicles, caravans, and boats above a nominal threshold Generally excluded from assessment: - Your principal home (for the first two years of residential care or indefinitely if a protected person — such as a spouse — remains living there) - Accommodation bonds or refundable accommodation deposits (RADs) paid to a facility, up to the protected threshold - Pre-paid funeral bonds up to $15,490 per person (2026 figure)The Australian Taxation Office (ATO) provides guidance on how superannuation is treated during the pension phase for means testing purposes, and financial advisers with aged care accreditation can help you structure assets to remain compliant while protecting your estate.
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Comparing aged care fee types: a 2026 breakdown
The following table outlines the three main cost components you may encounter in residential aged care, along with indicative 2026 ranges:
| Fee Type | Who Pays It | 2026 Annual Range (AUD) | Means Tested? | |---|---|---|---| | Basic Daily Fee | All residents | ~$23,874 (set at 85% of Age Pension) | No | | Means-Tested Care Fee | Those above thresholds | $0 – $33,309 per year | Yes | | Accommodation Payment (DAP or RAD) | Asset holders above threshold | DAP: $2,200–$6,500/month; RAD: $350,000–$750,000+ | Partial | Key: - DAP = Daily Accommodation Payment (ongoing rental-style payment) - RAD = Refundable Accommodation Deposit (lump sum, returned on exit)For home-based Support at Home participants, the means-tested contribution operates differently, with a co-contribution rate applied as a percentage of your package budget rather than a fixed annual cap. Budgets for 2026 range from approximately $10,200 (Level 1 equivalent) to $61,440 (Level 4 equivalent) per year.
See our full cost guide for a detailed breakdown by service type and State.
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How the assessment process works in 2026
Once you or a family member have been assessed as eligible for aged care through an Aged Care Assessment Team (ACAT) or RAS assessment, the financial side is handled by Services Australia. Here is what to expect:
1. Lodge your means assessment form — either online via myGov or via paper (SA457 for residential, SA486 for home care). 2. Services Australia verifies your income and asset data — this is cross-referenced with the ATO and Centrelink records automatically in most cases. 3. Receive your fee notification letter — typically within 4–6 weeks, outlining your assessed contribution amounts. 4. Negotiate accommodation with your provider — once you have your means-tested fee letter, providers can give you accurate fee quotes.
It is important to lodge the assessment form promptly. If you delay, your means-tested care fee may be backdated to your entry date, creating an unexpected lump sum liability.
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Protecting the family home in 2026
The family home remains one of the most emotionally and financially significant assets for older Australians. Under 2026 rules, the home is exempt from assets assessment while a spouse, dependent child, or carer (who has lived there for two or more years) continues to reside in it.
If the home is vacant, it is excluded from the assets test for the first two years of your residential care stay. After that point, it is included in your assessable assets at its market value, which can significantly increase your means-tested fee. Planning ahead — potentially through rental, sale, or family arrangements — is strongly recommended.
According to ABS data (Housing Statistics, 2025 release), the median value of a home owned by Australians aged 75 and over is approximately $820,000, meaning many families will face asset inclusion once the two-year exemption lapses.
Explore best aged care providers in Sydney if you are also considering location alongside financial planning.
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FAQ: Means testing for aged care in 2026
Q: Can I avoid the means-tested care fee by gifting assets to family members? A: No. Services Australia applies gifting rules that treat any amount gifted above $10,000 per financial year (or $30,000 over five years) as a deprived asset. Deprived assets are still counted in your means assessment for five years from the date of gifting, so this strategy rarely works and can create compliance issues. Q: Does my partner's income and assets affect my means test? A: For residential aged care, only your individual share of combined assets and income is assessed — typically 50% of jointly held assets. For the Support at Home co-contribution, the same individual-based approach applies, though couples may wish to seek separate financial advice given the interaction with Age Pension entitlements. Q: What happens if I cannot afford to pay my assessed contribution? A: You are never denied care because you cannot pay. The Australian Government pays the full subsidy for people who have no assessable income or assets above the protected thresholds. If your financial situation changes during your care stay, you can request a reassessment from Services Australia at any time. Q: How often are the thresholds updated? A: Most thresholds are indexed quarterly on 20 March, 20 June, 20 September, and 20 December each year, in line with CPI and pension indexation rates set by the ABS and administered through Services Australia. Annual caps are updated on 1 July each financial year.---
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