For residents entering residential aged care from 1 November 2025, the means tested care fee was replaced by two contributions: a hotelling contribution (up to $22.15 a day) and a non-clinical care contribution (up to $107.32 a day). The non-clinical care contribution stops at a $137,917.01 lifetime cap or after four years. The hotelling contribution has no cap at all.
If a Services Australia letter has arrived with the words "hotelling contribution" on it, you are not missing something obvious. The term is new, it does not appear in most of the material written about aged care costs before late 2025, and it describes a fee that did not exist two years ago.
From 1 November 2025 the means tested care fee — the single ongoing means tested charge that most explanations of aged care costs still describe — was replaced, for people entering residential care from that date, by two separate contributions. One of them behaves very differently from anything in the old system, in a way that matters a great deal for anyone planning a long stay.
First: which rules apply to you
This is the question to settle before looking at any figure, because there are three live sets of rules running side by side, not two.
Everything in this article applies to residents on the 1 November 2025 fee arrangements — broadly, people who entered residential aged care on or after that date. Those residents may pay a hotelling contribution and a non-clinical care contribution. Someone on the 1 July 2014 arrangements pays a means tested care fee instead, and someone on the pre-1 July 2014 arrangements pays an income tested fee, which is a different charge again (Department of Health, Disability and Ageing, https://www.health.gov.au/our-work/residential-aged-care/charging/fees).
If your parent moved permanently into a home on or before 31 October 2025, they are generally covered by the "no worse off" principle and continue under the earlier arrangements. Our articles on the means tested care fee and its annual and lifetime caps describe that older structure, which remains correct for that group. The wider reform is covered in what changed under the new Aged Care Act.
You should not have to guess which set applies. When a resident enters care, Services Australia sends a fee advice letter to both the resident and the provider setting out which fees apply and the amounts payable. If that letter has gone astray, or predates a change in circumstances, that is the first call to make — before the amounts.
The three things you pay
Under the 1 November 2025 arrangements the ongoing cost of residential care has three parts, and the figures below are the published maxima in the schedule current from 1 July 2026 (Department of Health, Disability and Ageing, https://www.health.gov.au/resources/publications/schedule-of-fees-and-charges-for-residential-care).
The basic daily fee is $66.80 a day and is paid by everyone, regardless of means. It is set at 85% of the single basic Age Pension and applies to permanent residential care and to residential respite care alike.
The hotelling contribution is capped at $22.15 a day. It is a contribution toward the hotelling supplement — the government payment that tops up the basic daily fee to cover daily living services such as meals, laundry, cleaning and utilities. If a resident's income or assets sit above the relevant thresholds they pay some or all of that supplement themselves, with the government covering the remainder. For a resident with income and assets below the thresholds, the government covers it in full.
The non-clinical care contribution is capped at $107.32 a day and goes toward non-clinical care — bathing, mobility assistance, lifestyle activities. Clinical care, meaning nursing and medication management and the like, is fully funded by the government under the new arrangements and is not means tested at all.
Accommodation is separate again and is not covered here. That is the refundable accommodation deposit or daily accommodation payment, dealt with in what an aged care room costs where you live and in RAD or DAP: which way to pay.
The gate: the smaller number is the one that matters
Set those three figures side by side and the $107.32 looks like the significant one while the $22.15 looks like a rounding detail. It is the other way around.
The non-clinical care contribution is payable only by residents who pay the full hotelling contribution. A resident whose means place them below the full hotelling contribution does not pay a non-clinical care contribution at all.
So the hotelling thresholds are the gate, and the much larger contribution sits on the other side of them. When you talk to Services Australia the useful question is not "how much will the non-clinical care contribution be" — it is "are we paying the full hotelling contribution, and if not, how close are we?"
The caps — and the one that does not exist
Here is the part that is genuinely new, and the reason this is worth understanding rather than filing.
The non-clinical care contribution is capped three ways. It is capped daily at $107.32. It has a lifetime cap of $137,917.01. And a four-year cap applies independently: the contribution ceases once a resident has paid it for a total of four years, even if the lifetime cap has not been reached. Those four years are counted as total days of paying the contribution and, in the department's words, "don't have to be consecutive days" — so a spell in hospital or a break in care neither resets the clock nor advances it. Services Australia notifies the provider and the resident when either point arrives, after which the government pays the full cost of that resident's non-clinical care.
The hotelling contribution is capped daily at the maximum hotelling supplement amount. Beyond that, in the department's own words, there is no annual or lifetime cap for the hotelling contribution.
It does not stop. At the maximum rate of $22.15 a day that is roughly $8,085 a year, indexed twice a year, for as long as the resident lives in care.
One further point about caps that is easy to miss and changes the arithmetic below. Caps are themselves indexed in March and September each year, and the department is explicit that the cap amount which applies to a resident is the amount current at the time they reach it — not the amount published when they entered care. Since nobody entering care today can reach the lifetime cap for something over three years, the $137,917.01 figure is best read as today's marker of where the ceiling sits, not as the number anyone will actually stop at.
Why the obvious comparison is the wrong one
Set against the older arrangements, the change is usually described in terms of the daily maximum falling from $372.03 to $129.47 — a reduction of about two-thirds. That comparison is accurate and it is misleading, because under the old rules the daily maximum was largely theoretical. The means tested care fee carried an annual cap of $35,910.43, which a resident paying the full rate reached in about 96 days; the fee was then set to zero and did not restart until the next anniversary of the date they first entered aged care.
Neither of the new contributions has an annual cap. A full-rate resident pays every day of the year.
Comparing the ceilings rather than the daily rates:
| At the published maximum rates | Post 1 July 2014 arrangements | 1 November 2025 arrangements |
|---|---|---|
| Maximum daily | $372.03 | $22.15 + $107.32 = $129.47 |
| Annual cap | $35,910.43 | none on either contribution |
| Lifetime cap | $86,185.23 | $137,917.01 — on the non-clinical care contribution only |
| Time-based stop | none | four years — on the non-clinical care contribution only |
| Hotelling contribution cap | not applicable | none of any kind |
The lifetime ceiling on the means tested portion has risen by roughly 60%, from $86,185.23 to $137,917.01 — and that figure now sits alongside a second contribution that never reaches a ceiling at all.
The necessary caveat. This compares maxima, not people. The means assessment itself changed on the same date — the new arrangements use four asset thresholds where the old used two — so which residents reach the maximum also changed. Most residents pay less than the maximum, often considerably less. What can be said honestly is that the structure of the ceilings changed: the annual brake was removed, the lifetime ceiling on the capped portion rose, and a permanent uncapped component was introduced. Whether any particular person is better or worse off depends on their own assessment, and that is a question for their own numbers.
The lifetime cap is shared with home care
This catches people out, and in both directions.
The non-clinical care contribution's lifetime cap is a combined cap. Contributions already paid toward Support at Home, and income tested care fees previously paid in home care, count toward the $137,917.01. Someone who received substantial home care support before entering residential care may therefore be closer to the cap than they realise — occasionally already at it.
Two refinements are easy to miss. Support at Home contributions count toward the dollar cap but not toward the four-year cap, which must be four years of paying the non-clinical care contribution in residential aged care specifically. And for someone who has opted in to the 1 November 2025 arrangements from an earlier arrangement, means tested care fees they previously paid for residential care also count toward the lifetime cap amount.
If there is a history of home care in the picture, ask Services Australia what has already accrued against the cap. It is not information that arrives unprompted, and it is directly relevant to what the next few years will cost. Our article on grandfathered home care package fees under Support at Home covers the home care side.
What reaching a cap does not do
A cap ends the means tested contribution it applies to. It does not end the bill.
After a resident reaches the lifetime or four-year cap on the non-clinical care contribution, they continue to pay the basic daily fee, their accommodation costs, the hotelling contribution, and any other fees they have agreed to — additional or extra service fees, for instance. Caps apply only to means tested fees and contributions. Families who have been told "the fees stop after four years" have generally been told about one component and inferred the rest.
The thresholds
The means assessment uses both income and assets. The thresholds in the schedule current from 1 July 2026, for a single resident and for the single rate applying to an illness-separated couple:
| Income | Single | Illness-separated (single rate) |
|---|---|---|
| Income free area | $35,521.20 | $34,793.20 |
| First threshold | $88,155.60 | $87,427.60 |
| Second threshold | $101,105.00 | $101,105.00 |
| Third threshold | $117,230.20 | $117,230.20 |
| Fourth threshold | $142,084.80 | $139,172.80 |
| Assets | Amount |
|---|---|
| Asset free area | $64,500.00 |
| First threshold | $214,884.00 |
| Second threshold | $258,000.00 |
| Third threshold | $361,366.66 |
| Fourth threshold | $547,884.00 |
| Home exemption cap | $214,884.00 |
The home exemption cap deserves a note of its own. Only the net value of the former home up to $214,884.00 is counted; value above that is excluded from the resident's assets for the means assessment. And the cap applies separately to each member of a couple, which is not how most people read it at first glance.
What the schedule does not publish is the rate at which each contribution tapers between these thresholds. Services Australia calculates each resident's actual contribution and advises both the resident and the provider. That is why this article gives you the ceilings and the structure rather than a formula: anyone offering you an exact figure without doing your means assessment is guessing.
Worked strategy examples
Margaret, 83, widowed, entered an Adelaide home in February 2026. Margaret sold the family home before moving in and holds roughly $680,000 in financial assets, with about $34,000 a year of income. Her assets sit above the fourth asset threshold of $547,884.00, so she is assessed at the maximum on both contributions.
At the maxima that is $22.15 plus $107.32, or $129.47 a day — about $47,257 a year, with no annual cap to interrupt it. Across three years that is roughly $142,000 in means tested contributions, against a lifetime ceiling of $86,185.23 under the older arrangements, where the cap would have ended her means tested care fee at around the two-and-a-half-year mark. Her non-clinical care contribution stops when she reaches the lifetime cap, which at the full rate takes roughly three and a half years — before the four-year cap could bite — though the cap she actually stops at will be higher than today's $137,917.01, because it indexes twice a year between now and then. From that point the hotelling contribution continues alone at up to $22.15 a day for as long as she remains in care: on a ten-year stay, something in the order of another $52,500 across the remaining six and a half years, bringing total means tested contributions to roughly $219,000. On top of all of it sit the basic daily fee of $66.80 a day and her accommodation cost. On these facts, treating the hotelling contribution as a permanent expense in the family's planning — rather than assuming the fees stop when a cap is reached — is generally the more realistic frame.
Robert, 79, single, entered a regional Victorian home in April 2026. Robert has about $180,000 in assets and roughly $31,000 a year of income, mostly the Age Pension. His assets sit below the first asset threshold of $214,884.00 and his income below the income free area of $35,521.20, so the government covers his hotelling contribution in full.
That single fact decides his whole means tested position. Because he does not pay the full hotelling contribution, no non-clinical care contribution is payable at all — the gate never opens. His ongoing means tested cost under the 1 November 2025 arrangements is nil, and what he actually pays is the basic daily fee of $66.80 a day, about $24,382 a year, plus whatever his accommodation costs come to. On these facts the caps, the four-year rule and the shared lifetime cap are all beside the point for him, and the question worth his family's attention is the accommodation decision rather than the fee structure.
Both cases are illustrations built on published maxima and thresholds, not predictions. Most residents fall somewhere between them, paying a tapered amount that only Services Australia can calculate, and every figure indexes twice a year.
What to ask
Five questions are worth putting to Services Australia, in this order. Which fee arrangements apply — the 1 November 2025 arrangements, the 1 July 2014 arrangements, or the pre-2014 ones? Are we paying the full hotelling contribution, and if not, how far below it are we? What is the assessed non-clinical care contribution, and what has already accrued toward the lifetime cap from any earlier home care or residential care? On current dates, when would the four-year cap be reached? And what continues to be payable after each cap is reached?
The accommodation cost is a separate conversation again, and the Age Pension interaction another. None of this touches the question of whether a particular home is the right one — choosing a home involves a great deal that no fee schedule captures.
The point
The reform did two things at once, and the commentary has mostly reported one of them. It cut the daily maximum on means tested contributions substantially, and it fully funded clinical care. It also removed the annual cap, raised the lifetime ceiling on the capped portion by about 60%, and introduced a second contribution that has no ceiling at all.
For a short stay the numbers are unremarkable. For a long one, the absence of a cap on the hotelling contribution is the single most consequential feature of the new system — and it is the one least likely to have been mentioned when the family sat down to work out what care would cost.
Sources
- Department of Health, Disability and Ageing — means tested fees for residential aged care
- Department of Health, Disability and Ageing — Schedule of Fees and Charges for Residential Care
- Department of Health, Disability and Ageing — Schedule of fees and charges for residential care from 1 July 2026 (v2.0)
Key takeaways
- These rules apply only to residents on the 1 November 2025 fee arrangements — someone who entered care on or before 31 October 2025 generally still pays a means tested care fee under the "no worse off" principle.
- Three components make up the ongoing cost from 1 July 2026: the basic daily fee ($66.80 a day, paid by everyone), the hotelling contribution (up to $22.15) and the non-clinical care contribution (up to $107.32). Clinical care is fully government funded.
- The non-clinical care contribution is payable only by residents who pay the FULL hotelling contribution — so the smaller figure is the gate that decides whether the larger one applies at all.
- The non-clinical care contribution stops at a $137,917.01 lifetime cap or after four years of paying it, whichever comes first. The hotelling contribution has no annual cap and no lifetime cap — it continues for as long as the resident is in care.
- The lifetime cap is shared with home care: Support at Home contributions and earlier income tested care fees count toward the dollar cap, though not toward the four-year clock — so ask Services Australia what has already accrued.
Frequently asked questions
What is the hotelling contribution in aged care?
It is a means tested contribution toward the hotelling supplement — the government payment covering daily living services in a residential aged care home, such as meals, laundry, cleaning and utilities. It applies to residents on the 1 November 2025 fee arrangements. If a resident’s income or assets are above the relevant thresholds they pay some or all of the supplement themselves, up to a maximum of $22.15 a day from 1 July 2026, with the government covering the rest.
Does the hotelling contribution ever stop?
No. The department is explicit that there is no annual cap and no lifetime cap on the hotelling contribution. It is capped daily at the maximum hotelling supplement amount, but it continues for as long as the resident remains in care. This is the most consequential difference from the old means tested care fee, which stopped once its annual or lifetime cap was reached. At the maximum rate it runs to roughly $8,085 a year, indexed twice yearly.
When does the non-clinical care contribution stop?
At whichever comes first of a lifetime cap of $137,917.01 (from 1 July 2026) or four years of paying it. Services Australia notifies the provider when either point is reached, after which the government pays the full cost of that resident’s non-clinical care. The four-year cap applies even if the lifetime cap has not been reached, and must be four years of paying the contribution in residential aged care specifically.
Do home care fees count toward the aged care lifetime cap?
Yes, toward the dollar cap. The non-clinical care contribution’s lifetime cap is combined with contributions already paid for Support at Home and with income tested care fees previously paid in home care. Those amounts do not count toward the separate four-year cap. For someone moving from an earlier arrangement, means tested care fees previously paid for residential care also count. Ask Services Australia what has already accrued.
What do you still pay after reaching a cap?
A cap ends only the means tested contribution it applies to. The basic daily fee continues, as do accommodation costs, the hotelling contribution, and any additional or extra service fees that have been agreed. Families told that "the fees stop after four years" have usually been told about the non-clinical care contribution and inferred the rest.