For residents who entered residential aged care before 1 November 2025, the Means Tested Care Fee (MTCF) is capped at $35,910.43 per year and $86,185.23 for life (as at 20 March 2026) — once the lifetime cap is reached, no further MTCF is ever charged. Residents who entered on or after 1 November 2025 are on a different structure: a hotelling contribution (no cap) and a non-clinical care contribution (capped).
For Australians who entered residential aged care before 1 November 2025, fees are both significant and, in many ways, structured to be more predictable than they appear at first. This article covers that grandfathered framework specifically. If you or a family member entered care on or after 1 November 2025, a different structure applies — see the hotelling contribution and the non-clinical care contribution for the current rules and figures.
For the grandfathered cohort, the most complex component — the Means Tested Care Fee (MTCF) — is calculated on the resident's income and assets, but daily, annual, and lifetime caps place a ceiling on total exposure. Understanding the structure matters for families currently managing aged care finances under this framework, and for pre-retirees who entered care before the reform and are thinking further ahead.
The four fee components
Residential aged care fees have four main components. The Basic Daily Fee applies to all residents regardless of means. It is set at 85% of the single basic Age Pension rate, and is $66.80 per day (~$24,382 per year) as at 20 March 2026 (Department of Health, Disability and Ageing, https://www.health.gov.au/our-work/residential-aged-care/charging/basic-daily-fee). All residents pay this, whether fully government-subsidised pensioners or high-means self-funded retirees. The Basic Daily Fee is updated each March and September alongside Age Pension indexation.
The Means Tested Care Fee (MTCF) is assessed separately, on the resident's income and assets above specified thresholds. The Accommodation Payment covers the resident's use of the room itself, structured as either a Refundable Accommodation Deposit (RAD — a lump sum repaid in full when the resident leaves) or a Daily Accommodation Payment (DAP — interest on an equivalent notional RAD amount, paid daily), or a combination. Additional Services Fees apply where the provider offers premium services — private rooms with enhanced fit-out, premium meals, or additional activities. Not all facilities charge these.
How the MTCF is assessed
The MTCF is assessed on both an income test and an asset test. The income test applies deemed income on financial assets alongside actual pension and other income. The asset test assesses the resident's assessable assets above specified thresholds. The combined income-tested and asset-tested amounts are subject to a daily rate cap, and — critically — an annual and lifetime cap that limits how much MTCF can accumulate over time.
Important: post-1 November 2025 reform. For residents who entered permanent residential care on or after 1 November 2025, the means-tested care fee does not apply at all — it has been replaced by two new means-tested contributions under the Aged Care Act 2024 reforms:
- A hotelling contribution, toward the cost of everyday living services such as meals, laundry and cleaning, up to $22.15 a day from 1 July 2026 — and, unlike the MTCF below, with no annual or lifetime cap of any kind.
- A non-clinical care contribution, toward non-clinical care such as bathing and mobility assistance, up to $107.32 a day, capped at a $137,917.01 lifetime limit or four years of payment, whichever comes first — and payable only by residents who pay the hotelling contribution in full.
- Clinical care — nursing, medication management — is fully government-funded for this cohort, with no means-tested contribution at all.
That structure, its rate tables and its caps are covered in full in our article on the hotelling contribution and the non-clinical care contribution. The rest of this article is about the older framework below, which remains current for anyone who entered care before the reform date.
For residents who entered care before 1 November 2025 (still the majority of current long-stay residents), the MTCF framework continues, with the following caps as at 20 March 2026 (Services Australia, https://www.servicesaustralia.gov.au/annual-and-lifetime-caps-for-your-aged-care-costs):
- Annual cap: $35,910.43 (per care-anniversary year)
- Lifetime cap: $86,185.23 (across the resident's entire time in aged care)
Once the annual cap is hit, MTCF drops to zero for the remainder of that year. Once the lifetime cap is hit, MTCF stops permanently. Both caps are indexed each March and September.
The caps mean that even for a high-means resident at the maximum daily MTCF rate, once the annual cap is reached no further MTCF is charged for the rest of that year. The cap resets on the anniversary of the day the resident entered care, not the calendar or financial year — so two residents who entered on different dates reach their reset points at different times. The lifetime cap, by contrast, accumulates across the resident's entire time in care regardless of anniversary. Once the lifetime cap is exhausted, no further MTCF is ever charged — regardless of how long the resident remains in care. For long-stay residents, the lifetime cap typically takes two to three years of full-rate MTCF to reach.
The family home and the protected person exemption
The treatment of the family home is one of the most consequential features of the MTCF asset assessment. If a "protected person" continues to occupy the home, the property is generally exempt from the aged care asset test for the duration of that protected person's residence. Protected persons include the resident's spouse or de facto partner, a dependent child, or an eligible carer who meets the residency and dependency requirements.
For couples where one partner enters residential care and the other remains in the family home, the home is ordinarily protected from the MTCF asset test. This can substantially reduce the entering partner's MTCF — and is one of the primary reasons the couple's combined housing and care planning needs to be considered as a whole, not treated in isolation.
For single residents, or couples where both partners enter care (no protected person remaining at home), the family home is included in the means assessment at a capped value of $214,884 as at 20 March 2026 (My Aged Care, https://www.myagedcare.gov.au/means-assessments-residential-aged-care) — or the net market value of the home if lower. The property value in excess of the cap is excluded, which means very high-value homes do not attract proportionally higher MTCF than a moderately valuable home. A protected person living in the home (spouse, dependent child, eligible carer, eligible close relative) makes the home FULLY exempt from the means assessment.
The RAD and MTCF interaction
Whether the resident pays their Accommodation Payment as a RAD (lump sum) or a DAP (daily) affects the MTCF asset test. A RAD paid in full counts as an asset for the MTCF asset test — it has transferred from financial assets into the RAD balance held by the provider, but it remains assessable. A DAP, by contrast, does not reduce the resident's assessable financial assets (since the capital has not been transferred). The interaction is subtle and can affect the MTCF calculation in ways that are not immediately obvious; specialist advice at the time of entry typically addresses this.
Pre-emptive and at-entry planning
For people planning ahead — years before any expected care need — the MTCF framework suggests a few structural considerations. Assets held in pension-phase superannuation are assessed under aged care rules, and the interaction between super drawdowns and the aged care income test can affect MTCF. The treatment of different asset types differs, and structuring before care need arises is generally more effective than restructuring at the time of entry when options may be limited or create other problems.
For families facing imminent care need, the key decisions at entry are: the RAD versus DAP (or combination) choice; whether any asset reorganisation is possible and appropriate; and whether a review of the means assessment itself is warranted to ensure accuracy. Independent specialist aged care financial advice at entry typically saves materially more than it costs in fees.
Sources
- Department of Health and Aged Care — Basic daily fee
- Services Australia — Annual and lifetime caps for your aged care costs
- My Aged Care — Means assessments residential aged care
- Department of Health, Disability and Ageing — means tested fees for residential aged care (post-1 November 2025 structure)
Key takeaways
- Residential aged care fees have four components: the Basic Daily Fee (paid by everyone, $66.80/day as at 20 March 2026), the Means Tested Care Fee, the Accommodation Payment (RAD or DAP), and optional Additional Services Fees.
- The Means Tested Care Fee is capped at $35,910.43 per care-anniversary year and $86,185.23 across a resident's entire lifetime in aged care — once the lifetime cap is reached, no further MTCF is ever charged, typically after two to three years of full-rate MTCF for long-stay residents.
- For residents who entered permanent residential care on or after 1 November 2025, the MTCF no longer applies. It has been replaced by a hotelling contribution (up to $22.15 a day, with no annual or lifetime cap at all) and a non-clinical care contribution (up to $107.32 a day, capped at $137,917.01 for life or four years, whichever comes first) — see our dedicated article for the full rates and rules.
- If a protected person (spouse, dependent child, or eligible carer) continues to live in the family home, the home is generally fully exempt from the MTCF asset test — for couples, this is a central reason to plan the entering partner's and remaining partner's finances together rather than in isolation.
- For residents without a protected person at home, the family home is included in the means assessment but capped at $214,884 (as at 20 March 2026) or net market value if lower, so very high-value homes don't attract proportionally higher fees.
Frequently asked questions
What is the Means Tested Care Fee and how much can it cost?
The Means Tested Care Fee (MTCF) is a residential aged care fee assessed on a resident's income and assets above specified thresholds, on top of the Basic Daily Fee everyone pays. It's capped at $35,910.43 per care-anniversary year and $86,185.23 for the resident's entire lifetime in care (as at 20 March 2026). Once the lifetime cap is reached, no further MTCF is charged for the rest of the resident's time in care, however long that continues.
Does the family home count toward aged care means testing?
It depends on whether a 'protected person' — the resident's spouse or de facto partner, a dependent child, or an eligible carer — continues to live in the home. If so, the home is generally fully exempt from the aged care asset test for as long as that person remains. If no protected person remains at home, the property is included in the assessment but capped at $214,884 (as at 20 March 2026) or its net market value if that's lower, so high-value homes don't push fees up proportionally.
Has the Means Tested Care Fee changed recently?
Yes, for new entrants. From 1 November 2025, residents entering residential aged care no longer pay a Means Tested Care Fee at all. It has been replaced by two contributions: a hotelling contribution toward everyday living costs, capped daily but with no annual or lifetime limit, and a non-clinical care contribution toward non-clinical care, capped at $137,917.01 for life or four years of payment. Clinical care is now fully government-funded for this cohort. Residents who entered before 1 November 2025 continue under the MTCF framework described in this article, with its $35,910.43 annual and $86,185.23 lifetime caps.
Does choosing a RAD or DAP affect the Means Tested Care Fee?
Yes. A Refundable Accommodation Deposit (RAD), paid as a lump sum, still counts as an assessable asset for the MTCF asset test even though it has moved from your bank account to the provider — it hasn't left your assessable estate. A Daily Accommodation Payment (DAP) doesn't reduce your assessable financial assets in the same way, since no capital has actually transferred. This interaction can meaningfully affect your MTCF calculation, which is why specialist advice at the time of entry is worthwhile.