What Happens If You Can't Afford Aged Care Costs?

You've done the sums. Maybe more than once. And the number at the bottom doesn't work.

So what happens if you can't afford aged care costs?

It's one of the most frightening questions a family can face — the fear that Mum or Dad might miss out on the care they need simply because the money isn't there. Take a breath.

Aged care costs in Australia is built so that cost isn't the thing that decides whether you get care, sadly this is the reality. There are contribution rates scaled to your means, government support for people with low means, and a hardship scheme for very special circumstances. Let's walk through what's actually available, one piece at a time.

1. Care is subsidised — you're asked for a contribution, not the full aged care cost

Here's what gets lost in the panic. The government funds the bulk of aged care in Australia if you are on a full pension. What families are asked for is a contribution.

When you see a big number attached to a service or an aged care home, that's usually the total cost of care. It's not the bill landing on your doorstep. How much you personally contribute depends on your income and assets, and it's worked out through an assessment before anything is locked in.

Some care carries no contribution at all. Under the Support at Home program, clinical services — nursing, physiotherapy, allied health — are fully funded by the government for everyone, whatever your financial position. And from 1 October 2026, personal care is fully funded too: showering, dressing, continence support and help with medication will cost participants nothing out of pocket.

So before you decide something is out of reach, find out what your actual contribution would be. It's very often less than families expect.

2. An aged care assessment works out the maths for you

Before you pay anything, there's an assessment of your finances that determines what you can reasonably contribute. There are two, depending on the type of care:

• Support at Home (care in your own home): an income and assets assessment. Your principal home is exempt — it isn't counted at all.
• Residential aged care: a means assessment. Here the family home is counted, but only up to a capped value of $214,884.00 (as at 20 March 2026), or its net market value if that's lower. And it's not counted at all if a "protected person" lives there — your partner, a dependent child, or a carer or close relative on an income support payment who has lived with you long enough to qualify.

Services Australia does the assessment for most people. If you receive a means-tested payment from the Department of Veterans' Affairs, DVA does it instead. If you're a full or part pensioner, they'll largely use the information they already hold from your pension assessment.

If your income and assets are low, your contribution can be small. There's also a lifetime cap — $135,318.69 as at 1 November 2025 — on the non-clinical care contributions you can ever be asked to pay, combined across home care and residential care. It exists specifically to protect people who need care for a long time.

One thing worth knowing: completing the assessment isn't compulsory, but if you skip it, you can be charged the maximum rate. So the assessment almost always works in your favour. Start it through My Aged Care (the federal government's aged care portal) or Services Australia.

3. If you still can't afford it: financial hardship assistance

Sometimes the assessment says you should contribute a certain amount, and the reality is you simply can't. Maybe your money is tied up in a house you can't sell. Maybe there are debts, or circumstances the standard formula doesn't capture.

This is what financial hardship assistance — formally, the fee reduction supplement — exists for. If you're eligible, the government pays some or all of your contributions, fees and accommodation costs directly to your provider.

To apply, you'll need to have already had your income and assets (or means) assessed, and you'll need to meet the thresholds:

• Assets of no more than $46,835.10, not counting assets classed as unrealisable
• No gifting above $10,000 in the current or any of the previous four financial years, or $30,000 across those five years

"Unrealisable" is the important word. A home you own can be excluded if it's genuinely stuck — for example, if it's been on the market for six months or more, or if it's jointly owned. Investment properties you rent out don't qualify.

Services Australia then looks at what you have left after essential expenses — food, rent or mortgage, utilities, medical and dental costs, transport, private health cover, funeral plan payments. If you're left with less than 15% of the basic Age Pension ($165.05 a fortnight), you may qualify for a full fee reduction. More than that, and a partial reduction may still be available.

You apply on form SA462 through Services Australia, with evidence of your expenses for the previous three months. It's worth starting the paperwork early rather than waiting until the bills have piled up — gathering three months of records takes time you'd rather not be spending in a crisis.

4. The big lump sum isn't the only path

If you're looking at residential aged care, you've probably run into the accommodation payment — the large upfront figure that can genuinely take your breath away.

You have three ways to pay it:

1. A refundable lump sum — a refundable accommodation deposit (RAD), or a refundable accommodation contribution (RAC) if the government is helping
2. Daily payments — a daily accommodation payment (DAP) or contribution (DAC), which work like rent and aren't refunded
3. A combination of the two, split however you choose

You can't be asked to choose before you move in. You can pay a lump sum in full or in part at any time after you enter care, once your means assessment has been finalised. Until you do, you pay by daily payments.

One thing to go in with your eyes open about: since 1 November 2025, providers deduct a retention amount of 2% per year from any new refundable lump sum, for up to five years. That portion isn't refunded when you leave. It's worth factoring into any comparison between paying a lump sum and paying daily.

And if your means assessment gives you low means status, the government contributes towards your accommodation — either covering it in full, or covering the gap between what you can contribute and what the provider is entitled to receive. That's built into the rules, not discretionary.

5. Where to actually start

If all of this feels like a lot, that's fair. None of us are taught this stuff. Here's a simple order of operations.

1. Get the aged care needs assessment done. An aged care assessor (often a nurse or allied health professional) has a conversation with you, usually at home, to confirm what care is needed. You may still hear this called an ACAT assessment — the assessment teams were folded into a single national system in December 2024. Apply through My Aged Care on 1800 200 422 or myagedcare.gov.au.
2. Ask for the financial assessment. An income and assets assessment for home care, or a means assessment for residential care. This gives you your actual contribution — the real number, not the headline one. Through Services Australia on 1800 227 475.
3. If the numbers still don't work, apply for financial hardship assistance. Form SA462, through Services Australia. Bring three months of financial records.
4. Talk it through with someone who does this every day. Services Australia's Financial Information Service is free, as are the Aged Care Specialist Officers in Services Australia service centres. For decisions involving the family home or a lump sum, independent financial advice is worth it.

You don't have to do these in perfect order, and you don't have to do them alone.

6. You're not being asked to do the impossible

The fear of not being able to afford care is real, and it's heavy. But the system isn't built to leave your mum or dad without care because a bank balance came up short. It's built to work out what you can contribute, and to step in where you can't.

Whenever you're ready — today, next week, or three months from now — working through the numbers with someone who knows the way through can lift a genuine weight off your shoulders.

Let CareAbout match you with trusted providers

We understand, knowing who to trust and how to find the right provider is hard, but that’s where CareAbout comes in. We only pair with the providers we would trust to take care of our very own loved ones. 

That’s why we pride ourselves on vetting all providers through an extensive process to assure they’re the right fit; providing high-quality standards and fair pricing while reputable, trusted, and of course, they’ll CareAbout you. Don’t just take our word for it, start your placement process with CareAbout today!

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