Moving into residential aged care can be a significant life change, and understanding the associated costs is often one of the biggest concerns for individuals and their families.
The Australian Government provides financial assistance to help make residential aged care more affordable. However, the level of support available depends on a person’s financial circumstances and whether they qualify for what is known as low-means status.
Understanding how this assessment works, what it means for your accommodation costs and how it may affect your ongoing fees can help you make more informed decisions when planning for aged care.
What does low-means status mean?
A low-means resident is someone whose financial circumstances fall below specific thresholds set by the Australian Government.
If you qualify for low-means status, you may be eligible for government assistance towards your accommodation costs. Rather than paying the full accommodation price, you may be required to pay an accommodation contribution, with the Government subsidising the remaining eligible amount.
This can make a significant difference to the overall cost of residential aged care, particularly for individuals with more limited financial resources.
You can find further information about low-means status and government assistance with accommodation costs through the Department of Health, Disability and Ageing.
How is low-means status determined?
When someone enters permanent residential aged care, their financial circumstances are assessed to determine how much they may need to contribute towards their care and accommodation.
This assessment is generally completed by Services Australia. For eligible veterans and other DVA clients, the Department of Veterans’ Affairs (DVA) may conduct the assessment.
The assessment considers a person’s financial circumstances, including:
- Assets: Such as bank accounts, investments, property and other valuable possessions.
- Income: Including relevant pension payments, investment income and other assessable income.
- Overall financial position: Including applicable income and asset assessment rules.
The assessment produces a Means-Tested Amount (MTA), which is used to determine whether someone qualifies for low-means status and helps establish their financial contributions towards aged care.
In particular, the assessment helps determine:
- Whether the person qualifies as a low-means resident.
- Whether they are required to pay an accommodation payment or an accommodation contribution.
- The amount they may need to contribute towards certain ongoing aged care costs.
You can learn more about how means assessments work for residential aged care, including what information may be required and how the assessment is completed.
Why is the assessment important?
Your means assessment plays an important role in determining how much you may need to contribute towards residential aged care.
Depending on your circumstances, it can influence:
- Accommodation costs: Whether you pay an accommodation payment or an accommodation contribution.
- Government assistance: Whether you qualify for government support towards eligible accommodation costs.
- Ongoing care contributions: The amount you may need to contribute towards certain daily living and care expenses.
- Long-term affordability: How your aged care arrangements fit within your available financial resources.
It is also important to understand that your financial circumstances can change over time.
Your low-means status is generally determined using your financial position when you enter an aged care home. If your circumstances change while you remain in the same home, your low-means status does not automatically change. However, your ongoing fees and contributions may be affected.
If you move to another aged care home, a new means assessment may be required.
Understanding the difference between your initial assessment and ongoing financial contributions is an important part of planning for residential aged care.
For further information, My Aged Care explains how means assessments and aged care fees work.
Important considerations when planning for aged care
Many people assume that qualifying as a low-means resident is always the best financial outcome. However, aged care funding arrangements can be more complex than they initially appear.
Your financial position, accommodation preferences and available funding options all need to be considered together.
For example, different financial arrangements may affect:
- Your eligibility for government assistance.
- The accommodation options available to you.
- Your ongoing aged care fees and contributions.
- How your savings and assets are used.
- Your financial security over the longer term.
It is also important to understand the difference between a Refundable Accommodation Deposit (RAD), a Refundable Accommodation Contribution (RAC), and their corresponding daily payment options.
These arrangements can have different financial implications depending on whether you qualify as a low-means resident.
Making decisions without understanding how these options interact with your means assessment could lead to unexpected costs.
Careful planning before entering residential aged care can help you understand your options, manage your finances and make decisions that support your preferred care arrangements.
Understanding the aged care rules
Residential aged care funding is governed by the Aged Care Act 2024 and its associated legislation, which applies nationally across Australia.
The current aged care arrangements commenced on 1 November 2025, introducing changes to how some residents contribute towards their accommodation, everyday living and care costs.
The rules can be particularly complex for people who may qualify as low-means residents, making it important to understand how the legislation applies to individual circumstances.
You can access the Aged Care Act 2024 through the Federal Register of Legislation for further information about the legislative framework.
How Holzworth Partners can help
Navigating residential aged care funding can be overwhelming, particularly when you are also managing the personal and emotional challenges that come with transitioning into care.
At Holzworth Partners, we help individuals and families better understand the financial side of aged care and explore the options available to them.
We can assist with:
- Understanding how low-means assessments work.
- Explaining potential accommodation costs and government assistance.
- Modelling different aged care funding scenarios.
- Understanding RAD, RAC and daily payment options.
- Developing financial strategies that consider affordability and your preferred care arrangements.
Every person’s circumstances are different. Having a clear understanding of your options before making important decisions can help you feel more confident about the next steps.
Thinking about residential aged care or helping a family member plan for the transition?
Contact Holzworth Partners to discuss your circumstances and arrange an appointment for personalised aged care financial advice.
The information provided in this article is intended for general information and educational purposes only. It does not constitute personal financial, taxation, accounting or legal advice and should not be relied upon as a substitute for professional advice.
The information has been prepared based on our understanding of the relevant legislation and regulations at the time of publication. While every effort has been made to ensure accuracy, no representation or warranty is made as to the accuracy, completeness or currency of the information.
This information does not take into account your individual objectives, financial situation or needs. Before making any financial or aged care decisions, you should consider whether the information is appropriate for your circumstances and seek advice from a suitably qualified financial adviser or other relevant professional.
