The short answer: two phone calls, both free. Book an ACAT assessment through MyAgedCare on 1800 200 422 to find out what level of care your parent qualifies for. Request a financial assessment from Services Australia to find out what it’s going to cost. Everything after that follows from what those two calls uncover. The accommodation, the home decisions, the family contributions.
Aged care feels overwhelming because it’s a financial system with medical, legal, and emotional layers stacked on top. The sequence matters. Get the two assessments done first, before any property or family decisions. Most of the mistakes we see are made in the first two weeks, when families act on partial information.
If you’re reading this because mum or dad just had a fall, a stroke, or a dementia diagnosis that’s changed everything, here’s what you need to know. The system is genuinely complex. That’s not a failing on your part. It took the Royal Commission into Aged Care Quality and Safety to surface how opaque it had become, and even the reforms that commenced 1 July 2025 haven’t made it simple.
What to Do in the First Week
Before anything financial, talk to the hospital or the GP about safety. If your parent’s in hospital, the social worker can initiate an ACAT assessment there and escalate discharge planning. If they’re at home, call MyAgedCare on 1800 200 422 and ask for an ACAT assessment. It’s free and government-funded. It tells you whether your parent qualifies for Home Care or residential care, and at what level.
The second call is to Services Australia. Ask for an assessment of your parent’s assets and income for aged care purposes. That determines the means-tested care fee, which can range from nothing to over $400 a day depending on their financial position. Without that assessment, every number you hear from an aged care provider is a guess.
Don’t sell the house in the first week. Don’t sign a residential agreement without checking the fine print. Don’t let a provider rush you into an accommodation decision. The worst mistakes in the system happen when families act before they’ve got the assessments back.
The Two Assessments That Unlock Everything
The ACAT assessment is usually a nurse and a social worker. They come to your parent’s home or meet in hospital, and they look at daily living needs, cognitive function, mobility, and medical conditions. The output is an official approval letter listing what levels of care your parent is eligible for. That might be Support at Home packages at any level from 1 to 8, or residential care, or both.
The financial assessment comes from Services Australia. The form is SA456 (or the equivalent on MyGov). You submit a full snapshot of assets, income, and liabilities. Services Australia produces a determination that sets the daily means-tested care fee, shapes what accommodation payment structure makes sense, and confirms how the family home factors into the calculation.
Both assessments are free. Both take two to four weeks. Start them the same week you realise aged care is coming.
Paying for Residential Aged Care in 2026
Residential aged care has four fee layers. Understanding them separately makes the total less scary.
| Fee Type | What It Pays For | 2026 Range | Notes |
|---|---|---|---|
| Basic Daily Fee | Meals, laundry, utilities, general care | $63–$65/day | Set at 85% of the single Age Pension |
| Means-Tested Care Fee | Personal care and nursing | $0–$420/day | Based on assets and income; annual cap ~$33,000; lifetime cap ~$82,000 |
| Accommodation Payment | The room itself | $0–$800,000+ (as RAD) | Paid as lump-sum RAD, daily DAP, or a combination |
| Additional / Hotel Fees | Extras such as Foxtel, wine, outings | $10–$50/day | Optional, varies by provider |
The accommodation payment is where families get stuck. You can pay it as a Refundable Accommodation Deposit, usually just called a RAD. That’s a lump sum. It gets returned when your parent leaves or passes away. The alternative is a Daily Accommodation Payment, or DAP, which is an interest-based daily rate on the unpaid RAD amount. You can also do a combination.
The right structure depends on what assets your parent has, where they’re held, and whether drawing down to pay a RAD will affect Age Pension eligibility for the surviving spouse. That last consideration is the one most families miss.
There’s also a lifetime cap on the means-tested care fee, currently around $82,000 (indexed). And an annual cap of around $33,000. These protect against open-ended costs, but only if you know to track them.
What Actually Happens to the Family Home
This is the most emotionally charged part of the conversation, and the most misunderstood.
If your parent has a protected person still living there, the home is exempt from both the Age Pension assets test and the aged care assets assessment. There’s no pressure to sell. A protected person is a spouse, a dependent child, a full-time carer who’s been living in the home for two years, or a close family member who’s been living there for at least five years and has Centrelink-defined carer status.
If no protected person is living there, the home is included in the aged care assets calculation up to a capped value (around $201,000 in 2026, indexed). For Age Pension purposes, the family home is exempt for two years from the day your parent enters aged care. After two years, it becomes assessable and usually tips the pension downward.
There are a few common approaches when there’s no protected person. Some families sell and contribute part of the proceeds as a RAD. The RAD itself is exempt from the Age Pension assets test and doesn’t attract deeming, which can be more favourable than keeping the equity in a house that’s now being assessed. Others rent the home and use the rental income to fund DAP payments. Rental income from aged-care residents counts as assessable income for the pension (the old exemption ended 1 January 2017), and the home becomes assessable for the pension after the two-year rule window. A third path is to keep the house empty, which is usually only sensible if the family is considering sale later or expects the stay to be short. Each path has different pension and estate consequences, and the best choice depends on the parent’s full financial picture.
Home Care Versus Residential Care
The default assumption for most families is residential care, because that’s the visible option when a crisis hits. But about four in five older Australians say they want to stay at home, and the Support at Home program (which replaced Home Care Packages on 1 July 2025) makes that more viable than it used to be.
| Option | What It Covers | Typical Annual Cost | Good Fit For |
|---|---|---|---|
| Support at Home (Levels 1–2) | Cleaning, transport, social support | $5,000–$15,000 government-funded | Low needs; independence is the goal |
| Support at Home (Levels 3–4) | Personal care, nursing visits | $25,000–$40,000 government-funded | Moderate needs; still mobile |
| Support at Home (Levels 5–8) | High care, dementia support | $50,000–$90,000 government-funded | Higher needs but home-capable |
| Residential Care | Full accommodation and round-the-clock care | $80,000–$150,000+/year total fees | 24/7 needs; advanced dementia |
Home care is almost always cheaper unless the needs escalate to 24-hour oversight. The trade-off is coordination. Someone in the family usually has to be the point person, and there are gaps between packages that the family ends up filling.
The Mistakes We See Families Make
Selling the house too early is the most common. Families panic, assume aged care needs the money immediately, and sell below market. Often the parent is gone within six to twelve months, and the capital gain would have been exempt under the main residence rules anyway.
Signing the aged care agreement without reading the fine print is the second. The agreement lists additional fees, lock-in periods, and exit conditions. Providers sometimes charge hotel-style extras that weren’t mentioned in the initial meeting. Always ask for the additional services schedule before signing.
Waiting too long for home care is another. The Support at Home approval can take months, and families who wait until crisis mode often can’t get the level of support they need fast enough. If a parent is starting to struggle, get the ACAT assessment done early even if they don’t need the package yet.
Missing the Age Pension refresh is the fourth. Moving a parent into aged care changes their pension calculation. If the spouse is still in the home, their pension often goes up because they’re now assessed as a single. Families miss this because no one at the aged care provider tells them, and Centrelink doesn’t always pick it up automatically.
How a Financial Adviser Fits In
Most families don’t need ongoing financial advice through aged care. What they do need is a one-off engagement to look at the full picture before the first big decision.
It usually covers the decisions that are hard to reverse. How to structure the accommodation payment based on available assets. Whether selling the family home or renting it makes sense given the pension rules. How the aged care fees interact with the Age Pension when one parent’s in care and the other’s still at home. And how to get the estate paperwork tidy while there’s still clear cognitive capacity to sign.
We see a lot of this because we’ve usually worked with a client for several years on their own retirement, and then their parents need care a few years into that relationship. We’re already across the family’s financial picture, so the aged care decisions don’t start from zero. The fee for a one-off aged care engagement is typically $3,500 to $5,500 depending on complexity, and it often saves several times that in avoided structural mistakes.
The Bottom Line
If your parent is already in aged care or about to go in, these are the priorities. Get both assessments booked this week. Understand the fee layers before signing anything. Leave the family home decision until you’ve had the financial assessment back. Revisit the Age Pension calculation once the move is done. Talk to an adviser before paying a RAD.
The system is harder to navigate than it should be. That’s the reality families in 2026 are dealing with. Good preparation makes the financial side manageable. The emotional side is its own thing, and advice can’t fix that.
Common Questions
How long does an ACAT assessment take to come through?
Usually two to four weeks from the day you phone MyAgedCare on 1800 200 422. Faster if your parent’s in hospital, because the social worker can escalate. The assessment itself takes about an hour. The approval letter follows a few days later by post or MyGov.
Do I need to sell my parents’ house to pay for aged care?
Not always. If there’s a protected person still living in the home (a spouse, dependent child, long-term carer, or qualifying family member), the house is exempt from the aged care assets assessment and no sale pressure applies. If there’s no protected person, there are still options: pay the accommodation as a daily fee rather than a lump sum, rent the house to fund DAP payments, or sell and contribute part of the proceeds as a RAD. Selling is rarely the only option, and making that call in the first month is usually a mistake.
Is the Refundable Accommodation Deposit really refundable?
Yes. A RAD is returned in full (plus any agreed interest on unused amounts) when your parent leaves the facility or passes away. Providers are required by law to return it within 14 days. The Australian Government also guarantees the RAD refund under the Accommodation Payment Guarantee Scheme, so even if a facility becomes insolvent (rare), the money is repaid.
What happens if my parent can’t afford aged care?
The government funds the bulk of aged care for low-income residents. A supported resident pays only the basic daily fee, which is set at 85% of the single Age Pension and designed to fit within it. The means-tested care fee is zero if assets and income are below threshold. You can ask Services Australia to flag your parent as a supported resident during the financial assessment. The quality of care is identical; the funding source is the only difference.
Can I get help applying for a Support at Home package?
Yes. MyAgedCare assessors walk you through the application after the ACAT approval. Most not-for-profit aged care providers have advocacy teams that assist at no cost. If you’re dealing with a complex family situation (dementia, disagreements among siblings, or a blended family), paid services like OPAN (Older Persons Advocacy Network) can help. Financial advisers handle the structural questions once the package is approved: how to fund any co-contributions, how to structure gap payments, and whether the parent’s income can cover the out-of-pocket costs without drawing down assets.
General Advice Warning: This article contains general information only and does not take into account your individual objectives, financial situation, or needs. Thresholds, fees, and rules cited are current as at 2026 and may change. Before making any financial decisions, you should consider whether the information is appropriate for your circumstances and seek personal financial advice from a licensed adviser. Great Advice Financial Advisers is a Corporate Authorised Representative of Akumin Financial Planning Pty Ltd (AFSL 232706).
