Lyla Lindsey
The Australian Government is the primary funder and regulator of the aged care system, providing subsidies and supplements to approved providers for each resident receiving care. The funding system is designed to accommodate various levels of care, from enabling individuals to continue living independently in their own homes to providing the necessary support when residential aged care becomes the best option. The government subsidises a range of aged care homes, with the amount of funding based on an assessment of each person's care needs and how much they can afford to contribute to the costs.
| Characteristics | Values |
|---|---|
| Primary funder | Australian Government |
| Regulator | Australian Government |
| Funding type | Subsidies and supplements |
| Who receives subsidies | Approved providers |
| Who pays subsidies | Australian Government |
| Who receives supplements | Eligible care recipients |
| Who pays supplements | Australian Government |
| Who contributes to the cost | People who receive government-subsidised aged care |
| Who decides the cost | Each home sets their own prices within a prescribed limit |
| Basis of funding | Needs assessment by a residential aged care funding assessor |
| Basis of funding | How much the recipient can afford to contribute |
| Types of costs | Basic daily fee |
| Types of costs | Means-tested care fee |
| Types of costs | Accommodation costs |
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What You'll Learn
Government subsidies and supplements
The Australian Government subsidises aged care services, with the subsidy amount depending on an individual's needs. The government pays subsidies and supplements to approved providers for each resident receiving care under the Aged Care Act (1997). These subsidies are paid directly to the aged care home. The amount of funding that a home receives is based on an assessment of the care needs and how much the resident can afford to contribute to the costs of their care and accommodation.
The Australian Government subsidises residential aged care by paying subsidies and supplements to approved providers. These are paid on behalf of each person eligible to receive government-subsidised residential aged care. Approved providers can also apply for capital grants for building and maintaining aged care homes. Supplements help with the extra cost of meeting eligible residents' specific care needs.
The Australian Government funds providers to keep costs affordable, so individuals won't be asked to cover the full cost of services. People who receive government-subsidised aged care may contribute to the cost if they can afford to. They do this by paying aged care fees and charges. Residents can be asked to pay a basic daily fee, currently a maximum of $63.82 per day. Some residents also pay a means-tested care fee based on an assessment of their income and assets.
The Australian Government provides funding for a variety of aged care services, including in-home support, such as the Commonwealth Home Support Programme (CHSP), and Home Care Packages (HCP). It also provides a subsidy for those requiring residential care. The government also funds integrated health and aged care services in small rural and remote communities.
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Resident contributions
Aged care in Australia is funded by the Australian Government through subsidies and supplements, capital grants, and funding through aged care programs. The government subsidises approved providers for each eligible resident, helping to cover the costs of care services and accommodation. These subsidies are paid directly to the aged care homes, and the amount is based on an assessment of the individual's care needs and their ability to contribute financially.
There are a few types of fees that residents may be required to pay. Firstly, all residents can be asked to pay a basic daily fee, which is currently set at a maximum of $63.82 per day. This fee covers the cost of services received at the facility. Additionally, some residents may be required to pay a means-tested care fee, which is based on their income and assets. This fee is applicable for those who have the financial means to contribute more towards their care.
Some residents may also have their accommodation costs partially or fully covered by the Australian Government. However, those with greater financial means may be required to pay an accommodation price, previously known as a bond. This price is agreed upon with the aged care home. It is important to note that residents will not be asked to cover the full cost of their care, and financial hardship assistance is available for those who cannot afford the fees.
The fees and contributions vary depending on the specific care facility and the individual's circumstances. It is recommended to use tools such as the fee estimator and income and means assessment tools to understand the potential costs and determine the need for an income assessment. Additionally, it is important to compare the costs of different providers to make the most of one's budget.
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Capital grants
The Australian Government subsidises aged care services by providing capital grants to approved providers for building and maintaining aged care homes. Organisations can apply for capital grants through the Aged Care Capital Assistance Program (ACCAP). The program provides grants for building, extending, upgrading, or improving aged care services, as well as for building staff accommodation in areas where older Australians have limited or no access. The aim is to maintain or increase access to quality aged care services, particularly in regional, rural, and remote locations, and for Aboriginal and Torres Strait Islander communities.
Up to $966.5 million has been allocated for the ACCAP program over four years until 30 June 2028, with at least $161 million available per year on an ongoing basis from 2028-29. The grant opportunity guidelines are published on GrantConnect at the beginning of each grant round, and eligible activities are determined on a round-by-round basis.
One example of a grant opportunity within the ACCAP is the Residential-based Aged Care Services and Staff Accommodation grant, which closed on 20 May 2025. Up to $300 million was made available to fund infrastructure projects that maintain or improve access to quality residential-based aged care services in regional, rural, and remote locations, as well as metropolitan locations where specialised care is provided to Aboriginal and Torres Strait Islander people.
Another example is the Critical Infrastructure Projects Grant Opportunity, which has made available up to $255.5 million until 30 June 2029. This grant opportunity supports aged care infrastructure projects, such as building, extending, or upgrading aged care facilities, to ensure access to quality aged care services for older Australians.
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Funding for rural communities
The Australian Government is the primary funder and regulator of the aged care system in Australia. The Government subsidises residential aged care by paying subsidies and supplements to approved providers on behalf of each person eligible to receive government-subsidised care.
However, in rural communities, there is limited access to in-home aged care services, and the availability of these services decreases the further one travels from capital cities and regional centres. This has resulted in rural communities having to raise funds independently to meet the growing demand for aged care. According to the National Rural Health Alliance, rural Australians missed out on $850 worth of healthcare services each year due to a lack of access, resulting in an annual rural health underspend of $6.5 billion.
To address this issue, the Australian Government has implemented a program that provides up to 12 weeks of care and recovery services in aged care homes, the community, or an individual's home. This program is jointly funded by the Australian, state, and territory governments to serve regions that cannot support stand-alone hospitals or aged care homes.
Despite these efforts, rural communities continue to advocate for equitable funding to keep up with their ageing populations. They face challenges in attracting healthcare workers to regional areas due to a perceived lack of support and difficulty in securing investment.
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Commonwealth Home Support Programme
The Commonwealth Home Support Programme (CHSP) is an Australian Government-funded program that provides entry-level support services to older Australians to help them live independently and safely in their homes. The program is designed for those who need some help with everyday tasks but do not require the level of care provided in aged care homes.
To be eligible for the CHSP, individuals must be aged 65 years or older (or 50 years or older for Aboriginal or Torres Strait Islander people) or 50 years or older (45 years or older for Aboriginal and Torres Strait Islander people) and on a low income, homeless, or at risk of becoming homeless. An aged care assessment is conducted to determine an individual's eligibility for the program, including specific services they may require. This assessment can be accessed through the My Aged Care website.
The CHSP offers a range of services, including support with mobility, communication, reading, and personal care. It also assists with transportation to appointments and community activities, as well as helping individuals maintain their social connections and participation in their community. Additionally, the program provides support for carers, giving them a short break from their caregiving responsibilities.
The Australian Government subsidises the cost of CHSP services by paying subsidies and supplements to approved providers. These subsidies and supplements are paid on behalf of each eligible individual receiving government-subsidised care. The government also provides capital grants for building and maintaining aged care homes. Individuals who receive government-subsidised care may also contribute to the cost through fees and charges if they are financially capable.
The CHSP is an important program that enables older Australians to maintain their independence and remain in their homes while receiving the support they need to live safely and well. By providing entry-level support, the program helps delay or prevent the need for higher levels of care.
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Frequently asked questions
The Australian Government subsidises aged care, and the subsidy amount for you depends on your needs. The funding system is designed to accommodate various levels of care, whether it's enabling individuals to continue living independently in their own homes or providing the necessary support when residential aged care becomes the best option.
The amount of funding a home receives is based on an assessment of your care needs and how much you can afford to contribute to the costs of your care and accommodation. Each home sets its own prices, within a prescribed limit, and costs will vary.
There are typically three types of costs associated with aged care homes: a basic daily fee, a means-tested care fee based on an assessment of income and assets, and a maximum amount that everyone pays for the hotel services they receive.
