Superannuation plays an important role in determining how much you pay for residential aged care in Australia. The means-tested care fee and accommodation contribution are both affected by your assets — including your super balance.
How Aged Care Costs Work
Residential aged care involves several cost components:
- Basic daily fee: Everyone pays (currently 85% of the single Age Pension rate — approximately $61/day in FY2024–25)
- Means-tested care fee: An additional contribution assessed based on your income and assets
- Accommodation costs: Room pricing (Refundable Accommodation Deposit/RAD or daily fee equivalent — DAC)
The means-tested care fee is calculated by the Services Australia means assessment, which includes your income and assets — including super.
How Super Is Assessed for Aged Care
For people below Age Pension age, superannuation balances are treated differently than for those of pension age:
- Under Age Pension age: Super is generally not included in the means test assets assessment for aged care
- Over Age Pension age: Super is included in the assets assessment — it is counted as an asset
For most people entering aged care, they are typically of pension age, so their super balance is counted in the means test.
Super and the Means-Tested Care Fee Cap
The means-tested care fee is capped:
- Annual cap: Approximately $33,000 (indexed)
- Lifetime cap: Approximately $80,000 (indexed)
Once the cap is reached, no further means-tested care fee is charged. For low-asset/income residents, means-tested care fees may be zero.
Super and the Accommodation Contribution
The Refundable Accommodation Deposit (RAD) or Daily Accommodation Contribution (DAC) is priced by the facility and assessed based on your means position. If your assets are below a threshold, you pay a lower accommodation contribution (the government subsidises the remainder).
Your super balance is counted as an asset for accommodation means testing (if over Age Pension age), which can affect whether you pay full accommodation costs.
The Family Home and Aged Care
For most people, the family home is the largest asset — and its treatment is complex:
- If you enter care alone: the family home may be assessed (after 2 years exemption if a former carer or protected person remains)
- For couples: home is generally exempt from the assets test while the partner remains
Super is typically a secondary concern compared to the home — but for those without a large home, super becomes more significant in the means test.
Account-Based Pension and Aged Care Income Test
If your super is in an account-based pension, the income test (not just the assets test) may apply:
- ABP drawdowns count as income under the aged care income assessment
- The deeming rate (set by Services Australia) is applied to the ABP balance for income testing if opened after 1 January 2015
Strategies
- Financial advice before entering aged care: The interaction of the Age Pension, means test, and aged care fees is complex — specialist aged care financial advice is often valuable
- Consider the role of your super: Drawing down super before entering care (if needed for living costs or debt repayment) changes the means position
- Timing of accessing super: Those entering care with large super balances should consider how drawdown strategies interact with the aged care means test
Important: Deliberate deprivation of assets (gifting, spending down) to reduce means-test results is subject to special rules — seek professional advice before any significant transactions.
For advice on aged care and superannuation, speak with an aged care specialist financial adviser via MoneySmart or My Aged Care. For more: Estate Planning and Super, Super and Disability.