The Big three for MTFs
Historical article – pre-1 November 2025 aged care changes
Fees in residential aged care are means-tested, but the rules are complicated. This article explores the three key facts you need to know about means-tested fees.
Providing aged care in a residential service is expensive when you add up wages, equipment and other operational costs. The government pays most of this cost but you may be asked to pay a portion.
How much you pay is means-tested, so the more you have in financial resources, the more you might be asked to pay – but only up to the annual cap of $29,399, with an overall lifetime cap of $70,559 (indexed).
The rules for how the means-tested fee (MTF) works is not easy to understand. So what are the top three facts you need to know.
1. The fee is not evenly spread across the year
The annual cap averages $80.55 per day, but you might be asked to pay a higher rate each day (up to $265 per day, based on an assessment of your care needs) until you reach the annual cap. Once you reach the cap you stop paying the means-tested fee for the rest of that year. Other fees continue.
Example:
Martha’s means-tested fee (MTF) is calculated as $160 per day. She pays this amount (plus other fees) for approximately 184 days until she has paid an amount equal to the annual cap. Then no more MTF is payable until the next year.
Unfortunately there might be a delay before Services Australia identify the cap has been reached and allow payments to stop. The provider will refund (or hold a credit) any excess that you have paid.
2. The cap applies to an anniversary year
The annual cap applies to your anniversary year. This generally starts on the date you enter permanent residential care. But if you were receiving a home care package before the move, the year starts from the date your home care package commenced. This could see your first 12 months in residential care span two anniversary years and you may pay more than the annual cap in that first 12 months.
3. The caps are indexed
Every six months the annual (and lifetime) caps are indexed. You will need to chase the indexing cap, but once reached, the means-tested fee ceases for the rest of the year, despite any indexation during that time.
This advice is general in nature and everyone’s circumstances are different. So it’s important to speak to someone like myself who is a licenced financial adviser (I am an Authorised Representative of Count Financial Limited AFSL 227232).
As an Accredited Aged Care ProfessionalTM, I have helped many clients navigate through aged care fee liabilities. It is important to determine the means-tested fee and plan on how to best cover the costs.
Call me on 0431 414 799 or email jason@burleyagedcareadvice.com.au to find out how I might help yours or a loved ones’ own position.
