Moving one member of a couple into an aged care home often costs significantly more than topping up government-funded home care. Because aged care means testing splits a couple’s assets evenly, residential care fees can quickly consume an entire household income. Many couples find that paying for additional home care services preserves their financial security and allows them to stay together longer.
Key Takeaways
- Residential aged care fees for one partner can easily exceed a couple’s total annual income.
- Aged care means testing treats a couple’s income and assets as equally shared 50/50.
- Household living expenses for the partner remaining at home do not halve when one person moves into care.
- Topping up government-funded home care with private funds is often more cost-effective than moving into residential care.
- Always compare the numbers carefully before assuming an aged care home is the most affordable option.
Many older Australians assume that staying at home and topping up government-funded home care with privately funded services will be unaffordable. But the reality is that for many couples, having one person move into residential aged care can cost far more, and the financial impact rarely falls evenly. To better compare home care, residential care and broader aged care funding options, it is important to look at the full household impact before making a decision.
When one member of a couple enters aged care, it can feel less like shared responsibility and more like robbing Shirley to pay for Jack’s care.
That may sound blunt, but it reflects the reality of how the system works.
How Means Testing Works for Couples
Aged care means testing treats couples as though income and assets are shared equally, splitting them 50/50 regardless of who actually needs care. On paper, that seems fair. In practice, once one partner moves into residential aged care, the household suddenly carries the cost of running two lives instead of one.
A Real-World Example: Jack And Shirley
Take Jack and Shirley, part pensioners who own their home and have $600,000 in investments and $10,000 in personal assets. Jack needs residential aged care. The home he chooses charges a Refundable Accommodation Deposit (RAD) of $750,000. Rather than paying the lump sum, Jack pays a Daily Accommodation Payment (DAP) calculated at 8.43 per cent, indexed. That means his accommodation cost alone is just over $60,000 a year.
On top of that, Jack pays the basic daily fee of $67 a day and a hotelling fee of $10 a day. Before medications, clothing, haircuts or any additional services, his aged care costs already total more than $88,000 a year.
Jack and Shirley receive a combined age pension of about $52,000 a year and earn around $30,000 from their investments. Their total household income is roughly $82,000.
In other words, the cost of one person entering residential aged care exceeds the couple’s total annual income.
Even when they try to reduce those costs, the numbers remain confronting. If Jack contributes his half of the investments, $300,000, towards the RAD, his accommodation payments fall by about $24,000 a year and their pension increases by around $10,000. But even then, Jack’s care costs are still about $64,000 a year, leaving Shirley with only $14,000 to cover everything else.
The Ongoing Costs for the Partner at Home
Shirley’s costs don’t disappear simply because Jack has moved out of the family home. She is still paying rates, insurance, utilities, groceries and all the ordinary costs of daily living. In reality, most household expenses do not halve when one person moves into care.
The shortfall has to come from somewhere. Typically, it is funded by drawing down savings, effectively eating into Shirley’s financial security to fund Jack’s care.
Why Additional Home Care May Cost Less
This is what many families fail to appreciate when comparing the cost of home care with residential aged care. Paying privately to supplement government-funded care at home can feel expensive when viewed as an hourly rate. But the alternative (one partner moving into residential care) can place enormous pressure on the household balance sheet.
For many couples, spending an extra $20,000 or even $30,000 a year on additional care at home may actually preserve both their finances and their lifestyle for longer. It can delay or avoid the need for residential aged care altogether, allowing couples to remain together and reducing the risk that the spouse left at home is pushed to the financial edge.
Residential aged care is essential for many people and provides important clinical and personal support. But the financial reality is that when one person moves into care, the costs often consume not just their own income and assets, but a substantial portion of their partner’s as well.
When home care funding is exhausted, it can be easy to assume that moving into residential aged care will be more affordable. But before making that move, it is worth comparing the numbers carefully, because for many couples, residential aged care can end up costing far more.
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FAQs
Does aged care means testing split a couple's assets evenly?
Yes, aged care means testing treats a couple’s income and assets as equally shared regardless of who actually needs care. This means half of your combined household wealth is assessed to determine the fees for the person entering residential care.
Is it cheaper to stay at home or move to an aged care home?
It is often more affordable to stay at home and top up government-funded home care with private services. Moving one partner into an aged care home means the household must pay for residential care fees. At the same time, the partner remaining at home must cover ongoing living expenses.
Do household costs halve when one partner moves into aged care?
No, most household expenses do not halve when one partner moves into an aged care home. The partner remaining at home still needs to pay for all fixed living costs. These include ongoing expenses like council rates, home insurance, utilities and regular groceries.
What happens when home care funding is exhausted?
It is easy to assume that moving into residential aged care will be more affordable once home care funding runs out. However, you should compare the numbers carefully before making a move. For many couples, residential aged care can end up costing far more than paying for additional home care.
Does Aged Care Decisions help families find home care providers?
Yes, Aged Care Decisions offer a 100% free and independent service to help older Australians find suitable aged care options. We do the running around for you to reduce stress. We can match you with available Support at Home providers in your area.
The information contained in this article is intended as general information only and does not constitute personal financial advice, legal advice or professional advice. While care has been taken to ensure the information is accurate and up to date at the time of publication, rules, rates and circumstances can change.
The information provided may not be suitable for your individual circumstances. Before making any decisions about financial matters you should seek advice from an appropriately qualified professional who can consider your personal situation.
