If you or a loved one receive the Age Pension, there is some welcome news heading your way this month.
From 20 March 2026, the Australian Government is increasing the Age Pension in line with the rising cost of living. For many older Australians and their families, this is a meaningful boost but it also triggers some automatic changes to aged care fees and contribution caps that are worth understanding before they kick in.
Below is a simple breakdown of what’s changing, why it happens, and what (if anything) you need to do.
How Much Is The Age Pension Increase?
Twice a year, in March and September the government reviews and adjusts the Age Pension to keep pace with inflation and wages. From 20 March 2026, the new maximum fortnightly rates (including pension supplement and energy supplement) will be:
Situation | Current Rate | New Rate From 20 March |
Single | $1,178.70 | $1,200.90 |
Couple | $1,777.00 | $1,810.40 |
Couple separated by illness | $2,357.40 | $2,401.80 |
If you and your partner are separated due to illness, such as when one partner enters residential aged care and the other remains at home, Services Australia recognises the higher cost of running two households. In this situation, both partners receive the higher single rate of $1,200.90 per fortnight. For many couples in this situation, that means a combined increase of $44.40 per fortnight, which makes a real difference to day-to-day budgets.
Why Does A Pension Increase Affect Aged Care Fees?
This is one of the most common questions we hear from families, and it’s a fair one.
The aged care system is designed so that fees are linked directly to the Age Pension. This way, as the cost of living rises and the pension adjusts, the system stays balanced. The government’s contribution to care increases at roughly the same rate as what residents and participants are expected to contribute.
In practical terms, the Basic Daily Fee in residential aged care is set at exactly 85% of the single basic Age Pension. So, when the pension goes up, the daily fee goes up by the same percentage. The same principle applies to a range of other fees, caps and thresholds across both residential care and Support at Home.
It’s not a coincidence; it’s baked into Aged Care legislation.
What Changes For Residential Aged Care?
If you or a loved one lives in a permanent residential aged care facility, here is what to expect from 20 March:
The Basic Daily Fee will increase
Everyone in residential aged care pays this fee to cover everyday living costs like meals, laundry, cleaning and utilities. Currently set at $65.55 per day, this is expected to rise to around $66.80 per day once the Department of Health publishes the official updated fee schedule. The exact figure will be confirmed shortly.
Means-tested care fees may shift slightly
If you pay a means-tested care fee on top of the basic daily fee, the annual and lifetime caps on how much you pay will also be indexed upward. This is actually good news, it means you are protected from paying unlimited fees over time, and those protections strengthen slightly each indexation round.
Asset thresholds are also updated
The thresholds that determine whether a resident qualifies as “fully supported” (meaning the government covers accommodation costs) will nudge upward. This gives families a slightly larger buffer before having to pay full accommodation costs.
Deeming rates are also rising from 20 March
Services Australia uses deeming rates to estimate income earned from financial assets. From 20 March, these will increase by 0.5 percentage points to 1.25% on lower balances and 3.25% on higher balances. For part-pensioners or self-funded retirees with financial investments, this may slightly increase your assessed income and, in turn, your means-tested care fee.
What Changes For Support At Home?
If you receive services under the Support at Home program, the percentage you contribute toward your services—for example, 5% for a full pensioner receiving independence services—does not change
However, from 20 March, the lifetime caps on how much you can contribute over the course of your care will increase:
- For New participants (those who entered Support at Home from 1 November 2025) the cap is currently $135,318.69 and will increase
- For Grandfathered HCP participants (those who had a Home Care Package before 12 September 2024): cap is currently $84,571.66 and will also increase
For most Support at Home participants, the practical day-to-day impact is minimal. The contribution percentages you pay for each service stay the same, it’s mainly the caps and thresholds running in the background that shift.
View our extensive Support at Home information hub for more information.
Do You Need To Do Anything?
The good news is no, you don’t need to do a thing.
Services Australia handles all these calculations automatically. If the 20 March indexation changes your individual fee amount, you will receive a new fee advice letter in the mail from Services Australia. Your aged care provider will also be notified directly.
You don’t need to call My Aged Care, resubmit an assessment or update any forms.
When Will The Exact New Figures Be Confirmed?
The Department of Health and Aged Care will publish the official, to-the-cent updated Schedule of Fees and Charges on or very shortly after 20 March 2026.
As soon as that schedule is released, we will update our comprehensive Schedule of Fees page with every new figure including Basic Daily Fee, means-tested caps, asset thresholds, Support at Home lifetime caps and everything else.
Need Help Understanding Your Aged Care Costs?
Understanding aged care fees can feel complicated but navigating them doesn’t have to be stressful.
At Aged Care Decisions, we help thousands of Australian families each month to understand their options and find providers that match their needs, location and budget—completely free of charge.
Whether you are exploring Support at Home services, looking for a residential aged care facility, or just trying to understand what you are likely to pay, our Aged Care specialists are here to help.
Get your FREE personalised Options Report today
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