Overview
When one partner enters residential aged care, both partners' financial lives change. This is one of the most emotionally difficult transitions an older couple can face — and the financial complexity makes it worse. The at-home partner often worries about whether they can afford to maintain their own lifestyle, while the family worries about the cost of care.
The good news: the system has specific protections designed to prevent the at-home partner from being left destitute. The family home is exempt indefinitely while the partner remains there. Assets are split 50/50, so the at-home partner retains access to their share. And the illness-separated pension rate can increase combined household income by more than $14,000 per year.
Understanding these rules before your parent or partner enters care can save thousands of dollars and significantly reduce anxiety. This guide covers every major financial aspect with worked examples using current 2025–26 government rates.
How assets are assessed for couples
For the means-tested care fee, Services Australia combines the assets of both partners — regardless of whose name they are in — and then divides the total by two to determine the assessable assets for the person entering care.
“Combined assets” includes:
- Bank accounts and term deposits (both partners)
- Superannuation balances (both partners, if over Age Pension age)
- Shares, managed funds, and other investments
- Motor vehicles
- Investment properties (at market value)
- Contents and personal effects (at disposal value)
It does not include the family home if the partner continues to live there (see family home section below), and it does not include prepaid funeral expenses or special disability trusts.
Worked example: moderate assets
| Calculation | Amount |
|---|---|
| Combined assessable assets | $400,000 |
| Half attributed to David | $200,000 |
| Asset excess ($200,000 − $59,500) | $140,500 |
| Asset test fee ($140,500 × 17.5%) | $24,588/yr |
Worked example: high assets
| Calculation | Amount |
|---|---|
| Combined assessable assets | $900,000 |
| Half attributed to David | $450,000 |
| Asset excess ($450,000 − $59,500) | $390,500 |
| Asset test fee ($390,500 × 17.5%) | $68,338 → capped at $32,719/yr |
How income is assessed
Combined income is also halved for the assessment. Income sources assessed include:
- Age Pension (both partners)
- Superannuation drawdowns or pension payments
- Investment income (dividends, interest, rental income)
- Deemed income on financial investments (at Centrelink's deeming rates)
- Employment income (if applicable)
Worked example: income assessment
| Calculation | Amount |
|---|---|
| Combined assessable income | $69,864/yr |
| Half attributed to David | $34,932/yr |
| Income excess ($34,932 − $31,140) | $3,792 |
| Income test fee ($3,792 × 50%) | $1,896/yr |
Both the income test result ($1,896) and the asset test result (from the examples above) are added together to determine the total means-tested care fee — subject to the annual cap of $32,719.
Income test contribution: $1,896/yr
Asset test contribution: $24,588/yr
Total MTCF: $1,896 + $24,588 = $26,484/yr (below the annual cap)
Age Pension rates for couples
The Age Pension rate directly affects household income and, in turn, the means-tested care fee. Understanding the different pension rates available to couples is important for financial planning.
| Situation | Rate per person (approx., Sept 2025) | Combined |
|---|---|---|
| Couple — both at home | $22,432/yr | $44,864/yr |
| Couple — one in care, one at home | $22,432/yr each | $44,864/yr |
| Illness-separated rate | $29,754/yr each | $59,508/yr |
The Age Pension includes a pension supplement and an energy supplement, which help cover the basic daily fee charged in residential care ($63.57/day or $23,203/yr). For a full pensioner at the couple rate ($22,432/yr), the basic daily fee alone exceeds the pension — meaning the at-home partner's pension is effectively subsidising the care costs. The illness-separated rate helps address this imbalance.
The illness-separated pension rate
When one partner enters aged care, the couple may be eligible for the illness-separated rate. This is one of the most important — and most commonly missed — financial benefits available to couples in this situation.
What is it?
The illness-separated rate provides each partner with a pension closer to the single Age Pension rate ($29,754/yr), rather than the lower couple rate ($22,432/yr each). The combined benefit is substantial:
| Couple rate | Illness-separated rate | Difference | |
|---|---|---|---|
| Per person (annual) | $22,432 | $29,754 | +$7,322 |
| Combined (annual) | $44,864 | $59,508 | +$14,644 |
Who qualifies?
The illness-separated rate applies when a couple is separated due to illness. Eligibility requires:
- One partner is in residential aged care (or hospital long-term)
- The separation is due to the illness or infirmity of one or both partners
- The couple intends to remain together if circumstances allowed
- Application is made through Centrelink (Services Australia)
In practice, if one partner is in permanent residential aged care, this criterion is almost always met. But you must apply — it is not automatic.
Net financial impact
The higher pension increases combined income, which slightly increases the means-tested care fee through the income test. However, the net benefit is almost always positive:
How to apply
- Contact Centrelink (Services Australia) on 132 300
- Advise that one partner has entered (or is entering) residential aged care
- Request the illness-separated rate
- Provide supporting documentation (admission letter from the facility)
Accommodation payments for couples
The accommodation cost (RAD/DAP) is separate from the means-tested care fee and is set by the facility. For couples, the key question is whether to pay the RAD as a lump sum (tying up capital) or the DAP as a daily rental (preserving liquid assets for the at-home partner).
Preserving the at-home partner's financial security
The at-home partner needs access to funds for living expenses, home maintenance, and potential future care needs. Paying a large RAD from joint savings can leave the at-home partner short of liquid capital.
- Full RAD: Pay $400,000 from savings + $50,000 loan or DAP on remainder. At-home partner left with minimal liquid savings.
- Full DAP: $450,000 × 8.38% ÷ 365 = $103.33/day ($37,716/yr). Savings preserved for at-home partner.
- Combination: Pay $200,000 RAD + DAP on $250,000 = $57.38/day ($20,943/yr). At-home partner retains $200,000 in savings.
The “right” choice depends on the at-home partner's other income sources, the couple's total assets, and how long the partner in care is likely to remain in the facility. An aged care financial adviser can model these scenarios.
The family home
If the partner remaining at home continues to live there, the family home is exempt from the assets test indefinitely. This is the single most important financial protection for couples in the aged care system. There is no time limit and no value cap when a partner remains in the home.
This protection applies regardless of the home's value. Whether the home is worth $300,000 or $3 million, it simply does not count in the assets test while the partner lives there.
See our Family Home guide for the full rules on exemptions, the 2-year rule, and renting vs selling.
When both partners need care
This is the scenario that families dread — and the one that requires the most advance planning. When both partners enter residential aged care, the costs effectively double while the protections change significantly.
How the assessment works
Each partner is assessed separately, but combined assets and income are still halved for each person's individual assessment. This means:
- Each partner pays their own basic daily fee ($23,203/yr each = $46,406/yr combined)
- Each partner's MTCF is calculated on half of combined assets and income
- Each partner has their own annual cap ($32,719/yr each) and lifetime cap ($78,526 each)
- Each partner pays their own accommodation costs (RAD/DAP) at their respective facility
The family home changes
Once neither partner lives in the family home, the indefinite exemption ends. The 2-year rule then applies — the home is exempt for 2 years from when the second partner enters care (and the home is vacated), after which it is included in the assets test at its capped value.
Total cost impact
Each partner's asset test: ($399,275 − $59,500) × 17.5% = $59,461 → capped at $32,719/yr each.
Basic daily fees: $23,203/yr × 2 = $46,406/yr
MTCF: up to $32,719/yr × 2 = $65,438/yr
Accommodation: dependent on facility choices
Minimum combined annual cost: $111,844 + accommodation
Planning strategies
These are the most impactful steps couples (and their families) can take to manage aged care costs effectively.
- Apply for the illness-separated pension rate immediately. Contact Centrelink as soon as one partner enters care. The additional $14,644/yr in combined pension income makes a meaningful difference to household finances.
- Get the means assessment before choosing a facility. Services Australia will issue a fee advice letter showing exactly what means-tested care fee applies. Request this before signing any agreement with a facility.
- Model the “second partner enters care” scenario now. Use our calculator to see what happens to total costs if both partners eventually need care. This informs decisions about the family home and accommodation payments.
- Consider the DAP for the first partner. Paying the full DAP (rather than the RAD) preserves liquid capital for the at-home partner. This is particularly important if the at-home partner may also need care later.
- Do not sell the family home prematurely. While one partner remains at home, the home is exempt indefinitely. Selling removes this protection and can significantly increase the means-tested care fee.
- Engage an aged care financial adviser. Couples with combined assets above $400,000 (excluding the home) or complex situations (self-managed super, investment properties, blended families) will almost certainly benefit from professional advice. The cost ($2,000–$5,000) is small relative to potential savings over a multi-year care period.
Next steps
If you are navigating aged care for one partner of a couple, here is the recommended sequence:
- Get a personalised estimate — use our free calculator to see what the means-tested care fee and total costs will be for your specific situation. Select “couple — partner at home” in Step 1.
- Apply for the illness-separated rate through Centrelink (132 300) as soon as one partner enters care.
- Request a means assessment from Services Australia (1800 227 475).
- Read our related guides — particularly the family home guide and RAD guide.
- Consult an aged care financial adviser if your combined assets exceed $400,000 or if you need help deciding between RAD and DAP options.