Making Aged Care More Affordable

The Australian Government provides subsidies and supplements to help reduce the cost of aged care for older Australians. These payments go directly to providers on your behalf and fund essential care services so individuals aren’t expected to cover the full cost themselves. 

Subsidies are a major part of how aged care services are funded in Australia — whether you’re receiving support in your home or living in a residential aged care home.

What Are Government Subsidies?

Government subsidies are payments made to approved aged care providers to help cover the cost of care you receive. They reduce the amount you would otherwise have to pay for your care needs. Subsidies apply to a wide range of care types, including:

Support at Home (formerly Home Care)

  • Subsidies paid to providers to support services delivered in your home.

  • Funding is based on your assessed care needs and classification.

  • Covers clinical support, core care services, equipment, and approved programs.

  • Your actual government contribution depends on your income and assets assessment (which determines what you pay). 

Key point: Support at Home subsidies form part of your individual Support at Home budget, which covers services you choose to receive. 

Residential Aged Care

When you enter a residential aged care home, the government subsidizes both care and support services. These can include:

  • Clinical care (nursing, wound care, therapy, allied health).

  • Everyday living support (help with personal care and daily tasks).

  • Accommodation subsidies for managing basic care costs. 

Providers receive funding directly from the government based on your care needs and your means‑tested financial assessment. 

Other Subsidized Programs

There are also government subsidies for:

  • Residential respite care — short‑term care in a facility to give carers a break. 

  • Transition Care Programs — short‑term care after hospital stays to help restore independence.

  • Multi‑Purpose Services Programs in rural or remote areas.

What Are Government Supplements?

In addition to core subsidies, the government also pays supplements to help providers meet specific care needs. These are extra amounts included in funding and may cover services such as:

Common Supplements Include:

  • Dementia and Cognitive Support — additional funding for residents with dementia (restricted under new reforms for older recipients). 

  • Veterans’ Supplements — extra funding for eligible veterans receiving aged care through the Department of Veterans’ Affairs.

  • Concessional Resident Supplements — helps reduce out‑of‑pocket costs for low‑income residents. 

  • Technical or Medical Supplements — such as oxygen, enteral feeding, or 24/7 registered nurse supplements. 

Supplements don’t come directly to care recipients — they are included in the subsidy amounts paid to aged care providers. 

How Much the Government Contributes

The government contribution varies depending on:

  1. Type of care you are approved for (Support at Home or residential care).

  2. Your income and assets — assessed by Services Australia or the Department of Veterans’ Affairs.

  3. The specific services, equipment, or supports you receive. 

For example, under the Support at Home program, there are different funding levels (classifications) that determine how much government money is allocated to your care budget each quarter. 

How It Works in Practice

Support at Home

Once you’re approved:

  • You’ll be assigned a Support at Home classification based on your needs.

  • Government funding for that classification is added to your care budget.

  • You may also be eligible for additional supplements depending on specific needs.

  • Your personal contribution is then calculated based on your means test. 

Residential Aged Care

When you enter a residential facility:

  • The government pays a residential care subsidy to the provider.

  • Additional supplements may apply for clinical and specialist services.

  • Your personal contributions (e.g., basic daily fee, non‑clinical care contributions) are means‑tested — meaning higher earnings/assets typically lead to higher contributions.

  • You must get an income and assets assessment to determine your subsidy and contribution levels.
  • Subsidies and supplements are paid to providers, not to you directly. 
  • Additional services or lifestyle upgrades at a provider may not be subsidised.
  • Financial hardship assistance may be available if you genuinely can’t afford the contributions. 

Summary

Government subsidies and supplements are designed to:

  • Reduce the cost of aged care for individuals and families

  • Encourage high‑quality care by ensuring providers have predictable funding

  • Tailor funding to individual care needs and financial capacity

Understanding how these subsidies work helps you plan effectively for ageing with dignity and financial confidence.