Aged Care Funding Options in Australia

As individuals age, the need for quality healthcare and aged care services becomes increasingly important.

In Australia, there are various funding options that play a significant role in supporting the healthcare and aged care needs of older adults.

Understanding these options is crucial for individuals and families navigating the complex landscape of aged care.

In this guide, we will explore the different funding options available, including Medicare, the Aged Care Funding Instrument (ACFI), Home Care Packages, and the means-tested fee system.

By the end of this article, you will have a better understanding of how these funding options work and how to access them.

Medicare: Australia’s Universal Healthcare System  

Medicare is Australia’s publicly funded universal healthcare system that ensures essential healthcare services are accessible to all Australian citizens and permanent residents.

It plays a vital role in providing healthcare support for older adults. While Medicare primarily focuses on medical expenses, it does offer some level of support for aged care services.

Under Medicare, elderly adults have access to a range of medical services and treatments. This includes medical consultations with general practitioners and specialists, diagnostic tests such as blood tests and X-rays, prescription medications, and certain allied health services like physiotherapy, occupational therapy, and podiatry.

These services are crucial for managing various health conditions, monitoring health status, and providing necessary treatments to enhance the overall well-being of older individuals.

It’s important to understand that while Medicare covers a portion of healthcare expenses, it does not fully cover the costs associated with aged care services, such as residential care or personal support.

Medicare primarily focuses on funding healthcare services required by older individuals. This means that medical treatments and consultations related to specific health issues are covered, but long-term care and support services are typically not included.

For comprehensive aged care services, individuals may need to consider other funding options, such as the Aged Care Funding Instrument (ACFI) for residential care or Home Care Packages for support services in their own homes.

These funding options, in conjunction with Medicare, help seniors access the necessary healthcare and aged care services to meet their specific needs.

It’s important for individuals and families to familiarize themselves with the limitations and coverage of Medicare regarding aged care. This understanding allows them to explore additional funding options and make informed decisions about the appropriate aged care services required for themselves or their loved ones.

Consulting with healthcare professionals, aged care experts, or financial advisors can provide valuable guidance in navigating the complexities of healthcare funding and aged care services.

The Aged Care Funding Instrument (ACFI)

For individuals who require residential aged care, the Aged Care Funding Instrument (ACFI) serves as a crucial funding option.

The ACFI is a comprehensive assessment tool utilized to determine the level of care needed by residents in government-subsidized aged care facilities.

It evaluates the individual’s care requirements across three domains: activities of daily living (ADLs), behavior, and complex health care.

The assessment process involves a thorough evaluation of the resident’s ability to perform essential daily activities independently, such as bathing, dressing, eating, and mobility.

It also considers behavioral aspects like wandering or aggression, as well as complex health care needs related to medical conditions or specialized treatments.

Based on the ACFI assessment outcomes, individuals may become eligible to receive funding from the Australian Government to cover a portion of their care costs.

This funding is directed to the aged care provider, alleviating the financial burden on residents and their families.

The ACFI funding enables aged care facilities to deliver appropriate levels of care and support to residents, ensuring their well-being and quality of life.

Home Care Packages

Home Care Packages are specifically designed to support older individuals who prefer to continue living independently in their own homes.

These packages offer a range of services tailored to the individual’s unique needs and requirements. Services can include personal care assistance, domestic support, nursing care, transport assistance, and more.

Home Care Packages receive funding from the Australian Government, with allocations based on the individual’s level of need. There are four levels of Home Care Packages available, ranging from Level 1 to Level 4.

Each level provides different levels of funding and support, with higher-level packages offering more comprehensive assistance.

The goal is to ensure that older individuals can access the necessary services and support to maintain their independence and well-being within their own homes.

It’s worth noting that the allocation of Home Care Packages is based on the individual’s assessed care needs and may involve waiting periods due to high demand.

However, once assigned a package, individuals can work closely with their chosen service provider to customize the services to meet their specific requirements.

Both the ACFI and Home Care Packages are vital funding options that contribute to the availability and affordability of aged care services in Australia.

These options enable elderly individuals to access appropriate care and support, whether they choose residential aged care or prefer to remain in their own homes.

By utilizing these funding mechanisms, individuals can receive the assistance they need while maintaining their independence and quality of life in their senior years.

Means-Tested Fees

In addition to Medicare, the Aged Care Funding Instrument (ACFI), and Home Care Packages, the Australian Government implements a means-tested fee system to determine the financial contribution individuals need to make towards their aged care costs. This system takes into account the individual’s income, assets, and overall financial circumstances.

To assess the means-tested fee, the Department of Human Services conducts an income and assets assessment. This assessment evaluates the individual’s financial resources, including income from various sources such as pensions, investments, and superannuation, as well as assets like property, savings, and investments.

The income and assets assessment is designed to determine the individual’s ability to contribute towards their aged care costs.

The means-tested fee is calculated based on a sliding scale, where those with higher income and assets contribute a higher percentage of their aged care expenses.

Conversely, individuals with lower income and assets may be eligible for a reduced or minimal means-tested fee.

It’s important to note that the means-tested fee is separate from the accommodation fees charged by residential aged care facilities. The accommodation fee covers the costs associated with the resident’s room, amenities, and services provided by the facility.

The means-tested fee, on the other hand, pertains specifically to the individual’s personal contribution towards the costs of their care and support services.

The means-tested fee is an essential component of the aged care funding system as it ensures a fair distribution of costs based on an individual’s financial capacity.

It helps to support the sustainability of the aged care system and ensures that government subsidies are appropriately allocated to those with greater financial need.

The Department of Human Services conducts regular reassessments of income and assets to ensure that the means-tested fee remains accurate and reflects any changes in the individual’s financial circumstances over time.

It’s advisable for individuals and families to engage with financial advisors or seek guidance from the Department of Human Services to understand how the means-tested fee applies to their specific situation.

This can help them plan and prepare for the financial aspects of aged care and make informed decisions regarding their care options.


Navigating the funding options for aged care in Australia can be complex, but understanding Medicare, the Aged Care Funding Instrument (ACFI), Home Care Packages, and means-tested fees can help individuals and families make informed decisions.

By leveraging these funding options, older Australians can access the necessary healthcare and aged care services to support their well-being and maintain their independence.

Seeking guidance from aged care professionals, financial advisors, or government resources can provide additional support and clarity when navigating these funding options.

Everyone’s situation is unique, and it’s essential to consider individual circumstances when exploring aged care funding options.

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