What Happens to the Age Pension When Someone Enters Aged Care?

Age Pension guide • Last reviewed 16 July 2026

Moving into residential aged care does not automatically cancel the Age Pension. The pension remains subject to the usual income and assets tests, but the move often changes the information used in those tests.

The pension and residential aged care means assessment are separate calculations. A decision that reduces one cost can sometimes increase another, so both should be reviewed together.

Does the pension continue?

For many people, yes. The rate can stay the same, increase or decrease depending on their circumstances after the move. Important changes can include whether a partner remains at home, whether the home is sold or rented, and how accommodation is paid.

What happens if one member of a couple enters care?

Partners who live apart because one needs residential care may be treated as a couple separated due to illness for social-security purposes. This can affect the pension rate while their combined income and assets may still be assessed under couple rules.

The aged care means assessment generally uses half of the couple’s combined income and assets, regardless of whose name each asset is held in.

How can the family home affect the pension?

The former home may remain exempt from the Age Pension assets test for a period or while certain occupancy conditions apply. Residential aged care uses a different capped-home and protected-person test. Families should not assume that a home exempt for pension purposes is also fully exempt for aged care fees.

What happens when a RAD is paid?

A refundable accommodation deposit is counted as an asset in the residential aged care means assessment. However, My Aged Care confirms that the RAD balance is exempt from the Age Pension means test.

Using financial assets to pay a RAD can therefore alter the pension assessment, the aged care means assessment and available cash flow in different ways.

What if the home is sold?

Sale proceeds may become assessable financial assets and may be subject to deeming unless a specific exemption applies. The timing and intended use of the proceeds can matter. The sale can also change rental income, home exemptions and the amount available to pay for accommodation.

What if the home is rented?

Net rental income may be assessable. The asset treatment of the property can depend on the applicable pension and aged care rules, including who is living in the home. Keep clear records of rent, agent fees, rates, insurance, maintenance and debt.

What needs to be reported?

Changes such as moving into care, selling or renting the home, paying a RAD, receiving an inheritance, changing relationship status or changing investments should be reported promptly to Services Australia or DVA.

Information to prepare

• Current pension and concession-card status.
• Partner details and living arrangements.
• Home ownership, occupancy and proposed sale or rental plans.
• Financial assets before and after any RAD payment.
• Superannuation and income streams.
• Expected rental income and property costs.
• The proposed room price and accommodation payment method.

General information only: This guide does not provide financial, legal or tax advice. Outcomes depend on individual circumstances, provider agreements and the rules, rates and thresholds applying at the relevant time.