What is the Income-Tested Care Fee?

Manjil Munankarmi
Jun 29
6 min read

Updated: 3 days ago

When exploring government-funded home care options, understanding your potential out-of-pocket costs is just as important as finding the right provider. One key fee that often raises questions is the Income-Tested Care Fee (ITF).

In this blog, we’ll break down what this fee is, who needs to pay it, how it’s calculated, and how it fits into your Home Care Package (HCP).

What Is the Income-Tested Care Fee (ITF)?

The Income-Tested Care Fee is a contribution that some individuals are required to pay toward their own home care services. It’s based on your income, not your assets, and is assessed by Services Australia after you submit an income assessment form (SA456).

This fee is added directly to your Home Care Package budget, helping to fund services you choose, such as personal care, transport, domestic support, or nursing.

The Income Tested Fee is not paid to the government. It is paid to your Home Care Provider, like My Companionship, and used entirely for your care.

Why Does the Government Charge This Fee?

While the Australian Government subsidises most of the cost of Home Care Packages, it also asks people who can afford to contribute to do so. This ensures the system remains financially sustainable for everyone, including those on lower incomes who pay little or nothing at all.

The good news? Your contribution is capped:

Annually: You won’t pay more than a set amount per year.
Lifetime: Once you hit the lifetime cap, you don’t have to pay the ITF again, even if you move into an aged care home later.

As of March 2025, the lifetime cap is $82,347.13.

How Is It Related to Home Care Packages (HCP) and Support at Home?

The Income-Tested Care Fee is a key part of how Home Care Packages are funded. Here’s how they’re connected:

Home Care Packages Are Subsidised, But Not Fully Paid For:

While the government pays the majority of your care costs, those with higher incomes may be asked to share the cost through the ITF. This ensures fairness across the aged care system.

Your Fee Replaces Part of the Government Subsidy:

If Services Australia assesses that you need to pay an ITF, your fee reduces the amount the government contributes, but the total value of your package stays the same.

Example:

Your HCP Level 3 is worth $34,550 per year
Your assessed ITF is $3,000 per year
The government contributes $31,550, and you contribute $3,000
You still get $34,550 worth of services
The Fee Enhances Your Package Budget:

The ITF is not a hidden or wasted fee, it’s added to your total care budget. This allows you to access more hours or additional services based on your preferences.

From 1 November 2025, the Support at Home program will gradually replace the current HCP system. While some funding models will change, the principle of income-based contributions remains.

That means:

ITFs will still apply under Support at Home
Your assessed fee will continue to go towards your care, not to the government
The caps and income brackets may be adjusted, but fairness and affordability will stay central

At My Companionship, we’ll guide you through the transition and make sure your care remains uninterrupted - no matter the program name.

How Is the Fee Calculated?

Your Income Tested Care Fee is determined by an income assessment, not your assets. After submitting the SA456 form, Services Australia will:

Review your taxable income (post-tax and Medicare levy)
Exclude certain payments such as:
- Pension supplement
- Rent assistance
Share the finalised amount with you and your provider
Deduct your contribution from the government subsidy

Assessments are reviewed twice a year (March and September), or earlier if your income changes significantly.

Who Has to Pay and How Much?

Income-tested fees are not charged to everyone. They are based on your individual income level, not your assets.

1. Low-Income Bracket - Pay $0

You won’t pay an ITF if your income is:

Single: below $33,850
Couple (apart): below $33,173
Couple (together): below $26,198

2. Middle-Income Bracket - Up to $18.85/day

Income ranges:

Single: above $33,850 - $65,260
Couple (apart): above $33,173 - $64,584
Couple (together): above $26,198 - $49,873

3. High-Income Bracket - Up to $37.70/day

Income over:

Single: above $65,260
Couple (apart): above $64,584
Couple (together): above $49,873

Lifetime Cap: $82,347.13 (as of March 20, 2025)

Once you’ve paid this much, you won’t pay any more even if you later enter an aged care home.

What If My Income Changes?

Life circumstances change, and so can your income. Whether you retire, start receiving a different pension, sell an asset, or experience a drop in superannuation income, your Income-Tested Care Fee (ITF) may need to be adjusted.

Here’s what you need to know:

Twice-Yearly Reviews

Services Australia automatically reviews your income every March and September as part of its indexation process. These reviews ensure your ITF reflects your most up-to-date financial situation without requiring you to do anything.

Request a Reassessment Anytime

You don’t have to wait for the next scheduled review. If your financial situation changes significantly, for example:

You stop working
You transition from part pension to full pension
You experience a major drop in investment income

You can request a new assessment by submitting another Income Tested Fee Assessment form (SA456). This helps ensure you’re not overpaying when your income drops.

Why It Matters?

If your income decreases, your ITF could reduce or you may no longer have to pay it at all.
If your income increases, your ITF may go up, but remember: it’s still capped annually and for your lifetime.

Where Does the Fee Go?

The Income-Tested Care Fee:

Is paid directly to your provider.
Is added to your Home Care Package budget.
Is used only for services and supports you choose and agree to.

At My Companionship, we ensure that every dollar of your package and contribution is put toward high-quality, meaningful care.

Conclusion

Understanding the Income-Tested Care Fee is an important step in planning your Home Care journey. While it may feel overwhelming at first, remember:

Not everyone pays it.
It’s based only on your income.
It goes directly into your care budget.
It's capped to protect your affordability.

At My Companionship, we’re here to guide you every step of the way, from submitting your income assessment to making the most of your Home Care Package. We believe in transparency, personalised care, and helping you feel in control of your funding and support.

Have questions about your fees or assessment?

Reach out to our friendly team today. We’ll help you understand what applies to your situation, so you can focus on living well at home.

FAQs

1. Do I have to pay an Income-Tested Care Fee if I receive the full Age Pension? No. If you're a full pensioner and your income falls within the low-income bracket, you generally won’t have to pay an Income-Tested Care Fee. This is confirmed after you complete the income assessment with Services Australia.

2. Will my Home Care Package be reduced if I have to pay this fee? No. The value of your Home Care Package stays the same. If you're assessed to pay an Income-Tested Care Fee, that amount replaces part of the government subsidy. Your total care budget remains unchanged, you still receive the full package value.

3. What happens if my income goes up or down? Your income is reviewed automatically twice a year. However, if you experience a significant change in income before the next review, you can request a reassessment at any time by submitting a new SA456 form. This helps ensure your fee remains fair and accurate. 4. Is there a maximum amount I can be asked to pay?

Yes. There are annual and lifetime caps. As of March 20, 2025, the lifetime cap is $82,347.13. Once you reach the lifetime cap, you won’t have to pay this fee again, even if you move into residential aged care later.

5. How can My Companionship help with the Income-Tested Care Fee? We assist you through every step explaining how the assessment works, helping with forms, and making sure your care plan makes the best use of your funding. Our team ensures full transparency and supports you in managing your care affordably.