Sweeping reforms to aged care came into effect on 1 November to help improve the quality, transparency and flexibility of care.
With more care levels, clearer pricing, and greater control over how your funding is used, the new system aims to better match services to individual needs. Providers will be required to offer detailed cost breakdowns, empowering you to make informed decisions about your care.
While the reforms are a step forward in care quality, they also come with changes in how services are funded and that may mean higher out-of-pocket costs for some.
What you pay depends on your financial situation – whether you receive a full or part pension or are self-funded – and the services you access.
As the aged care landscape evolves, staying informed is key to making confident choices. Whether you’re planning for yourself or supporting a loved one, understanding the new system will help you access the right care at the right time.
Help at home
From 1 November the current Home Care Packages will be replaced by a new program called Support at Home.
The key changes include:
- Eight levels of care (up from four) to better match individual needs
- Extra funding for assistive technology, home modifications and palliative care
Services are expected to remain the same but the way you pay for them may change.
- For example, clinical care (such as nursing or physiotherapy) will be fully funded by the Government.
- You may pay more for everyday living services (such as meal preparation or cleaning) than you do for independence supports (like personal care or transport).
- The out-of-pocket costs for everyday living will range from 17.5 per cent for full pensioners to 80 per cent for self-funded retirees.
- Non-clinical support, like showering, will cost five per cent for full pensioners to 50 per cent for self-funded retirees.
Categories and expected contribution ranges are shown below*:
If you were approved for a Home Care Package on or before 12 September 2024, you will be eligible for fee concessions to ensure you are not worse off under the new rules.
The package level you are assigned sets the total funding available to pay for care, with 10 per cent allocated to the care provider to cover the cost of care management.
You then work with your provider to decide how you want to spend the rest of the budget. The provider will set their fees for services and you will make a contribution based on your income and assets.
Residential aged care
Room prices in aged care facilities have been steadily rising following an increase in the Refundable Accommodation Deposit (RAD) threshold from $550,000 to $750,000.
Higher RADs mean you may need to use more of your savings or income to cover aged care costs.
From 1 November 2025, anyone who moves into care after this date and pays a RAD, will have two per cent of that amount deducted each year, for up to five years.
You can still opt to pay a Daily Accommodation Payment (DAP), but this will increase every six months in line with inflation.
Other fees include:
- the basic daily fee (set at 85 per cent of the single age pension)
- a hotelling contribution and non-clinical care contribution
- potentially a higher everyday living fee (previously known as extra or additional services)
Fee caps and planning ahead
The lifetime cap on aged care contributions continues. You won’t pay more than $135,318 (indexed) over your lifetime towards in-home and residential non-clinical care combined.
Understanding how the changes affect your financial future is vital. You’ll need to consider:
- whether someone will remain in the family home
- your current income and assets
- potential age pension entitlements
- estate planning strategies
Use the government’s fee estimator at MyAgedCare to get a clearer picture of your potential costs.
Get advice early
Navigating aged care can be complex and the upcoming changes add new layers of decision-making.
We can help explain your options, structure your assets, minimise fees and plan for your future care needs. If you would like to discuss your aged care options, please give us a call.
Source: Prepare for Life Summer 2025-26. Prepare for Life is a publication of Alliance Wealth Pty Limited (AFSL 449221), a wholly owned subsidiary of Centrepoint Alliance Limited.
This article has been republished in full with permission.
* Additional content: The table included in this article has been added by Synectic for explanatory purposes.
