by sophie doyle, retirement and financial aged care specialist
Sophie Doyle | Erina | Morgans
After a long wait, the government has introduced new laws that will change the way aged care is delivered and funded in Australia.
Australia’s population is getting older. To ensure that aged care services remain high quality and that older Australians are treated with dignity, the government has made changes to how aged care is funded.
The new Aged Care Act focuses on putting you at the centre of care, giving you more choice, control, and clearly defined rights.
However, many people are most concerned about the cost of care. Below is a simple guide to help you understand the changes and plan for the future.
Who is affected?
The rights in the new Aged Care Act apply to everyone. However, the new fee rules will only apply if:
- You move into residential aged care after 30 June 2025.
- You are approved for Home Care on or after 12 September 2024.
If you were already receiving a Home Care Package before 12 September 2024, or were waiting for a package, special grandfathering rules may apply to ensure you are not disadvantaged even if you later move into residential care.
Changes to Residential Aged Care Costs
The cost of aged care includes both accommodation (your room) and ongoing care costs.
Accommodation costs (room fees)
- Some room prices may increase, but a range of prices will still be available.
- You can choose to pay for your room as a lump sum (like a refundable deposit) or as a daily rental payment.
- If you pay a lump sum, the provider will deduct 2% per year for the first five years (up to 10% total). The rest will be refunded to you or your estate.
- If you choose daily rent, this will increase every six months in line with inflation.
ongoing care costs
These costs will now be split into three fee categories:
Everyday living expenses
Includes meals, cleaning, and laundry.
- The standard rate is $63.57 per day (indexed).
- If you have assets over $238,000 or income above $95,400, you may pay up to $12.55 extra per day.
Non–clinical care
Includes personal care and help with daily tasks.
- This is means–tested, up to $101.16 per day.
- Fees only apply for the first four years or up to $130,000 total (indexed).
Clinical Care
Covers medical care and nursing.
- Fully paid by the government (you do not pay anything for this).
Changes to home care costs
From 1 July 2025, the current Home Care Packages will be replaced by the Support at Home program.
This new system will offer eight levels of care instead of just four, giving more flexibility to match your needs.
Like residential care, the cost of home care will be split into three categories and means–tested:
Clinical Care
Fully funded by the government.
Independence Support (personal care, mobility aids, etc.)
- Self–funded retirees pay 50% of the costs.
- Full pensioners pay 5% of the costs.
- Part–pensioners and Commonwealth Seniors Health Card holders pay somewhere in between, based on means–testing.
Everyday Living Costs (meals, transport, social activities)
- Self–funded retirees pay 80% of the costs.
- Full pensioners pay 17.5% of the costs.
- Part pensioners and Commonwealth Seniors Health Card holders pay somewhere in between.
other important changes
- Your total home care fees over your lifetime will not exceed $130,000 (indexed).
- Use it or lose it: Home care package budgets will now be allocated quarterly, and you can only roll over up to $1,000 or 10% of your funds each quarter.
what should you do next?
Planning for aged care can be complex, and ensuring you have enough money set aside is essential for maintaining your quality of life.
- If you or a loved one may need aged care soon, acting before 1 July 2025 may help you lock in current fee arrangements.
- Regardless of when you enter care, it’s important to get comprehensive financial advice to understand how these changes impact your options.
As a licensed financial adviser and Accredited Aged Care Professional™, I have the experience and expertise to help you navigate these changes.
Sophie Doyle (AR#000470612) is a Retirement and Aged Care Specialist at Morgans Financial Limited (Morgans AFSL 235410 / ABN49 010 669 726) and a 2023 Aged Care Adviser of the Year Finalist. Sophie has a passion for assisting people make informed financial decisions, as they navigate their way through retirement and aged care. Disclaimer: While every care has been taken, Morgans Financial Limited makes no representations as to the accuracy or completeness of the contents. The information is of a general nature only and has been prepared without consideration of your individual objectives, financial situation or needs. Before making any decisions, you should consider the appropriateness for your personal investment objectives, financial situation or individual needs. We recommend you see a financial adviser, registered tax agent or legal adviser before making any decisions based on this information. Current at 3 December 2024.