The new Aged Care Bill aims to strengthen aged care in Australia. However, it also means an increase in costs for some people entering residential aged care. Understanding the recent Australian Aged Care reforms is important for avoiding confusion and stress.
Although the aged care reform also focuses on home care, this guide will focus on changes to residential aged care.
Here, I’ll explain the recent Australian Aged Care reforms and what they mean for anyone entering into an aged care home after 1st November 2025.
Australian Aged Care Reforms: What You Need to Know
What Is the Australian Aged Care Reform?
The Australian Parliament passed the Aged Care Bill on 25 November 2024. The New Aged Care Act will affect the cost of residential aged care for those entering care starting 1 November 2025.
I highly recommend this resource for details on the New Aged Care Act: New Aged Care Act | Australian Government Department of Health and Aged Care.
Goals of the Aged Care Reform Act
With a growing ageing population, the government recognised the need to build a sustainable aged care system.
The Australian government took recommendations from the Aged Care Taskforce and Royal Commission into Aged Care Quality and Safety to build a system aimed at meeting long-term goals.
Australia’s Aged Care Reform Act aims to:
- Strengthen Australia’s aged care system
- Ensure older individuals have the care they need to enjoy the quality of life they deserve
- Provide greater choice and independence
- Increase access to aged care services that respect and meet their needs
- Deliver person-centered care
- Strengthen the quality of aged care standards
- Improve funding for residential aged care services
- Give older individuals the support they need to live in their homes longer and retain independence
- Provide additional support to the growing aged care sector
Learn more about the goals of the Aged Care Reforms here: About aged care reforms and reviews | Australian Government Department of Health and Aged Care.
If you are wondering how it may impact those with home care plans, I explain that in How the New Aged Care Reform Impacts Home Care
What Are the Main Changes to Residential Aged Care Costs?
The changes may result in higher charges for individuals entering the aged care system depending on the person’s financial situation.
There was already one change introduced from 1st January 2025. The room price cap, which is the amount a provider can set the Refundable Accommodation Deposit has increased from $550,000 to $750,000 and will be indexed over time.
Here is a look at some of the main changes you need to know for those entering aged care from 1 November 2025:
- The ‘no worse off’ principle applies to individuals who are already in aged care as of 30 June 2025 and means they will not be asked to pay more once the new rules are implemented
- Fees will remain the same for low-income individuals. Individuals with higher assessable income and/or assets will pay higher fees under the aged care reform.
- Aged care recipients may be required to contribute more toward the cost of non-clinical residential aged care services, such as accommodation, bathing, personal care, laundry, lifestyle activities, mobility assistance, and other living expenses
- The government will pay for 100% of clinical care costs
| Fee | Current | From 01/07/2025 |
|---|---|---|
| Basic Daily Care Fee | Paid by everyone Set at 85% of the basic Age Pension, indexed |
Paid by everyone Set at 85% of the basic Age Pension, indexed |
| Means Tested Care Fee | Paid by those with assets and income above a certain threshold | |
| Non-Clinical Care Contribution | Residents with assets over $502,981 or annual income over $131,279 (or combination) Up to $101.16/day Max $130,000 (indexed) or after 4 years whichever occurs first |
|
| Hotelling Supplement | Residents with assets over $238,000 or income above $95,400 (or combination) $12.55/day indexed |
|
| Refundable Accommodation Deposit (RAD) | The paid RAD is fully refundable when a person leaves an Aged Care Home | Providers can apply a retention (non-refundable) fee of 2% per annum on the RAD for up to 5 years, with a maximum retention of 10%. |
| Daily Accommodation Payment (DAP) | New residents lock in the Maximum Permissible Interest Rate applicable on the date of admission | The Daily Accommodation Payment (DAP) will be indexed twice a year in line with CPI. |
Trusted, Knowledgeable Guidance with Aged Care Consultants
Choosing an aged care home for your loved one is hard enough, but I know these changes can make the process even more overwhelming. As an aged care consultant, I help families understand and navigate these changes with confidence.
From Choosing the Right Aged Care Facility to knowing when to consider aged care services for your loved one, I’m dedicated to giving families the knowledge needed to find the right solution for their family.
Learn more about the role of a care consultant in aged care or contact me at Care Match Solutions with questions.
