The Federal Government has passed the Aged Care Act 2024, introducing the most significant reforms to Australia’s aged care system in over a decade. Designed to improve quality, fairness, and sustainability, these changes will affect both home care and residential aged care fees and will take effect from 1 November 2025.
For families planning for the future, these reforms are more than just numbers on a page. They will influence how care is funded, how much you contribute, and how far your retirement savings need to stretch.
A Shift Towards Fairer Funding
The goal of the reforms is simple: make the system more equitable by linking fees more closely to what individuals can afford.
For those with lower income and assets, key protections remain in place, including the important “no worse off” guarantee for anyone already receiving care before the changes start.
What’s Changing for Home Care
From 1 November 2025, the current Home Care Packages will be replaced by a new system called Support at Home.
1. More Package Levels, Different Budgets
The existing four funding levels will expand to eight, giving families more tailored options:
- Level 1: $11,000 (up from $10,588)
- Level 4: $30,000 (down from $61,440)
- Level 8: $78,000 (new top tier)
This means some people may receive less funding than before, especially at mid-level care, so planning ahead becomes even more critical.
2. A New Fee Structure
The existing Basic Fee and Income Tested Fee will be replaced by three contribution categories:
- Clinical Care – No cost to individuals (0% contribution)
- Independence Care – Means-tested (5% for full pensioners, up to 50% for self-funded retirees)
- Everyday Living – Means-tested (17.5% for full pensioners, up to 80% for self-funded retirees)
Importantly, all home care fees will count towards the $130,000 lifetime cap on aged care costs.
What’s Changing for Residential Aged Care
For families considering residential care, there are several significant updates.
1. Higher Accommodation Caps
The accommodation payment cap will increase from $550,000 to $750,000 (approximately $758,000 by July 2025 with indexation).
2. New Payment Structures
Residents will still choose between:
- Paying a RAD (Refundable Accommodation Deposit),
- Paying a DAP/DAC (Daily Accommodation Payment/Contribution),
- Or a combination of both.
However, RADs are planned to be phased out entirely by 2035, with a review scheduled for 2030.
3. Other Changes to Note
- Hotelling Contribution: Up to $15.60 per day, means tested.
- Non-Clinical Care Contribution: Capped at $130,000 lifetime or $32,500 per year.
- Everyday Living Fees: Now higher, and can only be agreed to after entering care.
What’s Staying the Same
Some important protections remain unchanged:
- Low-means residents will continue to receive government support.
- The asset and income test framework remains intact.
- The family home continues to be treated the same in aged care assessments.
Key Takeaways
- Start Date: Changes begin 1 November 2025
- Higher Contributions: Those with greater income and assets will generally pay more
- “No Worse Off” Protection: Safeguards apply for those already receiving care before the reforms
- Lifetime Cap: $130,000 maximum for care costs across both home and residential aged care
Why Planning Matters
These reforms could significantly impact your care funding, estate planning, and retirement strategy. Families moving from home care to residential care may be particularly affected, as contributions will become more means-tested and accommodation costs could rise.
At HPH Solutions, we believe the best way to prepare is with proactive, intentional planning. Understanding how these reforms work today means you can make smarter financial decisions for tomorrow.
If you’d like guidance on how these changes might affect you or a loved one, we’re here to help.
To learn more about the New Aged Care Act, visit the Department of Health, Disability and Ageing website.