The Australia aged care system 2025 is about to undergo its biggest reform in decades. From 1 November 2025, the Aged Care Act 2024 will come into effect, introducing new rules that will significantly impact both care recipients and their families. For Australians planning ahead, understanding the financial implications of aged care is now more important than ever.
Key Changes in the Australia Aged Care System 2025 (Under the Aged Care Act 2024)
Support at Home Program
The new Support at Home program will replace existing Home Care Packages and Short-Term Restorative Care. It will provide eight levels of funding support, ranging from approximately $11,000 to $78,000 per year.
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Clinical care will remain fully government-funded.
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Independence services and everyday living assistance will require partial contributions from individuals, based on means testing of income and assets.
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A lifetime cap of $130,000 will apply to all non-clinical costs.
This shift means families must carefully assess their financial capacity and plan for potential out-of-pocket expenses.
Residential Aged Care Costs
These changes show how the Australia aged care system 2025 will reshape family decisions about affordability.
Significant updates are also coming to residential aged care funding:
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The Refundable Accommodation Deposit (RAD) cap will rise from $550,000 to $750,000.
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A 2% annual retention fee will apply (up to five years).
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Daily Accommodation Payments (DAPs) will increase over time, linked to new indexation rules.
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New means-tested daily contributions will be introduced for “hotelling” services such as meals, laundry, and non-clinical care.
These reforms will make it crucial for families to evaluate whether to choose RAD or DAP payments, and how these decisions impact long-term affordability.
Why Early Financial Planning Matters
Currently, more than 200,000 Australians are on aged care waiting lists, making access both competitive and stressful for families. The new system will increase oversight from the Aged Care Quality and Safety Commission, ensuring higher accountability, but it will also demand more financial preparedness from individuals.
Importantly, those entering care before 1 November 2025 will be protected under “no worse off” provisions. This means timing of entry could have a major financial impact, and families may need to seek advice sooner rather than later.
The Role of Financial Planners
For financial planners, these reforms underscore the need for strategic advice on:
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Navigating the balance between RADs and DAPs.
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Managing the growing influence of means testing.
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Planning for lifetime contribution caps.
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Ensuring long-term financial security in retirement.
With system demand rising, costs capped, and new rules around contributions, professional guidance will be critical in helping Australians secure both quality of care and affordability in later life.
The Aged Care Act 2024 represents a fundamental shift in how aged care is funded and accessed in Australia. For families, this means early planning, smart financial decisions, and clear advice have never been more important.
With the Australia aged care system 2025 introducing new rules, now is the time to explore your options and prepare for the financial implications.
Have questions about how these changes affect you? Connect with our experts for tailored guidance.
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Credits
Ratheesh, Wealth Management Team
