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New Aged Care Act 2025

Major Changes Coming to Aged Care: What to Know Before November 1st, 2025

Written by Michael Horin on . Posted in Blog.

The Australian Government is overhauling the Aged Care Act with significant aged care changes in 2025 set to take effect on 1 November 2025. This move replaces the existing 1997 Act and is a key part of the broader aged care reform in Australia, aimed at improving sustainability and care quality.

By 2050, the number of aged care beds required in Australia is projected to grow by over 400%, from 180,000 to more than 750,000. With nearly half of residential aged care providers operating at a loss in FY24, these changes to aged care legislation aim to encourage the development of new facilities and provide a more sustainable funding model.

Key Changes to Aged Care Fees

  • Refundable Accommodation Deposits (RADs): Currently RADs (formally known as bonds) are fully refunded when a resident leaves care. Under the new rules, providers will retain 2% of the RAD per year for up to five years, totaling a 10% retention amount.
  • Daily Accommodation Payments (DAPs): Interest rates on unpaid RADs, currently locked in at the time of admission, will instead be indexed to inflation (CPI) twice a year.
  • Basic Daily Care Fee: This fee, set at 85% of the full pension, remains unchanged.
  • Hotelling Supplement: Previously covered entirely by the government, this daily fee, which will start at $12.55, will now be means-tested, with residents contributing none, some, or all of it based on their financial circumstances.
  • Higher Everyday Living Fee (HELF): Replacing the current Extra or Additional Services Fee that ranges from $0 to $100, this charge will be negotiated only after a resident has moved into care, with built-in cooling-off periods and regular reviews. It will also be indexed to CPI.
  • Non-Clinical Care Contribution (NCCC): The current means tested fee has an annual cap of ~$34k and a lifetime cap of ~$82k. The new NCCC will replace this structure. While clinical care will be fully funded by the government, residents will pay up to $101.16 per day, with no annual cap but a higher lifetime cap of $130,000. This reinforces the impact of means testing in aged care.

The new structure introduces CPI-linked aged care fees and a more complex means-testing framework. It's essential to understand aged care costs in Australia and your financial obligations before making any decisions.

What Does This Mean for Residents?

The government will continue to pay ~75% of the cost of care; however, over 50% of residents will pay more under the updated aged care changes in 2025. Here's how this breaks down:

  • 100% of self-funded retirees will contribute more 
  • 75% of part pensioners will contribute more
  • 30% of full pensioners will contribute more
  • No ‘low means’ residents will contribute more

Key financial considerations include:

  • RADs will still be exempt from pension assessments and remain government guaranteed.
  • Residents’ contributions will need to factor in CPI-linked fee increases.
  • The value of the principal place of residence will remain capped at around $200k.
  • All protected person rules for the home will still apply.

What You Should Do Now

Residents already in care before 1 November 2025 will be grandfathered into the current system, but for those planning a move into care, the upcoming changes make it more crucial than ever to seek expert aged care advice.

The new rules add complexity to decision-making, especially with the introduction of CPI-linked fees and the increased emphasis on means testing. Although the reforms aim to create a more sustainable aged care sector, they also mean those who can afford to pay more will contribute more for their care. Understanding these changes and determining how much money one could save by entering care before the transition date requires careful planning.

As the 1 November 2025 deadline approaches, obtaining clarity on these changes will ensure you or your loved ones make the best decisions for the future. For expert guidance, contact Clarity Aged Care Advisors for trusted aged care advice.
Looking for local help? Speak with our Melbourne aged care advisors today to better understand your options.

Note: Figures are accurate as of the publication date