Major Aged Care Changes – What You Need to Know

Big Changes Coming to Aged Care in 2025 – Here’s What You Need to Know

From 1 July 2025, Australia’s aged care system is set for one of its biggest overhauls in years. With the introduction of the Aged Care Bill 2024 to Parliament in September last year, the government aims to make aged care more financially sustainable, more consistent, and better tailored to people’s individual needs (Parliament of Australia, 2024).

If you or a loved one is approaching aged care—whether at home or in a facility—these updates could significantly impact your financial planning and care options. Here’s what’s changing and how to prepare.

Key Changes to Residential Aged Care

From July 2025, new aged care residents will see updated fee structures designed to better reflect both clinical and non-clinical services.

New Means-Tested Fee Model
The current means-tested care fee will be replaced by a Clinical Care Cost, subject to a lifetime cap rather than an annual cap. This change aims to simplify the system and better reflect actual care costs (Department of Health and Aged Care, 2024).

Introduction of the Hotelling Contribution
A new Hotelling Supplement will cover everyday living expenses like food, laundry, and cleaning. This fee is means-tested and expected to cost around $11.24 per day, depending on your financial circumstances (Aged Care Taskforce, 2023).

Accommodation Payment Changes
From 1 January 2025, aged care providers will be allowed to increase their Refundable Accommodation Deposits (RADs). Additionally, facilities will be able to retain 2% of the RAD per year (capped at 5 years) for new residents entering care after 1 July 2025 (Aged Care Guide, 2024).

Home Care: What’s Changing?

Australians are increasingly choosing to stay at home longer. Recognising this, the government is introducing a single, streamlined Support at Home Program, replacing the current Home Care Packages and Short-Term Restorative Care Programs (My Aged Care, 2025).

The new program includes:

• 8 Levels of Home Care Support (up from 4)
• 2 Additional Restorative Levels for rehabilitation and end-of-life care
• Updated service lists, care guidelines and pricing caps, still to be confirmed

With more detailed care options, understanding what’s covered at each level will be essential to maximise support without overspending.

Kellie Seymore, Adviser Support & Aged Care Specialist

Will Current Residents Be Affected?

If you or a loved one is already receiving residential aged care before 1 July 2025, your current fee arrangements will continue—unless you leave care or change providers.

This forms part of the government’s ‘no worse off’ principle, ensuring current residents remain on the existing rules (Department of Health and Aged Care, 2024).

How to Prepare for the Changes

If you or a loved one is considering aged care in the next 12 months, timing your entry could make a significant financial difference. Here’s how to prepare:

Review Your Financial Position
Assess your assets and income in light of the new means-testing rules. This includes understanding how your home, superannuation, and investments are treated in aged care assessments.

Consider Timing
Entering care before 1 July 2025 could allow you to avoid the higher daily fees and retain more favourable payment structures.

Explore Payment Options
Whether you choose to pay via RAD (lump sum), DAP (daily payment), or a combination, there are pros and cons. The right mix depends on your cash flow, estate plans, and long-term goals (Aged Care Guide, 2024).

Get Expert Advice
These changes are complex—and financial consequences can be long-lasting.

If you’re planning to access aged care in 2025, we strongly recommend seeking financial advice before 1 July 2025.
Early planning may offer substantial financial advantages.

Rosie Copp, Senior Financial Adviser and Accrediated Aged Care Specialist

How Can a Financial Adviser Help to Navigate These Changes?

At Coastal Advice Group, we specialise in helping Australians make confident, informed decisions about aged care.

Our specialist aged care advisers can help you:

• Evaluate your options
• Understand the aged care changes
• Compare your entry options
• Structure your finances
• Reduce out-of-pocket expenses
• Minimise the financial impact for your family

Final Thoughts

Navigating aged care is never just about numbers—it’s about protecting dignity, peace of mind, and financial wellbeing. With the 1 July 2025 changes approaching fast, now is the ideal time to put a plan in place that works for your circumstances.

Whether you’re helping a loved one transition into care or preparing for your own future, early planning can help you avoid unnecessary costs, take advantage of current rules, and ensure you’re receiving the right care at the right time.

You don’t have to do it alone.

Our team at Coastal Advice Group is here to guide you through every step of the process—clearly, compassionately, and with your best interests at heart.

• Call us today to speak with a qualified Aged Care Specialist, or
• Book your complimentary Discovery Call online

The sooner you start the conversation, the more options you’ll have. Let’s create a strategy that gives you and your family clarity and confidence for the road ahead.

1. Sources:
   
   Department of Health and Aged Care (2024), Aged Care Taskforce Final Report.
2. Parliament of Australia (2024), Aged Care Bill 2024 Overview.
3. Services Australia (2024), Means Testing in Aged Care.
4. Aged Care Guide (2024), Understanding RAD and DAP.
5. My Aged Care (2025), Support at Home Program Information.