Upcoming Changes to Aged Care: What You Need to Know 

October 11th 2024 | Categories: Aged Care |

Aged Care Guru Adviser Article

Big reforms in aged care are set to take effect in 2025, these reforms will redefine how aged care is funded and who pays for it. This article will briefly outline what it means to you and your family who may be currently navigating aged care or are thinking about accessing it in the coming months.  

We can confirm regardless of your financial situation under the new 1 July 2025 framework the Government will fund aged care costs for everyone. However, individuals receiving care will need to contribute more for services classified as “non-care.” This covers costs associated with help with medications, personal hygiene, shopping, and meal preparation. Under the new rules, “care” is specifically defined as clinical services provided by professionals like nurses or therapists and so many everyday support services will fall under the non-care category.   

If you have assets over $206,039, you will still be responsible for paying the market price for accommodation. The Government will continue to cover clinical care costs. Everyone will pay a basic daily fee equal to 85% of the age pension, along with additional fees for non-clinical services based on financial status.   

From January 1 the maximum refundable accommodation deposit (RAD) will increase from $550,000 to $750,000. This is the highest amount a facility can charge without Government approval and those who opt to pay by Daily Accommodation Payment (DAP) will have their fees adjusted by consumer price index twice a year.   

Another sting in the tail is the introduction of exit fees on RADs.  From 1 July 2025 aged care homes will be able to charge an exit fee of 2% of your RAD for each year you stay, up to five years. For example, if you pay a RAD of $750,000 and you stay for five years, you could lose $75,000 when you leave.  

If you are a current resident or have family who are in residential aged care they will be protected under the “no worse off” principle. This will ensure current aged care recipients or those awaiting home care packages won’t see their costs increase. So, if you’re already in care or assessed as eligible, your costs will remain the same or decrease. 

Many people think of nursing homes when they hear “aged care,” but most services are actually delivered in homes. Out of a $5.6 billion reform package, about $4.3 billion will go toward home care initiatives. The support at home program will combine existing home care packages and short-term restorative care programs. It will also establish guidelines for home modifications and assistive technologies, offering up to $15,000, along with an “end-of-life pathway” that can provide up to $25,000 for palliative care.   Similar to Residential Aged Care the support at home services will also be divided into clinical care and assistance with daily living. The Government will cover clinical care costs, while individuals will pay for some daily living services based on their income and assets. The maximum annual funding for a Support at Home package will be $78,000. 

It’s estimated about 30% of full pensioners and 75% of part-pensioners may face higher costs. While it’s been communicated that wealthier Australians will pay more, we believe many people across the board may end up paying significantly more for aged care services.  We will continue to update you on these changes and how they may impact you or your loved ones. 

If you have any questions about the upcoming changes, please contact Shaun Akroyd.

Shaun Akroyd
Financial Adviser

Connect with Shaun on Linked In.

Brisbane-based financial adviser, Shaun Akroyd is a proud Retirement Living + Aged Care specialist, this article was produced in collaboration with Aged Care Gurus.

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What you need to know

The information contained in this article is general in nature and does not take into account any person’s individual objectives, financial situation or needs.   Information contained in this article is taken from a number of sources believed to be accurate. While reasonable care has been taken in the preparation of this information, subsequent changes in circumstances (including legislative change) may occur and may impact on the accuracy of this information. No liability is accepted by either the author or Aged Care Gurus for any person who relies on the information contained in this article.

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