July 2025 Aged Care Fee Changes - What You Need to Know

Introduction

As of 1st July, 2025 there will be a significant shift in how Aged Care is delivered and funded in Australia. Now is an important time to chat to us if you are considering your Aged Care options, as applying after the 1st July could significantly impact what your entitlements are.

But the financial implications are what most people are concerned about. In this article, we will explore what these changes mean for you and how they might affect your aged care planning.

Who is impacted?

The rights in the Aged Care Act apply to everyone, but the new rules for fees will only apply if you move into residential care after 30 June 2025 or are approved for Home Care after 12 September 2024.

If you were receiving a Home Care Package as at 12 September 2024 (or had been approved and in the queue waiting for a package to be allocated), grandfathering rules apply. These rules aim to ensure you are not disadvantaged by the changes even if you move into residential care after 30 June 2025.

It is a little confusing, which is why it is important to have a chat to understand how this could impact your circumstances.

Residential Care Changes

Room Costs

Some room prices may increase, but it is expected that there will be a range of price points. You will still be able to choose to pay for your room as a lump sum or as daily "rent".

If you pay a lump sum, each year the provider must deduct and keep 2%:

This only applies for the first five years – so you could lose up to 10% of the amount paid, with the remainder refundable to you or your estate.
If paying the daily rent, this increases each six months in line with inflation.

Ongoing Care Costs

Ongoing care costs will be split between you and the government, with three new fee categories to determine this split*:

Everyday living expenses – currently $63.57 (indexed) per day, but if you have assets over $238,000 or income above $95,400 (or a combination) you may pay up to an additional $12.55 per day.
Non-clinical care – this is a means-tested fee up to $101.16 per day. It will only apply for the first four years, or up to a dollar cap of $130,000 (indexed).
Clinical care – this is the most expensive component and will be fully paid by the government.

Home Care Changes

The Support at Home program starts on 1 July 2025, expanding care to eight levels instead of just four. Similar to residential care, the costs will be split into three categories and means-tested to determine your contribution:

Clinical care will be fully paid by the government.
Self-funded retirees will pay 50% of the costs for independence support and 80% of everyday living costs.
Full pensioners will pay only 5% of independence support costs and 17.5% of everyday living costs.
The percentage part-pensioners and Commonwealth Seniors Health Card holders will pay is between the above two groups and is based on means-testing.

Your home care contributions are subject to a $130,000 (indexed) lifetime cap.

An important change to note is that the package budget will be allocated quarterly, on a 'use it or lose it' basis. You will only be able to roll over unused funds up to $1,000 or 10% of the package budget from quarter to quarter.

Importance of Planning

Navigating these changes can be complex, and ensuring you have kept enough money to meet your care needs in the later years of life is vital to maximise your quality of life.

If you or a loved one require aged care, acting before 1 July 2025 may help you lock in current fee arrangements. But whenever you decide care is needed, it is important to get comprehensive financial advice to fully understand your options and how to restructure your assets and investments.

As a licensed financial adviser and accredited aged care professional, I have the experience and expertise to help your family navigate these changes. If you wish to discuss your situation, please reach out for a complimentary 15-minute consultation to discuss your circumstances and how I can help.

*Fees correct at the time of publishing, speak to our team for the current rates.