By Gary Marsh

The Aged Care Act 2024 represents the most significant reform in decades. Its promise is greater fairness, sustainability and dignity, but it also introduces new layers of complexity. By focusing on the financial detail now, you can protect your assets, secure access to quality care, and make informed decisions for yourself and your family.

Back in November 2024, our team at People + Partners shared an article outlining the changes coming to aged care with the passage of the Aged Care Act 2024. At that time, much of the detail was still emerging, and the message to clients was simple: be aware and prepare early. With the release of further government guidance, we now have a clearer picture of how the new arrangements will work.

In this update, we’ll focus on how the financial side of aged care is changing.

The Big Picture

The new Act, which takes effect from 1 November 2025, is designed to put the rights and preferences of older Australians at the centre of care. That principle is important, but the practical impact most families will feel is financial.

The government is reshaping how aged care is funded, aiming for fairness and sustainability. Broadly, the government will remain the major funder of aged care, but individuals will contribute more directly to non-clinical services, and there will be stricter rules around how fees are charged.

Support at Home Program and Fees

One of the biggest shifts will be the introduction of the Support at Home program, which will replace the Home Care Packages and Short-Term Restorative Care programs from November 2025. The Commonwealth Home Support Programme will transition later, no earlier than July 2027.

Under this system, older Australians will have more tailored budgets, with services delivered first and billed afterward. Importantly, your contributions will depend on a means test that considers both income and assets.

The government has confirmed that clinical care—nursing and medical support—will continue to be fully funded. However, everyday support such as bathing, cleaning or mobility assistance will involve co-contributions. These contributions will be set at a fixed percentage of the cost of the service, meaning greater consistency nationwide. From July 2026, price caps will also apply, helping to prevent wide variations in fees between providers

Understandably, many people have asked whether they will be disadvantaged under the new rules. The government has introduced a “no worse off” principle to ease this concern. If you were approved for, or already receiving, a Home Care Package before 12 September 2024, your financial arrangements will continue or improve under Support at Home.

For example, full pensioners who pay no fees now will continue to pay no fees in the future. For others who are contributing already, discounts and lifetime caps will carry over, ensuring you do not suddenly face higher costs because of the reforms.

Residential Care Contributions

For those considering residential aged care, the reforms introduce a new structure for contributions that may affect how much you or your family will be expected to pay.

At present, residents pay a means tested care fee in addition to the basic daily fee and accommodation costs. From 1 November 2025, this system will be reshaped. The current means tested care fee will be abolished and replaced with two new contributions.

The first is a Hotelling Supplement, which will cover the everyday living costs of residential care such as meals, cleaning, laundry and utilities. This supplement will now be means tested for new residents. Those who have the financial capacity to pay for their full accommodation costs will also be asked to contribute to these daily living expenses.

The second is the Non-Clinical Care Contribution (NCCC), which will apply to non-clinical services such as bathing, personal care and mobility support. The Government will continue to fund all clinical services—such as nursing and medical care—but the NCCC ensures that non-clinical care is partly funded by residents who can afford to do so. Importantly, this contribution only applies to those who are also paying the full Hotelling Supplement

There are also changes to accommodation payments. Refundable Accommodation Deposits (RADs) and Refundable Accommodation Contributions (RACs) will continue, but with clearer retention rules. Daily Accommodation Payments (DAPs) will be indexed twice a year, ensuring greater transparency. Providers will also be required to regularly report balances of refundable deposits, and residents will need to report any changes to their financial circumstances.

Finally, a “no worse off” principle will apply. Anyone already living in residential aged care as at 31 October 2025 will retain their existing fee arrangements for the entirety of their stay. This ensures that current residents are not disadvantaged by the new framework

Lifetime Caps and Financial Safeguards

Another important development is the introduction of lifetime caps on contributions. Across both in-home and residential care, there will be a ceiling on how much any one person can contribute over their lifetime.

This is designed to provide certainty and prevent the burden of care costs from consuming more than a fair share of a family’s assets. While the exact figures differ depending on the type of care, the principle is the same: there will be limits, and once reached, no further contributions will be required.

The government has also committed to funding those who cannot meet their obligations due to genuine financial hardship. In such cases, fees may be reduced or waived, ensuring access to essential care is never lost.

Beyond the Financials

Although the financial aspects dominate discussion, it’s worth remembering that these reforms are about more than money. The Act enshrines a Statement of Rights, strengthens quality standards, and introduces greater accountability for providers. These changes will provide more transparency and give families confidence that care is safe, respectful and centred on the individual.

What You Should Do Now

For those over 50, these reforms are a timely reminder to consider how aged care fits into your financial plans. Even if you are not expecting to need support in the near future, it is wise to understand how means testing will work, how contributions may be capped, and whether you or your parents qualify for the “no worse off” protections. The earlier you plan, the more choices you will have.

At People + Partners, our role is to guide you through this complexity. We can help you map out potential scenarios, review your retirement strategy in light of the changes, and ensure your financial arrangements are structured to make the most of the new system.

If you would like to discuss how these reforms could affect your personal circumstances, please contact us—we are here to help.

Disclaimer

People & Partners Wealth Management Pty Ltd ABN 67 127 250 613 is a corporate authorised representative of Fortnum Private Wealth Ltd ABN 54 139 889 535, holder of Australian Financial Services Licence (AFSL) No. 357 306. The content of this article is for general informational purposes only and does not constitute personal financial advice. It does not take into account your individual objectives, financial situation, or needs. Any advice we provide will be detailed in a formal advice document. The opinions expressed in this article are those of the authors at the time of writing and should not be taken as a recommendation to act. To the extent permitted by law, Fortnum Private Wealth Ltd and its associates accept no liability for any loss or damage incurred as a result of reliance on this communication.