Discover the Upcoming Changes in Residential Aged Care and What You Need to Know

The structure of residential aged care in Australia is set for significant changes starting November 1. These reforms aim to address current challenges and ensure quality care for older individuals. The new payment arrangements will be divided into four primary categories.

Key Changes in Residential Aged Care

Residents currently living in aged care facilities before October 31 will not experience these alterations. However, new residents deemed to have low financial means will also remain unaffected by these changes.

Eligibility for Low-Means Residents

• Full pensioners with income below A$34,762 (for singles).
• Couples with combined assets under $63,000.
• The government will cover complete care costs for these residents.

All low-means residents will be required to pay a basic daily fee, calculated at 85% of the basic single age pension, which is currently set at $65.55. Additionally, the government provides a Hotelling Supplement for funding assistance.

Clinical and Non-Clinical Care Costs

As of November 1, clinical care, such as physiotherapy, will be fully funded by the government for all residents, irrespective of their financial status or assets.

Non-Clinical Care and Living Costs

New residents with higher means will incur means-tested fees for non-clinical care and everyday living expenses. The Schedule of Fees and Charges will offer structure to these payments:

• Daily contributions for non-clinical care will be capped at $105.30.
• A lifetime cap of $135,318.69 applies, or four years, whichever comes first.
• Payments under the Support at Home program count toward this cap.

Residents will continue to pay a basic daily fee, but this payment does not cover the total cost of services. New residents with higher means will also contribute to the Hotelling Supplement, capped at $22.15 daily. Optional premium services may incur additional fees but cannot be a condition of entry to an aged care home.

Changes in Accommodation Funding

The government will pay accommodation costs for all low-means residents through an accommodation supplement, impacting approximately 19% of the current residents. Another 19% are partially supported but may pay a refundable lump sum or ongoing rent toward their care costs.

Payment Structures for Non-Supported Residents

• About 62% of residents are non-supported and pay set room prices directly to providers.
• Providers may deduct 2% from a resident’s lump sum balance annually for the first five years.
• Rental payments will be indexed semi-annually for non-supported residents.

Rationale Behind the Changes

These reforms aim to address long-term challenges in the aged care system. With an aging population, the need for high-quality care is paramount. However, nearly half of aged care homes operate at deficits, particularly concerning everyday living services.

The government is responding to these challenges by reassessing the Aged Care Act. Effective from November 1, this new legislation intends to enhance the rights of older Australians, increasing funding for daily living and accommodation services.

Future Considerations

While these changes are significant, they do not resolve all issues within the aged care system. A further pricing review is underway, focused on ensuring access to quality aged care for those with low means. The outcomes of this review will be made public by July 2026, potentially prompting additional adjustments to accommodation payments.