Navigating the New Aged Care Landscape: What You Need to Know

Entering residential aged care is one of the biggest life transitions many families will face. Beyond the practicalities, it is an emotional step not only for the person moving into care but also for the people supporting them. It often comes at a time when round-the-clock assistance is needed, and the shift from home to an aged care residence can feel overwhelming simply because there is so much to navigate at once. The introduction of the new Aged Care Act on 1 November 2025 has brought major changes to how aged care is funded, with the greatest financial impact on those entering care with higher levels of assets or income.

What to expect when entering aged care

Government-funded aged care is generally available to individuals aged over 65, but it can extend to those aged 50 and over in certain circumstances. Whether you are planning for yourself or assisting a parent or partner, the process typically begins with a health assessment through the Government’s Single Assessment System (SAS). An assessor meets with the applicant to understand their needs and determine whether round-the-clock residential care is appropriate.

From there, families face a series of decisions: choosing the right facility, preparing for the move and managing the emotional adjustment that comes with a change in independence and routine. Alongside this, significant financial decisions arise which can have long-term consequences for cash flow, estate planning and overall wealth. Understanding how aged care costs work and the strategies available to fund them is a critical part of navigating this transition with clarity and confidence.

Understanding the fees

Aged care fees can seem complex, as there are multiple costs to consider and the Government’s contribution is often means-tested (i.e. dependent on your income and assets). For those entering aged care, fees may include:

• Accommodation: Often one of the largest and most daunting costs. Funding options include a Refundable Accommodation Deposit (RAD), a Daily Accommodation Payment (DAP) or a combination of the two.

1. 1. The maximum RAD (the lump sum paid for a room) that can be charged without prior approval from the Government has risen sharply from $550,000 to $750,000 and is indexed annually (now $758,627 from 1 July 2025). Aged care providers will now retain 2% of the RAD per year for up to five years, meaning up to 10% in total may not be refunded.
   2. If you choose a DAP (a “rent-style” payment), your daily rate will now be indexed twice a year in line with inflation.

• Basic Daily Care Fee: Payable by all residents. This fee of $65.55 per day is indexed in March and September each year.
• Hotelling Supplement: A new means-tested fee covering non-clinical services such as catering, cleaning and laundry, with a maximum cost of $22.15 per day.
• Non-Clinical Care Contribution (NCCC): Applies to personal services (mobility assistance, support and lifestyle activities) but not clinical or nursing care, which remains fully government-funded. The NCCC is means-tested and capped at $105.30 per day, with a lifetime limit of $135,318.69 or four years of payment, whichever occurs first.
• Higher Everyday Living Fee: Where an aged care home offers additional hotel-style services or activities above minimum standards, these costs are paid by the individual if utilised.

The daily fees and relevant asset thresholds are indexed, with the latest figures available here. While the new framework commenced on 1 November 2025, the Government has introduced a “no worse off” principle, ensuring that existing fee arrangements are grandfathered for those already receiving aged care services.

Strategic decisions

Entering aged care requires careful planning. Key decisions include:

• The family home: Only a capped value counts towards fees if a home is retained. Where a “protected person” (spouse, dependent child, qualifying carer) remains in the home, the home may be fully exempt for aged care means testing. For those selling or renting the home, the relevant assets and income will be assessable.
• Accommodation funding (RAD vs DAP): Paying a RAD can reduce your DAP (the “rent-style” accommodation charge) whereas paying a higher DAP can leave additional assets in your personal name. The right mix of RAD/DAP is highly situation specific, and the best approach depends on the individual’s asset and income position, as well as their liquidity needs.
• Accommodation funding (superannuation vs personal assets): Super and pensions are treated differently in the means tests that determine many aged care fees. Using personal assets first or structuring super carefully may reduce fees, but tax implications must be considered before accessing funds.
• Estate Planning: Decisions around gifting, investing or retaining assets may affect aged care fees, your broader financial position, and your beneficiaries. Gifting rules are particularly relevant for aged care means-testing.

Overview

Navigating the aged care system can be complex, especially during what is often an emotional and stressful time for families. The 2025 reforms bring greater transparency and sustainability, but they also increase the potential financial exposure for those entering care. An Evans & Partners financial adviser can provide personalised guidance on fee structures, model the impact on your cash flow and assets, and explore funding strategies tailored to your circumstances. Engaging early can simplify the process and help ensure you and your loved ones receive the right care and support while protecting your financial wellbeing.