Residential Care Financials
Changes and Impacts from 1st July 2025
Residential Care - New Financial Rules from 1st July 2025
Based on the Aged Care Taskforce’s advice, these changes include:
- New residents will pay more based on their means.
- A higher maximum room price that will increase over time.
- Providers can keep a small part of the refundable accommodation deposits (RAD).
- No changes to how the family home is treated in the aged care system.
People already in care won’t have to pay more. These new rules will only apply to those entering care from 1 July 2025. If you're in care by 30 June 2025, your current arrangements will stay the same until you leave.
Increasing Maximum Capped Room Prices
Currently, providers need permission to charge more than $550,000 for any room, a rule in place since 2014.
From 1st July 2025, the Commonwealth will raise the cap level to $750,000, and the capped level will go up every year with inflation.
Retention of Refundable Deposits
From 1 July 2025, providers can "retain" a portion (2% a year) of the RAD, up to a maximum of five years.
So if a resident pays a RAD of $750,000 and has been a resident for more than 5 years, the provider will be allowed to retain $75,000 of the initial RAD lump sum payment !
($750,000 x 2 % = $15,000 for 5 years = $75,000)
This will also apply to Refundable Accommodation Contributions (RAC), which some residents pay if they get partial government support.
However, this won’t affect those already in care before 1 July 2025.
Daily Payment Increases
For those entering care after 1 July 2025, the Daily Accommodation Payment (DAP) will be adjusted twice a year to match inflation, ensuring payments keep up with rising costs.
However, this change won’t apply to people already in care before 1 July 2025.
Phasing Out RADs by 2035
The goal is to stop accepting new RADs by 2035, but the government will review the situation in 2030 before making any final decisions.
Living Costs Contributions
Residents already pay a Basic Daily Fee (BDF), which is 85% of the single Age Pension, for meals, cleaning, and other services. This won’t change.
But those with over $238,000 in assets or $95,400 in income will contribute more to their living costs. A supplement will continue to cover the gap between the BDF and the actual costs.
Non-Clinical Care Contributions
The Means Tested Care Fee will be replaced.
The government will cover all clinical care costs. However, those with enough money will have to contribute to non-clinical care (like bathing and mobility support).
If your assets or income are above a certain level, you’ll contribute 7.8% of assets over $502,981 or 50% of income over $131,279, up to a daily limit of $101.16.
After four years in care, your non-clinical care costs will be fully covered by the government. There will also be a lifetime cap of $130,000 on these contributions, adjusted twice a year.
Family Home Treatment
The family home’s value will only be counted in the means test if no one (like a spouse) is still living in it, and even then, only up to a capped amount ($206,039 as of 20 September 2024).
No Changes for Current Residents
If you're in care by 30 June 2025, these new rules won’t apply to you. Your current setup will stay the same until you leave care. The new means-testing and payment arrangements will only affect people entering care after 1 July 2025.
For more information, check out the Government’s Accommodation Reform Paper.
