What You Need to Know from 1 July 2025
Significant changes to Australia’s Aged Care system will come into effect from 1 July 2025. The new regulations bring about a reset of how Aged Care fees are calculated and charged. These reforms, and this Aged Care fees reset, are designed to build a more sustainable and equitable system. Opinion suggests that they also introduce greater complexity, particularly when it comes to understanding the financial implications.
Here are five key things you need to know about the new Aged Care fee structure:
1.Aged Care Will Cost More
From 1 July 2025, the personal contribution required when entering residential Aged Care will increase.
But care is still subsidised.
The Australian Government will continue to subsidise the cost of care—covering, on average, around 73% of total care expenses. However, it’s essential to assess your personal cash flow and financial position carefully when planning for Aged Care.
2.New Terminology and Fee Calculations
Updated language
Some familiar terms will be replaced. For example, the “means-tested care fee” will be replaced with terms like:
- Hotelling Contribution
- Non-Clinical Care Contribution
New calculation methods
While the fees will still be based on your income and assets, the updated calculation formulas may result in higher contributions than under the previous system.
3.Lifetime Caps Still Apply—But Are Increasing
The cap is rising
There will continue to be a lifetime limit on what you can be asked to pay toward non-clinical care. From 1 July 2025, this cap will increase to $130,000.
New safeguard
Under the new rules, you will only be required to pay this fee for a maximum of four years, regardless of the total amount paid—helping to reduce inequality between residents with different levels of wealth.
4.Retention Amounts Are Returning
RAD and retention explained
If you enter Aged Care and pay a Refundable Accommodation Deposit (RAD), providers may deduct a retention amount—up to 2% per year, capped at 10% over five years.
This effectively increases the cost of accommodation slightly, but in many cases, paying a RAD can still be more cost-effective than opting for a Daily Accommodation Payment (DAP).
5.Good Advice Can Save You Thousands
The new Aged Care regulations introduce layers of complexity—especially when making critical decisions about the family home, pensions, and assets. Mistakes can be costly, and the price of getting professional financial advice is often far less than the potential financial consequences of poor planning.
Expert advice is essential to ensure your decisions align with your financial goals and family needs.
Get Expert Aged Care Advice with Continuum Financial Planners
If you’re considering Aged Care for yourself or a loved one, start planning early. At Continuum Financial Planners, we provide specialist advice to help you make informed and financially sound decisions in navigating this Aged Care fees rest transition—giving you confidence and peace of mind during this significant life action.
To speak with an expert Aged Care financial planner:
- Call our office on 07 3421 3456, or
- at your convenience, use the linked Book A Meeting facility.
This article was prepared with permission, based on a draft by Aged Care Steps Pty Ltd © 2025.
(This article was first published by us in May 2025.)
