March 19, 2025

Preparing for Australia’s Aged Care Fee Reforms

From 1 July 2025, Australia’s aged care system will undergo significant reforms aimed at creating a more sustainable, person-centred model. These changes will impact both residential and home care services, making it essential for older Australians and their families to understand and prepare for the new system.

With potential increases in costs and a revised financial structure, planning ahead is crucial. Below is an overview of key changes and steps to take before the new rules come into effect.

Understanding the Aged Care Fee Reforms

Residential Care

  • Accommodation Payments: The cap on approved accommodation prices will rise from $550,000 to $750,000. Additionally, a retention fee will be introduced, allowing providers to retain 2% per annum of the Refundable Accommodation Deposit (RAD) for the first five years, up to a maximum of 10% of the total deposit.
  • Three-Part Fee Model: A revised structure will be implemented, with costs split into three categories:
    • Everyday Living Expenses: Covering meals, laundry, and basic services.
    • Clinical Care: Fully government-funded to ensure access to essential health services.
    • Non-Clinical Care Contributions: A means-tested fee for personal care and lifestyle support.

Home Care

  • Support at Home Programme: From 1 July 2025, this program will replace existing home care packages, aiming to improve service access and help older Australians live independently at home for longer.

These reforms may result in higher out-of-pocket costs for those entering aged care after 1 July 2025, making early preparation essential.

Pre-1 July 2025 Checklist: Steps to Prepare

1. Organise Key Legal Documents & Update Contacts

  • Wills: Ensure your will is up to date and accurately reflects your assets and relationships.
  • Advance Care Directives: Clearly outline your healthcare preferences and appoint a substitute decision-maker. Provide copies to family, healthcare providers, and your designated hospital.
  • Enduring Power of Attorney (EPA): Confirm that your chosen attorney fully understands your wishes and is prepared to act on your behalf when necessary.
  • Update Key Contacts: Ensure your substitute decision-maker, family members, and healthcare providers have your latest details.

2. Review Your Financial Plan

  • Reassess Your Budget: Consult an aged care specialist to determine how the new fee structures will affect you.
  • Review Investments and Savings: Ensure your financial assets are structured to manage aged care expenses effectively.
  • Consider Funding Options: Compare lump sum payments (RADs) with daily fees to find the best approach for your circumstances.

3. Explore Aged Care Providers

  • Specialist Guidance: Our team collaborates with aged care specialists who can provide insights on suitable providers and fee structures tailored to your needs.
  • Facility Visits: Visit potential aged care facilities and review testimonials to ensure they meet your needs and standards.

4. Identify Your Care Requirements & Discuss with Family

  • Evaluate Your Options: Determine whether residential care or home care best aligns with your health, lifestyle, and financial situation.
  • Understand the Fee Structure: Familiarise yourself with how the new fees will apply to your chosen care option.
  • Plan for Financial Impact: Consider how these changes may affect your overall cost of care.
  • Family Discussions: Discuss your aged care plans with family members to ensure everyone understands your preferences and expectations. Clarify roles and responsibilities in your care planning.

5. Consider Lifestyle & Long-Term Needs

  • Decide on Your Ideal Setting: Choose between a residential facility with social activities or a home care arrangement that allows you to stay in your own home.
  • Assess Amenities and Services: Identify essential services, social activities, and facilities that align with your preferences.
  • Plan for Future Needs: Factor in potential changes in your health and mobility to ensure your chosen care option remains suitable over time.

6. Seek Professional Advice

  • Engage with Experts: Consult our panel of aged care specialist to tailor a strategy that meets your needs.
  • Analyse Your Options: Get guidance on managing RADs, daily payments, and other fee components under the new framework.
  • Plan for the Long Term: Ensure your financial and legal arrangements are structured to secure your future care, whether you enter aged care before or after 1 July 2025.

How Forward Path Advisory Can Assist

At Forward Path Advisory, we understand the complexities of aged care planning and the financial considerations involved. We work alongside placement officers across Australia who specialise in aged care and placement advice, helping families find the right residential care or in-home support to enhance their loved ones’ quality of life. While they focus on finding suitable care options, we provide expert financial advice to ensure that wealth management and investment strategies support the cost of care effectively.

Our experienced financial advisers specialise in retirement planning and wealth management, ensuring that your financial strategies align with your needs and goals. By collaborating with aged care specialists, we help alleviate financial burdens while optimising the longevity and well-being of your loved ones.

With aged care reforms set to take effect from 1 July 2025, navigating the system may seem overwhelming. We work closely with aged care specialists to provide comprehensive guidance, helping you understand and adapt to these changes with confidence. Whether you’re considering residential aged care or home care, our team can assist in structuring your finances to minimise costs and maximise available benefits under the new system.

By planning ahead, you can make informed decisions and secure your financial well-being. Contact us today to ensure you’re fully prepared for these changes.

Senior Associate Adviser