Residential Aged Care Changes

OVERVIEW

Why are the changes happening?

With the number of Australians over the age of 80 expected to triple over the next 40 years, the sustainability of the aged care industry is under threat. In 2022/23, 46% of aged care providers made a loss from aged care accommodation.1 In 2023, the Aged Care Taskforce was established to explore these issues and to make recommendations on how to improve the sustainability of the sector. Their final report was released in March 2024 where a number of recommendations were made for the Government’s consideration. The proposed changes adopt several of the Aged Care Taskforce recommendations. At a high level, the proposed changes seek to ensure that those who can afford to contribute towards the cost of their care do so. Government support will be targeted those who are not as financially secure. The changes also seek to increase investment in the aged care sector to improve the facilities available to residents.

Will the changes impact me if I’m already in residential aged care?

The changes will only impact new aged care residents entering care from 1 July 2025. The ‘no worse off’ principle ensures that if you’re receiving care before 1 July 2025, you will continue to have your fees determined under the existing rules, unless you leave aged care or move to a new aged care provider.

Will the changes to fees impact private aged care facilities?

Private aged care facilities are not governed by the aged care rules that apply to Government subsidised aged care facilities. Instead, the fees payable are agreed between you and the private facility. Therefore, the proposed changes to fees do not impact private aged care providers.

Will the changes increase the cost of residential care?

If your income and/or assets are above certain levels, you may need to contribute more to the cost of your care if you enter care from 1 July 2025. The actual increase in your personal contribution to the cost of your care will depend on your personal circumstances.

The Government has confirmed that it’s expected that half of all new residents entering residential care from 1 July 2025 will not pay more under the new system. Specifically:

• no ‘fully supported’* resident will contribute more
• 7 in 10 receiving the full Age Pension will not contribute more, and
• 1 in 4 part Age Pensioners will not contribute more.

Read more about these changes below.