Significant changes to aged care funding have just come into effect (from 1 November 2025), and they could have a direct impact on your family’s financial plans.
Whether you’re exploring residential aged care now or planning, here’s what you need to know about the changes and how to prepare.
What’s changing in aged care?
Under the current rules, residents in aged care facilities may be required to contribute towards their personal and clinical care costs through a fee known as the Means Tested Care Fee (MTCF). This fee is calculated on a sliding scale and takes into account both income and assets. It’s one of the core components that helps cover essential care services.
From 1 November 2025, the system will have changed. The MTCF will be phased out and replaced by two new fees:
- The Hoteling Supplement Contribution (HSC):
This will go towards everyday living costs such as food, cleaning, laundry and general services provided within the care home. - The Non-Clinical Care Contribution (NCCC):
This covers lifestyle-related services like social programs, emotional support, and mobility assistance (anything that falls outside direct clinical care).
You can read more about these changes on the official My Aged Care website.
Will these changes increase your costs?
It’s expected that most new aged care residents entering care after 1 November 2025 will pay more under the new structure, particularly those with higher levels of income or assets.
This means that if you or a loved one is currently planning for aged care, it could be time to review your financial strategy to ensure you’re not caught off guard when the changes take effect.
While the exact cost will vary depending on your situation, the Government has provided some early guidance. As of 20 September 2024, the capped daily rates were:
- $12.55 per day for the HSC, and
- $101.16 per day for the NCCC
It’s also important to note that:
- There will be a lifetime cap on the new non-clinical care payments (NCCC) of $130,000, or
- A maximum of 4 years’ worth of payments at the standard rate, whichever is reached first.
What about people already in care?
If you entered care or secured a place before 1 November 2025, you’re likely to fall under grandfathering provisions. This means you’ll be able to keep your current funding arrangements.
This includes:
- People already in residential aged care as of 31 October 2025
- Those receiving or approved for a Home Care Package before 12 September 2024 who have entered residential aged care before 1 November 2025
In these cases, you’ll generally continue under the existing MTCF structure unless you choose to opt in to the new model.
For those not yet in care but actively planning, it may be worth exploring your options now, before the new fees apply.
Changes to home care funding
The changes don’t just affect residential care. From 1 November 2025, the current Home Care Packages Program and the Short-Term Restorative Care Program will be replaced by a new Support at Home program.
This new system aims to simplify and streamline in-home aged care support, but it may also come with updated funding structures. The way personal contributions are calculated will change, too:
- For aged pensioners, fees will continue to be based on income and assets using existing Age Pension assessments.
- For self-funded retirees, Services Australia will require additional information to assess affordability and apply appropriate fee levels.
What should you do now?
Planning ahead is key. The new structure could result in higher out-of-pocket costs for many families, especially if you were relying on the Age Pension to cover all or most of your aged care expenses.
Here are a few steps to consider:
- Review your aged care plans if you’re thinking about entering care in the next 12 months
- Speak with a financial adviser who understands aged care rules and can help you structure your finances in a way that supports affordability and long-term security
- Talk to your family so everyone understands the changes and the potential impact
You can also find more details about the updates on the My Aged Care website.
How APS Financial Planning can support you.
At APS, we understand that navigating aged care decisions can be both emotional and complex. Our financial planning team can help you:
- Understand how these changes may affect your family
- Explore ways to manage costs
- Build a plan that supports quality care without compromising your financial well-being
Whether you’re planning ahead or need support right now, we’re here to help you make informed decisions tailored to your unique family circumstances.
Get in touch today to speak with our friendly team about aged care financial planning.
Written by APS Senior Financial Advisor, Paul Hatzigeorgiadis.
Paul has over 25 years of experience in the financial services sector. Over Paul’s history, he has provided advice to an extensive range of clients from wealth accumulators to pre and post retirees, advising them on Wealth Creation, Cash Flow Management, maximising Centrelink benefits in Retirement, Personal Insurances, Debt minimisation strategies and Superannuation. Paul is married with a 14-year-old daughter and enjoys spending time with family and friends. Whether it’s assisting clients to meet their short-term goals or working with them over a longer term, Paul enjoys helping guide his clients with their financial future.