Aged care costs soar! Families could pay up to $50k more

Across Australia, families are realising this week that aged care costs have jumped overnight.

Many are now facing unexpected changes to the aged care system and what they will have to pay.

On 1 November, new aged care accommodation costs came into effect across Australia, fundamentally changing how much families will pay for residential care.

The reforms, introduced four years after a Royal Commission recommended major sector changes, mean many families will now face significantly higher costs.

The modifications primarily target how facilities charge for accommodation, with several key areas now costing more for new residents.

Refundable Accommodation Deposits (RADs)—the large lump sums families pay upfront—will no longer be fully returned when residents leave care.

Providers can retain 2 per cent of the RAD annually for up to five years, turning what was once a fully refundable bond into a partially consumable asset.

Daily Accommodation Payments (DAPs), the alternative to a lump-sum RAD, will now be indexed to inflation twice yearly in March and September.

Previously, daily rates remained fixed when residents first entered care, giving families certainty over long-term costs.

On 1 November, new aged care accommodation costs came into effect across Australia, fundamentally changing how much families will pay for residential care.

Perhaps most significantly, the daily Non-Clinical Care Contribution (NCCC) has replaced the previous means-tested fee structure with much higher caps.

The annual limit has been removed, while the lifetime cap has increased from $82,347 to $135,318.

Daily payments could reach upwards of $105, representing a substantial increase for many families.

Additional costs include a new hotelling supplement of up to $22.15 per day, covering services like catering, cleaning and laundry that were previously government-funded.

These changes reflect a sector in crisis.

Michael Horin from Clarity Aged Care Advisors explained that aged care facilities simply aren’t profitable under the current model.

With government-capped revenue but rising operational costs—from electricity to wages—providers have little incentive to create new capacity.

Australia currently has around 233,600 residential aged care beds, but by 2043, at least 400,000 will be needed to meet demand from an ageing population.

Without sustainable funding, providers cannot expand services, leaving families with fewer options.

The financial impact varies, but industry modelling suggests additional annual costs could range from $20,000 to $50,000 depending on income.

The Smith family from Adelaide, whose 82-year-old father needs residential care, illustrates the effect.

Previously, their DAP of $85 per day would have remained fixed, but now it will increase with inflation twice yearly.

Combined with the NCCC and hotelling supplement, they face potentially $150 per day in charges—more than $50,000 annually.

Self-funded retirees are particularly affected, as these changes focus on those with greater financial means.

These changes are just the start.

The new Aged Care Act, effective 1 November, centres older Australians’ rights and introduces the Support at Home program.

The government has applied 'no worse off' arrangements for older people already in the system before 12 September 2024.

Aged care experts urge families to start planning with these costs in mind, as care decisions often happen quickly during stressful times.

While the costs are higher, the changes aim to create a sustainable system that can actually provide beds when needed, with occupancy rates near 95 per cent nationally.

The reforms mark a shift from a predominantly government-funded model to one where individuals and families bear a greater share of costs, aiming to empower older Australians with choice and control.

Experts argue these changes were inevitable, as continuing with a loss-making system would ultimately provide fewer options and lower quality care for everyone.

Planning ahead—through superannuation, private savings or family contributions—will make the transition far less stressful for all involved.

Have these changes affected your family's aged care planning? We'd love to hear about your experiences and any advice you'd share with other families navigating this new landscape.

This video breaks down the recent changes to aged care costs and shows how they could affect families across Australia.

Watch now to see what these reforms mean for you and your loved ones—and why it matters today.

The rising costs of residential care are leaving many families anxious about what’s ahead.

Some households are already feeling the strain, and understanding real-life experiences can help you prepare.

One story highlights exactly how recent changes are affecting families on the ground.

Read more: They’re already struggling’: New changes to aged care spark fear among families

What steps are you taking to plan for your own or a loved one’s aged care costs under these new changes?