New aged care rules take effect: What it means for your wallet

For many older Australians, the thought of entering aged care is a mix of relief and worry. Relief that help is available when needed most—but worry over what it might cost. As the calendar turned to November, quiet but significant changes began shaping what people will pay for care, sparking fresh questions among families planning their next steps.

The system looks familiar on the surface, but the way it’s funded has shifted in ways that will touch thousands of households across the country.

What’s changing and who it affects

From 1 November 2025, a new fee structure for aged care has come into effect.

According to the government, these reforms will save $12.6 billion over the next 11 years. That saving, however, will come mainly from self-funded retirees and some pensioners who will now pay more.

Residential care and in-home care are both changing, with the central principle remaining that the government continues to pay for health-related costs—while those with greater financial means will contribute more for other services.

Importantly, these changes apply only to new entrants, not to anyone already receiving care.

'The key principle is that the government will continue to pay for health-related costs, but people with financial means will pay more for other costs,' the ABC report stated.

In-home care costs

Care at home will still be assessed on need, but there are now eight support levels instead of four, each tied to a different funding level—up to $78,000 a year, up from $60,000.

This funding acts like an annual budget that can be used to purchase services from an approved list.

The type of support you receive will determine how much you might have to pay out of pocket, and there are now three main categories:

• Clinical care—such as nursing or occupational therapy—remains fully covered by the government.

• Independence supports—such as help with showering, dressing, and taking medication—will require you to contribute between 5% and 50% depending on your means.

• Everyday living supports—such as cleaning, gardening, and meals—will require contributions between 17.5% and 80% depending on your means.

In examples provided by the government, a full pensioner approved for level five support will pay around 6% of their total care costs, while a self-funded retiree without a Commonwealth Seniors Health Card will pay 42%.

For the first time, the maximum price of home care services will also be set by a government regulator to prevent over-charging.

Eligible recipients can receive a $25,000 payment to help them spend their final three months at home, as well as access to a new 12-week program designed to support recovery from illness or injury.

The government has also lowered the maximum amount of administrative fees that home care recipients can be charged, leaving up to 27% more available to spend directly on care—though some fear providers may increase prices to offset the cap.

Existing home care recipients, and those already approved, will transition to the new system under a guarantee that they will not pay more than they would have before.

However, advocates for older Australians have raised concern about how 'non-clinical' care is defined, saying some personal assistance tasks, like showering or medication support, may now require out-of-pocket contributions.

Residential care fees

The structure of residential care payments remains the same, but the dollar amounts have changed.

Residents now pay in three ways: a basic daily fee paid by everyone, an additional daily fee based on means, and an accommodation charge that can be paid daily or as a lump sum deposit.

The basic daily fee—set at 85% of the Age Pension—remains unchanged. The means-tested fee has been renamed the 'non-clinical care' fee, reflecting the government's coverage of all clinical care.

This fee applies to those with more than $500,000 in assets or roughly $130,000 in income, with a maximum of $101.16 per day, payable for up to four years.

The maximum accommodation charge has risen from $550,000 to $750,000 per room.

Providers can still apply for government approval to charge more, but for the first time, they can also retain a small portion of lump sum payments—2% each year for five years, up to 10% in total.

Residents with more than $238,000 in assets or $95,400 in income—or a combination—will now pay a $12.55-per-day 'hotelling' supplement that was previously covered by the government.

The family home is still only counted toward the asset test up to about $200,000 in value.

In government examples, a full pensioner with few savings continues to pay roughly 17% of care costs, while a self-funded retiree pays around 45%.

Overall, three in ten full pensioners and three in four part pensioners will contribute more under the new arrangements.

Lifetime cap on fees

No one will pay more than $130,000 in non-clinical care fees over their lifetime, which covers both home and residential care.

That’s higher than the current cap of about $80,000, but it guarantees that costs remain capped no matter how long care is needed.

Why the government made these changes

Aged care remains one of Australia’s largest and fastest-growing areas of government spending, and with demand expected to rise as the baby boomer generation ages, funding the system sustainably has become critical.

Both sides of politics and the aged care sector agree that current funding levels have not been enough to deliver the quality of care Australians expect.

In 2021, the Royal Commission into Aged Care Quality and Safety recommended a taxpayer-funded levy to increase resources for care.

The government rejected that idea, instead arguing that those who can afford to should contribute more.

'The government currently pays about $4 for every $1 paid by aged care residents, and $19 for every $1 paid by in-home care recipients,' the ABC report noted.

Under the new reforms, the government will now pay $3.30 for every $1 contributed by residents in residential care, and $7.80 for every $1 paid by home care recipients.

Officials also hope the higher contributions will allow more Australians to receive care sooner, with around 68,000 people currently on the waitlist for a home care package.

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

Key Takeaways

• New aged care fee structure took effect on 1 November 2025, changing costs for home and residential care.
• Government savings of $12.6 billion over 11 years will come mainly from self-funded retirees and some pensioners.
• Key reforms include eight support levels, capped home care prices, new end-of-life and recovery programs, and a lifetime fee limit of $130,000.
• Officials hope the changes will make the system more sustainable and reduce the 68,000-person home care waitlist.

Do these changes make aged care fairer—or more confusing? What are your thoughts on the new system?