Several years ago, the Royal Commission into Aged Care Quality and Safety was established. Its job was to investigate how well Australia’s aged care system was working; particularly when it came to safe, quality and respectful care in residential facilities, home care and other services.
The Commission concluded that the aged care system was failing many Australians and needed significant structural change. Since then, improvements to the aged care system have been rolled out in stages, including improvements to home care, workforce training and quality standards.
On 1 November 2025 a new Aged Care Act takes effect that will change how residential and home care options will be funded. The reforms aim to create a fair, transparent, and sustainable aged care system. Here’s what this will mean for you or a loved one.
Residential care
Residents of aged care facilities will now pay a contribution for non-clinical supports (personal care, daily living assistance and lifestyle activates), called the Non-Clinical Care Contribution (NCCC). Residents who can afford it will contribute based on their means. There is a daily cap, so you won’t be charged more than a set amount per day, as well as a lifetime cap. Accommodation and hotel services (meals, laundry, cleaning, etc.) will also require contributions from those with sufficient means. Government subsidies remain for those with lower income or assets.
Home care
Home Care Packages for in home services will be replaced by Support at Home Packages. Contributions for packages will be means-tested using both income and assets (previously, only income was used). Full pensioners, part pensioners and self-funded retirees will have different contribution rates depending on financial circumstances. Fees will now reflect the services you use, instead of package levels, to make home care simpler, fairer and easier to manage.
Clinical care
Clinical services such as nursing, physiotherapy and allied health are now 100% government funded. This means that residents will no longer pay for these services, whether they’re in a care home or receiving at home support. Previously residents contributed to these costs, even if they weren’t using the services.
Who pays more and who pays less?
Those on the Age Pension are largely protected from fees, while wealthier retirees contribute more (but they will benefit from caps to prevent excessive costs).
| Resident type | Residential care | Home care |
| Full Age Pension | Mostly unchanged, costs largely covered by the government | Costs reduce and only pay for services used |
| Part Age Pension | Similar daily costs, but are structured differently | Slightly cheaper and only pay for actual services |
| Self-funded retiree | Daily costs may rise, but lifetime cap protects | Contributions higher due to assets, but clinical care is free |
For some people entering residential aged care after the changes, their costs may go up, especially for non-clinical and hotelling related fees. People will also need to provide up to date information about income and assets to properly assess their contributions (if not supplied, the highest rates may apply).
Why are these changes being made?
Changes to how aged care services are funded are being made to help make the system more sustainable, as Australia’s ageing population continues to increase. It is also to make funding fairer, such as higher contributions for those who have the means to do so, whilst supporting those who do not. It will help to strengthen the rights of older people, with more clarity, choice and transparency about what they receive and what they will pay.
Transitional protections will be in place for those already in residential care or on an approved Home Care Package (receiving, on the waitlist, or assessed as eligible) before 12 September 2024. This means you will be “no worse off” under the new changes. Hardship provisions still apply if someone can’t afford their contribution.
More information about the new changes can be found on the myagedcare and Aged Care Quality and Safety Commission websites.
