Australia is set to undergo its biggest aged care reform in three decades, with sweeping changes taking effect on November 1, 2025.
Under the new system, elderly Australians will be required to contribute more towards the cost of their own care — a move the government says is essential to ensure the sector’s long-term sustainability.
The overhaul comes amid a critical staffing shortage, rising costs, and mounting reports of elderly people stuck in hospitals due to a lack of residential care beds. The government hopes the new co-payment model will save billions of dollars over the next decade while creating a more transparent and equitable aged care system.
Higher out-of-pocket costs for everyday services
Under the new Support at Home program, which replaces the existing Home Care Packages (HCP), older Australians will now contribute to services based on their financial capacity. These include everyday tasks such as showering, dressing, cleaning, and gardening.
Until a price cap is introduced in 2026, service providers will be free to set their own rates, though the Aged Care Quality and Safety Commission will monitor whether fees are “reasonable.”
For example, if a provider charges $100 for a shower service, a full pensioner would pay around $35 per week for daily assistance, while a self-funded retiree would pay $350 per week.
Clinical care remains free – but daily living costs rise
The government has promised that clinical services, such as nursing and physiotherapy, will remain free of charge.
However, most older people who need assistance at home require non-clinical services, which will now incur contributions based on income:
- Full pensioners: 5%–17.5%
- Part pensioners or health card holders: 5%–80%
- Self-funded retirees: up to 80%
There will also be a lifetime cap of $130,000, after which the government will cover any further care costs.
Residential aged care fees increase
From November 1, new aged care residents will face a new Hotelling Supplement of up to $22.15 per day for meals, cleaning, and utilities.
The standard refundable accommodation deposit (RAD) will rise to $750,000, with some facilities allowed to charge as much as $2 million for premium accommodation.
Renting a room instead of paying a lump sum is possible but costly — experts estimate it could reach $120,000 per year, making it unaffordable for most Australians unless they sell their homes.
Concerns from experts and advocates
Pat Sparrow, CEO of the Council on the Ageing (COTA), warned that rising fees may force older Australians to make “unthinkable choices between having a shower or eating a meal.”
Professor Kathy Eagar of the University of New South Wales added that isolation and mental strain are likely to worsen. “If someone needs help showering, they’ll also need help with meals, cleaning, and getting to the doctor. The costs will add up fast,” she said.
Government promises transparency and fairness
A spokesperson for the Department of Health, Disability and Ageing stated that the new model is designed to ensure older Australians “only pay what they can afford, and only for services they’ve actually received.”
Providers will be required to issue itemised invoices and offer financial hardship assistance to those struggling to pay.
