The new age care act will come into effect on 1 November 2025. Under the new act, around 50% of Australians are expected to pay more for aged care.
How is funding changing?
Residents will be expected to pay more for residential aged care however the majority of costs of care will remain funded by the Commonwealth Government (73% of costs).
- Most age care residents will pay more means tested fees each year. The maximum annual means tested fee cap will rise from $34,311 pa to $41,836 pa.
- Age care residents lifetime means tested cap will increase from $82,347 to $130,000. Means tested fees will continue to be paid for longer before this cap is reached.
- A 2% fee (retention amount) will be deducted from the Bond/RAD that the resident pays for 5 years. For example, if you pay a $750k Bond/RAD the 2% retention fee that will be deducted will be $15,000 pa. There is currently no retention fee payable.
- The Daily Accommodation Payment (DAP) interest rate will remain locked in on entry however this interest rate will now increase with inflation / CPI each year.
Who is affected?
All age care residents that sign a permanent residential contract from 1 November 2025.
Grandfathered residents
Existing residents that are in the system prior to 1 November 2025 will be ‘grandfathered’ and remain under the previous fee structure.
Residents that received a home care package or that where approved or in the queue as at 12 September 2024 will have their means tested fees grandfathered under the previous legislation’s fee structure. However they will be required to pay the 2% Bond/RAD retention fee.
Avoid costly mistakes
If a loved one will soon be entering aged care please call us on 1300 659 677 to discuss your family’s option to fund the move.
The aged care sector is a minefield, there are significant financial risks if the move to an aged care facility is not handled correctly. Our financial modelling provides families with a ‘roadmap’ to safely navigate the aged care system.
Sydney Aged Care Financial Advisers will assist your family to make an informed decision on your funding options. Our initial advice can include;
- Modelling and analysis of a number of available financial options to enter an age care facility (Inc retaining, renting, or selling property assets)
- Cash flow analysis and funding solutions
- Accommodation bond funding strategies (i.e. lump sum RAD, interest only DAP, reverse mortgage or a combination)
- Assessing the impact on age pension benefits
- Minimising the aged care means tested fees (if possible)
- Investment management services
The My Aged Care Government website will assist your family locate a suitable facility in your local area. You can click though and view the RAD/Bond prices of each facility.
Michael Johnson
1300 659 677
