Navigating the aged care maze: What the new Aged Care Act means for Australians

In a significant overhaul aimed at redefining aged care in Australia, the Aged Care Act 2024 introduced sweeping reforms on 1 November 2025.

This landmark legislation promises a future where aged care systems are more responsive to individuals' needs, prioritising quality and accessibility. But what does this mean for individuals and their families? Apt Senior Financial Adviser Lisa Haley sheds light on the implications and opportunities.

Why did the Act change?

Whether you are navigating it for yourself or a loved one, Australia’s aged care system can feel like a maze. The new Aged Care Act was triggered by a sector-wide review that identified crucial flaws.

“With Australia’s population rapidly ageing, the new Aged Care Act is designed to handle long-standing challenges and create a more sustainable sector. It is designed to balance the need for quality care while recognising the commercial realities for providers delivering a more people-focused model," Lisa explains.

The new Act is designed to help seniors stay connected with their community, provide clarity to all stakeholders, ensure services delivered are compatible with the State of Rights and the Code of Conduct for Aged Care, and strengthen the quality of aged care in Australia.

But as Lisa highlights, it may also create some additional challenges when it comes to planning your finances.

What changed and what does it mean for me?

Under the Act, the sector is transitioning from a provider-based model to one centred on the needs and wellbeing of individuals. For many Australians, this shift means changes in how services and funding are accessed, aiming to improve the overall standard of care.

"This reform is designed to increase oversight, transparency and accountability, ensuring the consistent delivery of high-quality care to our seniors," Lisa notes.

However, she adds that the individual nature of care means that it can be more complex to navigate – and potentially more expensive.

"With an ageing population, the financial sustainability of aged care is paramount. The reforms introduced by the new Aged Care Act are intended as a step towards a more viable future, though they also mean around 50% of Australians will face increased costs for aged care services," Lisa explains.

“It’s a rebalancing of the funding model which moves some of the burden from the taxpayer to the family. And the amount you will pay for home care, for example, is a more complex calculation, so it can be harder to determine your out-of-pocket costs upfront, which, in turn, makes them more challenging to plan for.”

Adjustments to home care packages

For home care, the new Act introduces more nuanced package levels and financial contributions aligned with personal circumstances and care intensity, known as Support at Home.

"The revision to home care packages under the new Act is designed to provide a more finely tuned approach to meet individuals' needs and allow more people to access care, but it does make it harder to determine what your out-of-pocket costs will be, particularly for non-clinical care services," says Lisa.

Traditionally, Lisa explains, you were locked into specific services and a service provider. Now, you pay at the end of the month for only the services you use.

“While this sounds like a good way to cut wastage in theory, it may also make it harder for providers of non-clinical care, such as cleaning and driving, to adequately resource services as it will be more challenging to plan ahead. That may, in turn, impact availability for those who need the services, particularly with many services already at capacity,” she says.

Lisa says that those who were already signed up to a Home Care Package before the Act came into effect on 12 September 2024 will still be able to access funding under the old scheme.

“For those who were already receiving or signed up to receive a home care package, there will be less impact as they can continue to receive funding under the old Act and package rates. They can choose the old or new fee system, and can continue to benefit from old rules like carrying forward unused past budget amounts, which will be limited for new packages”

Changes to residential care

In residential care, Lisa highlights that the key change impacts the refundable accommodation deposit (RAD).

“Under the new model, a portion of the RAD is now able to be retained by the residential care provider. The provider can now withhold 2% per year up to five years, a maximum of 10% of your deposit to cover the costs of care. The government lifted the amount of RAD a facility can charge without applying for special approval from $550,000 to $750,000 on 1 January 2025, given it had not changed in years (while property prices and other costs rose), but this does not necessarily mean facilities will charge this amount.

“Each facility sets the RAD for each of the different types of room in their building depending on geographic location, quality of room, ensuite or shared bathroom and many other factors. RADs can still range broadly from $200,000 to over $1 million, so you need to look at a range of facilities, rooms and prices to find the right fit for you.”

For residential care home residents and their families, this means budgeting for a 10% loss of the previously fully refundable deposit.

However, Lisa highlights that the retained funds should ensure providers can increase the quality of care – something we all want for ourselves and our loved ones.

“One of the reasons for introducing this retainable amount was to support the increasing costs of care and ensure provision of better care, and if this comes to pass, that’s something we can all support,” she says.

Preparing for the changes

With the Act recently implemented, Lisa stresses the importance of proactive planning.

"For those considering aged care options, either for themselves or family members, now is the time to start preparing. Understanding these changes and how they impact your future plans is crucial."

Lisa advises potential home care recipients to familiarise themselves with the new package levels and financial co-contributions. For those exploring residential care, understanding the nuances of fee structures under the new Act is key.

"The Apt team is here to guide you through these changes. Together, we can develop a strategy that aligns with your needs and financial situation, ensuring a smooth transition to the new aged care landscape," she concludes.