The 2025 Aged Care Act changes and what they mean for your financial planning

Growing older and needing more support? Most families don’t realise how financial the conversation becomes until they’re in the middle of it. The potential need for assisted living is something we often try to avoid thinking about, but it has to be part of the financial planning process. Australia’s system is currently undergoing a major overhaul, with a new Aged Care Act set to take effect on 1 November 2025. These changes will impact how support is accessed, funded and delivered, particularly for those with mid to high asset levels.

At First Financial, we offer tailored wealth management and retirement planning that includes guidance around future care needs. To better understand what the new rules mean in practice and how to prepare for them, we spoke with First Financial Principal Gavin Colosimo.

The 2025 Aged Care Act introduces several structural reforms aimed at improving access, accountability and the quality of care across the system. It includes a Statement of Rights that outlines clear standards residents can expect, covering dignity, cultural safety, independence and access to information. For the first time, individuals will also be able to appoint a registered supporter to assist with decision-making.

A Single Assessment System will replace the current dual pathways (ACAT and RAS) with one streamlined process for faster and more accurate eligibility decisions. Once approved for permanent residential care, people will be allocated a place directly, rather than having to find a provider. Eligibility is also tightening. People under 65 will only qualify in specific situations, such as being Aboriginal or Torres Strait Islander and over 50, experiencing homelessness, or already in care.

The Support at Home Program will bring together existing home care and restorative services into a single, more flexible framework. Support will be grouped into categories such as clinical care, everyday living assistance and help to maintain independence. In residential care, providers will need to have a registered nurse on-site at all times and meet updated care minute requirements.

Quality Standards will be reduced from eight to seven, with new expectations around culture and person-centred care, and a dedicated standard for food and nutrition. Residents will also have stronger protections, including clearer complaints processes and access to compensation in serious cases of provider failure.

Alongside reforms for individuals and families, the 2025 Aged Care Act introduces stricter requirements for care providers and staff. These include mandatory provider registration, updated quality and compliance standards, and stronger protections for whistleblowers. Workers will also face new screening requirements and be encouraged to take a more active role in governance and continuous improvement.

Under the new framework, residents will face a more structured and transparent fee model, with changes across both daily contributions and accommodation payments.

Ongoing fees

• The Basic Daily Fee will remain indexed annually.
• A Hotelling Supplement Contribution will be introduced, covering non-care costs such as meals, laundry and utilities.
• A Non-Clinical Care Contribution will also apply, capped at a daily amount and payable for a maximum of four years, with a lifetime limit.

Accommodation payments

• From 1 January 2025, any advertised room price above $750,000 will require formal approval.
• Refundable Accommodation Deposits (RADs) will be subject to a 2 per cent annual retention amount, deducted monthly for up to five years.
• Daily Accommodation Payments (DAPs) will continue to be indexed twice per year, in March and September.

The Means-Tested Amount is calculated using a tiered formula that considers both income and assets. It determines how much an individual contributes toward non-clinical care costs.

While the government will continue to fund around 70 per cent of residential care and 89 per cent of home care, people with assessable assets of $1 million will proportionally be impacted heavily under the proposed changes. “This group, often part-pensioners or self-funded retirees, will see the most noticeable increase in out-of-pocket costs,” Gavin says.

What do the new rules mean for those wanting to structure their assets and cashflow in the best possible way, especially if they own property? It’s worth reassessing whether to sell a property to fund a RAD or retain it and pay DAPs. Gavin explains, “In spite of the annual 2 percent RAD retention fee, contributing towards a RAD may still be more cost-effective over time, especially if the property sale would trigger CGT or reduce Age Pension entitlements.”

For those with assessable assets over $600,000 and thinking they may need care in the next 12 to 18 months, entering before 1 November could be more beneficial. Under the new framework, the cost of care is likely to be substantially higher for those who wait.

If you’re looking at needing care in five years or so, it may be worth exploring structuring strategies now. That might include gifting assets to reduce your assessable amount. It does require planning ahead, and a financial adviser can help you think through the options in a way that suits your broader situation.

These reforms reflect a push from the government to create a more sustainable and accountable aged care system; however, it comes with an associated cost shift. Taking the time to understand your position now gives you more scope to prepare for what’s ahead and make choices that support your long-term needs and goals.

At First Financial, we make the aged care process easier to understand and navigate. Our advisers will walk you through your options, model different funding approaches, and help you find a clear path forward—whether you’re planning for yourself or supporting a loved one.

To learn more about the new Aged Care Act or to explore your own aged care planning, contact us today.

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