Proposed increases to the cost of aged care

Many elderly Australians can expect to pay more for aged care at home or in a residential facility from July 2025.

Under proposed reforms which have bipartisan support, new entrants will make larger means-tested contributions to their care, but a “no detriment” principle means contributions of people already in the aged care system will stay the same.

Self-funded retirees will continue to pay the lion’s share of their aged care costs, but significant changes to the way charges are calculated could mean further planning is needed to cover higher costs for those entering the aged care system from July 2025.

What is changing?

A new Aged Care Bill recently introduced to federal parliament lays out the nuts and bolts of how users will be paying more for both government-subsidised help at home and residential aged care. The fine detail, following a consultation period as it passes through parliament, is yet to come.

The reforms focus on keeping people at home, with a distinction being made between care and non-care and who pays for what.

The government will fund clinical care for everyone, regardless of means. But those receiving non-care services like showering, medication assistance, cleaning, gardening and shopping will be paying more.

For residential aged care, the financial damage for users will likely come in the form of higher Refundable Accommodation Deposits – which will no longer be fully refundable – as well as changes to the means-tested care fees and a much higher cap on the lifetime cost of care.

Funding a sustainable aged care system is important but so too is an improvement in the quality of care.

According to the government, the new Act focuses on older people’s rights, needs and personal choices with a significant strengthening of the existing Aged Care Quality Standards.

To become law, the Bill has to be debated and passed by parliament. The new Aged Care Act is intended to start from 1 July 2025.

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