With the upcoming aged care reforms taking effect from 1 July 2025, many Australians are considering their options for residential and home care. There is growing concern that the new rules will lead to higher costs, but this is not necessarily the case for everyone. Before making any decisions, it’s important to understand how these changes may impact you or your loved ones.
Choosing the Right Residential Aged Care Home
When the time comes to move into residential care, selecting the right facility is an important but complex decision. While availability and urgency can limit your choices, taking a structured approach can help:
- Choose the Location – Consider whether staying in your current area or moving closer to family is the best choice.
- Consider What Feels Like Home – Think about the type of environment that will make you comfortable, from modern buildings to gardens and outdoor spaces.
- Check the Price for Affordability – Room prices can range significantly, and there are flexible payment options including daily rental fees instead of lump sum payments.
- Structure Your Finances – Ensuring you have the right financial strategy can help you manage ongoing care costs effectively.
Understanding the Aged Care Reforms
The new Aged Care Act is designed to create a person-centred system, giving older Australians more control and choice over their care. However, funding changes will impact how care costs are split between individuals and the government.
Key Changes for Residential Care
- Some room prices may increase, but lump sum and daily rent payment options remain.
- If you pay a lump sum, aged care providers will retain 2% per year for the first five years (up to 10% total), with the remainder refundable.
- Daily rental payments will increase every six months in line with inflation.
- Care costs will be divided into three categories:
- Everyday Living Expenses: Starts at $63.82* per day (amount subject to indexing), with an additional $0-$12.55 per day (hotelling contribution which is means tested).
- Non-Clinical Care: Means-tested, up to $101.16 per day, capped at $130,000 over four years (includes Support at Home contributions).
- Clinical Care: Fully funded by the government.
Key Changes for Home Care
- The new Support at Home program expands care from four levels to eight.
- Costs are split into three categories, with means-testing determining contributions:
- Clinical Care: Fully funded by the government.
- Independence Support: Self-funded retirees pay 50%, full pensioners pay 5% and part-pensioners & Commonwealth Seniors Health Card holders pay between 5-50%
- Everyday Living Costs: Self-funded retirees pay 80%, full pensioners pay 17.5% and part-pensioners & Commonwealth Seniors Health Card holders pay between 17.5%-80%.
- Home care contributions will be capped at $130,000 (indexed) over a lifetime.
- Unused package funds will now be subject to a ‘use it or lose it’ rule, with limited rollover.
What Should You Do Next?
Navigating these changes can be complex, and ensuring you have the financial means to meet future care needs is crucial.
If you or a loved one may require aged care, acting before 1 July 2025 could help lock in the current fee arrangements. However, no matter when the transition to aged care happens, getting expert financial advice is key to making informed decisions.
At Evalesco, our Aged Care Specialist Team is here to help you understand your options and structure your assets effectively. Contact us today to discuss your situation and ensure you make the best choice for your future
