Major Overhaul to Aged Care Payments Begins November 1
Big changes are on the way for Australia’s residential aged care system, and they’ll officially kick in from November 1. If you or someone you know is in a nursing home or preparing to move into one, it’s definitely worth understanding how the new system will work — because the way people pay for aged care is about to look quite different.
Under the new structure, payments will be divided into four key categories — clinical care, non-clinical care, everyday living services, and accommodation. This change is designed to make the system clearer, more sustainable, and fairer for everyone involved.
Let’s start with some good news: clinical care , which covers nursing, physiotherapy, and medication management, will now be fully funded by the government . That means all residents, regardless of income or assets, won’t have to pay for this part of their care.
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But for non-clinical care — things like help with showering, dressing, and feeding — and everyday living services like meals, laundry, and cleaning, new means-tested fees will apply for people who can afford to contribute. Essentially, wealthier residents will pay more. These contributions will be capped at about $105 per day, with a lifetime limit of roughly $135,000 or four years, whichever comes first.
It’s important to note that if someone already lives in an aged care home by October 31, nothing will change for them. The same applies to new residents assessed as having low financial means — usually full pensioners with limited assets and income below about $34,762 per year. For these residents, the government will continue covering the full cost of care, though they’ll still contribute a basic daily fee of around $65.55 to help with everyday expenses.
When it comes to accommodation , the government will keep paying the costs for low-means residents through an accommodation supplement. However, from November 1, providers will be allowed to deduct 2% of a resident’s lump-sum balance each year for up to five years. Those paying rent instead of a lump sum will see their payments indexed twice a year.
So, why all these changes? The aged care system has been struggling financially for years. Nearly half of aged care homes are running at a loss, especially in providing meals and accommodation. With Australia’s ageing population growing fast, the government says these reforms are needed to protect the quality of care, keep providers financially viable, and attract more skilled staff with better wages and conditions.
A further pricing review is already underway, with more adjustments expected in 2026. The ultimate goal is to balance fairness — ensuring those who can afford to pay contribute more — while protecting vulnerable older Australians who depend most on government support.
In short, this overhaul marks a major shift in how aged care will be funded — one aimed at securing the sector’s future and improving life for older Australians.
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