What you need to know about changes to residential aged care from 1 July 2025
If you have a loved one currently living in a residential aged care home, there’s no need to worry or take any immediate action before 1 July 2025. That’s when the Australian Government’s new Aged Care Act comes into effect.
What’s changing?
The biggest change is how aged care places will be allocated. Instead of providers being given places, the places will now be assigned directly to individuals.
According to the Department of Health, Disability and Aged Care:
“It will be easier for you to move to a new aged care home of your choice, if you want to.”
This shift is designed to give older Australians more control and flexibility over where they live and who provides their care.
Key benefits of the new system
Starting from 1 July 2025:
- More choice: You or your loved one can choose a provider that best suits your needs.
- Better information: It’ll be easier to compare aged care homes and make informed decisions.
- Improved quality: Providers will be encouraged to offer better care and more innovative services.
- Less red tape: Providers will face fewer administrative hurdles, allowing them to offer services in more locations.
No change to how you access aged care
The process to enter residential aged care stays the same:
- You still need to be assessed by an Aged Care Assessment Team.
If approved, fully supported residents (those with limited financial means) won’t pay any more. - Most full pensioners will also see little to no change in what they pay.
Self-funded retirees may need to contribute more towards accommodation and daily living expenses.
What will it cost?
What’s staying the same
- Clinical care (like nursing and physiotherapy) remains fully funded by the government.
- The Basic Daily Fee (which covers meals, laundry, and cleaning) remains at $63.57 per day, indexed twice a year.
What’s changing
From 1 July 2025, new fees will apply to some personal care services – like help with showering, dressing, or moving around.
Hoteling supplement
- This is a new means-tested daily fee for non-clinical services.
- It starts at $15.60 per day.
- If you have assets over $238,000 or income over $95,400, you may need to pay part or all of this fee.
- The government will cover the rest if you're not able to pay the full amount.
Non-clinical care contribution (NCCC)
- This replaces the current Means-Tested Care Fee.
- It applies to people who can afford to pay the full Hoteling Supplement.
- The amount is calculated based on:
- 7.8% of assets over $238,000, or
- 50% of income over $95,400.
- It’s capped at $101.16 per day.
- You won’t pay more than $130,000 over your lifetime, or for more than four years – whichever comes first.
Accommodation costs are rising
The cost of rooms in aged care is also increasing.
As of 1 January 2025, the maximum Refundable Accommodation Deposit (RAD) that providers can charge without special approval has gone up from $550,000 to $750,000, and it will now be indexed annually.
- You can choose to pay this as a lump sum (RAD) or via Daily Accommodation Payments (DAP).
- Within a month of the change, dozens of providers raised their prices to match the new ceiling.
New exit fee introduced
Aged care providers can now keep 2% of your RAD per year, for up to five years. This is considered a form of "rent" to cover your stay.
In summary
While the new Aged Care Act introduces some extra fees for people who can afford to pay more, it’s also designed to give older Australians more choice, transparency, and control over their care. And if your loved one is already in residential care, you don’t need to do anything right now – these changes will only apply from 1 July 2025.
For more information, visit the Department of Health, Disability and Aged Care’s website or speak to an aged care advisor.
