How families can navigate the new aged care reforms
Australia’s aged care system is entering a new era of reform. BDO’s Sulo Kulendran unpacks the evolving landscape of residential aged care.
Australia’s aged care system is entering a new era of reform, with major changes coming into effect from November 1, 2025. For individuals and families, understanding what’s changing is key to making informed decisions and planning with confidence.
In this article, we unpack the upcoming reforms – including the new Support at Home program, the evolving landscape of residential aged care, and what the revised residential care fee structure means for you and your loved ones.
Prior to November 1, the system has operated through several key levels of care:
- Commonwealth Home Support Programme (CHSP): Entry-level assistance providing help with household tasks, transport, meal preparation, and basic nursing or social support.
- Home care packages: Four levels of tailored packages offering progressively higher levels of care – enabling people to remain in their own homes longer.
- Residential aged care: For individuals requiring full-time support, residential care homes offer comprehensive accommodation and care services. Fees and eligibility are determined through a means-testing process.
What’s changing?
The Australian Government has developed a new Aged Care Act to strengthen Australia’s aged care system. The new Act is designed to uphold the rights, dignity, and wellbeing of older Australians – ensuring that everyone accessing government-funded aged care receives respectful, high-quality support and the standard of living they deserve.
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The Support at Home program
From November 1, the Support at Home program will replace the current Home Care Packages Program as part of the government’s aged care reforms. Under Support at Home, older Australians will have improved access to services, equipment, and home modifications to help them stay healthy, active, and socially connected.
Key changes include:
- Simplified contributions: For full and part pensioners, fees will be based on existing Age Pension income and asset assessments. Non-pensioners will need to provide income and asset details to Services Australia or pay the highest fee rate.
- No-worse-off guarantee: Anyone receiving or approved for a Home Care Package before 12 September 2024 will contribute the same or less under the new system.
- Expanded service options:
- Clinical supports – nursing, physiotherapy, and occupational therapy
- Independence supports – personal care, transport, or respite services
- Everyday living supports – cleaning, gardening, shopping, and meal preparation.
Additional features include new pathways for restorative care, assistive technology, and end-of-life support – all designed to help older Australians live independently at home for longer.
The Commonwealth Home Support Program (CHSP)
The CHSP will transition to the new program after July 1, 2027.
The CHSP provides entry-level support for older people who need support to continue living independently at home. Service providers work alongside individuals to maintain their independence. If you are eligible, you’re expected to contribute to the cost of your care if you can afford to. The cost depends on the type of support and the provider.
The CHSP can provide services such as:
- Help around the house
- Transport
- Meals
- Personal care
- Home modifications
- Social support
- Nursing and allied health
- Planned respite care.
Residential aged care
For those residents who are living in an aged care home on or before October 31, 2025, their current residential and accommodation payment arrangements will stay the same while they remain in care.
Stay informed, daily
For people entering aged care homes from November 1, 2025, changes have been made to the means assessment. The treatment of the family home and refundable accommodation deposits for the aged care means assessment doesn’t change.
Key changes:
-
Refundable Accommodation Deposit and Daily Accommodation Payment
- 2 per cent per annum retention (non-refundable) amount deducted from any Refundable Accommodation Deposits (RADs) or Refundable Accommodation Contributions (RACs) paid
- The retentions only apply over the first five years, with a maximum of 10 per cent
- These retention amounts are not expected to increase DAP payments.
-
Contributions for everyday living costs
- Basic daily fee: All residents will continue to pay the basic daily fee (BDF)
- Hotelling Supplement: This helps aged care homes meet the cost of services such as catering, cleaning and gardening. Currently, the government pays the Hotelling Supplement for all residents. From November 1, 2025, residents who can afford it will contribute towards some or all of the Hotelling Supplement. This fee will be capped at $12.55 per day.
-
Contributions for non-clinical care
- The government will now fully fund all clinical care costs in aged care homes
- A new Non-Clinical Care Contribution (NCCC) will be introduced to cover things such as bathing, mobility assistance and lifestyle activities. Those who can afford it will make a contribution towards their NCCC based on their means assessment
- Daily Cap 101.16 per day (indexed)
- A lifetime cap to limit payments to the first four years, with an overall maximum of $130,000 (indexed).
-
Higher Everyday Living Agreement
- Residents will have the opportunity to review the options and decide whether to accept and pay an additional daily fee for any services selected.
Planning considerations
The new means testing rules and fee structures will directly affect how families plan and fund aged care. For those with significant assets, understanding the interaction between accommodation payments, daily fees, and government subsidies is essential. Engaging early with a financial adviser can help optimise funding strategies, protect family wealth, and ensure loved ones receive the care and support they need.
Access to all government-subsidised services is coordinated through My Aged Care.
Next steps: How BDO can help
An accredited aged care adviser can help families navigate the financial complexities of moving a loved one into care, ensuring informed decisions and optimal planning.
Contact a BDO adviser to discuss aged care in the context of your unique situation and ensure you are prepared for the changes ahead.
Disclaimer
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact the BDO member firms in Australia to discuss these matters in the context of your particular circumstances. BDO Australia Ltd and each BDO member firm in Australia, their partners and/or directors, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.
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