How 1 November 2025 impacted aged care advice
Last year Australia’s aged care system changed in ways that materially affected retirement plans, cash-flow strategies and advice conversations.
A new Aged Care Act commenced on 1 November 2025, bringing increased rights for older Australians and a strengthened regulatory model. But most importantly, it brought changes to the contributions clients will be asked to pay for their care, particularly under the new Support at Home program.
For financial advisers, these changes require new knowledge and skills but also offer a business growth opportunity.
Why this matters now: demographics and longevity risk
Our ageing population continues to increase the demand for aged care (for example, Home Care recipients more than tripled between 2017 and 2024, from 71,900 to 275,000 recipients) and the new rules are more complex to navigate.
These trends compound the complexity of aged care decisions and accelerate the need for advice on later life planning and aged care. More than ever, financial advisers, are facing the need to effectively manage longevity risk, sequencing risk and frailty risk for older clients.
The big changes at a glance
The complete aged care system has undergone change. These changes are impacting processes, governance, older people’s rights, provider obligations, staffing and funding of care services.
From an advice perspective, the key changes include:
Commencement of a new, rights-based Aged Care Act and strengthened Aged Care Quality Standards. Clients accessing care services can expect clearer service agreements, improved complaints pathways and more measurable quality standards.
Support at Home replaced the Home Care Packages program, with a significant change in contributions payable by the recipients as the Government shifts a greater share of the cost to users.
Changes to residential care contributions (fees) across accommodation, daily living and care services, which are resulting in higher costs for clients:
These changes to fees include:
Accommodation costs: new entrants from 1 November 2025 will have retention amounts deducted from any lump sum Refundable Accommodation Deposits (RADs) paid for up to 5 years, and the Daily Accommodation Payment (DAP) will be indexed by CPI twice a year.
Daily living: funding of the daily living expenses has been subsidised by Government through a Hotelling Supplement, but liability for this payment may shift to the resident (as a Hotelling Contribution) based on means-testing.
Care fees: the means-tested fee has been replaced by a new non-clinical care contribution (NCCC) with a higher dollar lifetime cap and an overall four-year limit.
Lifestyle expenses: on a positive note, fees for higher quality or additional services shift to an optional Higher Everyday Living Fee, albeit the cost of these services has been escalating.
Change always takes a while to get used to but these fee changes are even more complex due to grandfathering provisions. For residential care, permanent residents as at 31 October 2025 will continue to have fees assessed under the old rules. People receiving (or approved for) a Home Care Package as at 12 September 2024 are grandfathered with lower Support at Home contributions, but are also protected under some of the old rules when they enter residential care.
Advisers will need to determine which category a client falls into and whether they are assessed under old rules, new rules, or a hybrid of old and new rules. We can’t just forget the old rules, as they will carry forward with us for the foreseeable future.
Advice impacts to anticipate
The magnitude and impact of these changes will necessitate clients to plan for their full retirement, including the frailty period, and not just the early active years.
Financial advisers who fail to include these discussions and impacts into their financial planning processes will fail Standard 6 of the Financial Planners and Advisers Code of Ethics:
Standard 6: An adviser must take into account the broad effects arising from the client acting on your advice and actively consider the clients broader, long-term interests and likely circumstances.
It is time for financial advisers to ensure:
Earlier care planning is included as part of retirement planning services. Clients are likely to remain at home for longer with Support at Home, and not just use it as a compressed transition into residential care. Advice should map an end-to-end care journey.
Identify and manage changing cash-flow patterns during the different phases of retirement – active years, quiet years and frailty years. The change to fees is likely to increase the regular expenses for daily support as a client ages.
Revise residential care funding strategies as the new fee structure will reshape total cost. Clients comparing whether to pay a RAD or a DAP will need to weigh up retention, indexation, liquidity needs and opportunity costs.
The opportunities for advice business growth
With change comes opportunity. And the opportunity arising from these changes is the opportunity to build better relationships with clients and their families and achieve business growth. This includes relationships not only with your older clients, but also with their families, offering an opportunity to attract the next generation as ongoing clients in their own right.
The combination of an ageing client base and increasing use of care services means aged-care planning is becoming mainstream, not niche. Advisers should take the opportunity to consider how to elevate aged care as a core retirement advice stream, within their business model.
This does not mean every adviser needs to become an expert – but every adviser and advice business does need a solution to either build in-house capabilities or create external partnerships for a full or partial outsourcing arrangement.
Consider the following practical steps to get you started:
Map your client base: flag clients 70+ (and carers) for a care-readiness review.
Refresh advice documents: update SoA templates and fact-finds to reference the new rules.
Undertake training to bring your knowledge and practical skills up to date – the Aged Care Steps Accredited Aged Care Professional program is a great place to start.
Communicate with and educate clients through use client education tools such as newsletter articles, seminars and fact sheets.
For advisers, the opportunity is to embed aged-care planning into your core retirement proposition - using better modelling, clearer client education, and robust partnerships.
Starting now ensures your clients will approach their older years with clarity and an effective plan.
About Aged Care Steps
Aged Care Steps is the market leader in aged care advice and support to financial advisers.
We provide advisers with the training, resources and tools needed to offer aged care advice, whether advisers are looking for a fully outsourced solution or an expert in-house solution or somewhere in between.
Our suite of practical tools are designed to support each stage of the advice process, to help advisers maximise business opportunities. We work with professionals to help define their business service model and client value proposition.
We have also partnered with the Financial Advice Association Australia (FAAA) to be the exclusive provider of the educational program for advisers to qualify for the FAAA Aged Care Specialist™ designation.
For further information refer to www.agedcaresteps.com.au