What is the new Aged Care Act?
Australia's aged care system was governed by the Aged Care Act 1997 for nearly three decades. The Royal Commission into Aged Care Quality and Safety, which handed down its final report in 2021, found the system was failing older Australians and called for fundamental reform.
The Australian Parliament passed the Aged Care Act 2024 on 25 November 2024. The new Act fully commenced on 1 November 2025, with the most significant practical changes — new fees and the Support at Home program — also taking effect from 1 November 2025.
The two headline changes are:
- A rights-based framework — a formal Statement of Rights for all older Australians receiving government-funded care.
- A new funding and fee model — new residential care fees, a reformed home care program, and changes to how accommodation deposits work.
New residential care fees (from 1 November 2025)
The old residential aged care system had three cost components. The new system — which applies to anyone who entered residential care on or after 1 November 2025 — has four.
Old fee model (pre-1 November 2025 entrants)
| Fee | Who pays | Cap |
|---|---|---|
| Basic daily fee (~$66.80/day) | Everyone | None |
| Means-tested care fee (MTCF) | Higher-income/asset residents | $35,910.43/yr · $86,185.23 lifetime |
| Accommodation (RAD or DAP) | Those above the accommodation threshold | Facility-set price |
New fee model (from 1 November 2025 — new entrants only)
| Fee | Amount (2026–27) | Who pays |
|---|---|---|
| Basic daily fee | ~$66.80/day ($24,398.70/yr) | Everyone — unchanged |
| Hotelling Supplement Contribution (HSC) | Up to $22.15/day (means-tested) | Based on income and assets |
| Non-Clinical Care Contribution (NCCC) | Up to $107.32/day (means-tested) | Based on income and assets |
| Accommodation (RAD or DAP) | Varies by facility | Those above the accommodation threshold |
Hotelling Supplement Contribution (HSC)
The HSC is an entirely new fee. It covers the everyday hotel-style costs of residential care — meals, cleaning, laundry, and similar services. It is means-tested and capped at $22.15 per day (indexed). Full pensioners pay little or nothing; self-funded retirees pay the maximum.
Non-Clinical Care Contribution (NCCC)
The NCCC replaces the old means-tested care fee (MTCF). It is carved out of the daily Means Tested Amount (MTA), which combines an income-tested component and an asset-tested component:
- Income: 50% of assessable income above the income-free area ($35,313.20 single / $34,585.20 couple)
- Assets: 17.5% of assessable assets between the asset-free area ($64,500) and $214,884, then 7.8% above $536,384
- The income and asset components are added together (not the higher of the two) to form the daily MTA
NCCC applies once the MTA exceeds the Maximum Accommodation Supplement ($72.30/day) plus the HSC daily cap ($22.15/day). The NCCC has a daily cap of $107.32 and a lifetime cap of $137,917.01 or 4 years in residential care — whichever comes first. Once you reach the cap, no further NCCC is charged. This is a higher lifetime cap than the old MTCF limit of $86,185.23, but the NCCC lifetime cap is also bounded by a 4-year time limit that the old MTCF did not have.
Worked examples: NCCC and HSC in practice
Here is what three different residents entering care after 1 November 2025 might pay:
| Resident | Basic daily fee | HSC | NCCC | Daily total (excl. accommodation) |
|---|---|---|---|---|
| Mary — full pensioner, $80k assets | $66.80 | $0.00 | $0.00 | $66.80/day |
| David — part-pensioner, $450k assets + $30k/yr income | $66.80 | $0.00 | $0.00 | $66.80/day |
| Patricia — self-funded, $1.2M assets + $90k/yr income | $66.80 | $22.15 | $107.32 | $196.27/day |
Accommodation costs (RAD or DAP) sit on top of these figures. Patricia's total excludes her accommodation — if her facility charges a $550,000 RAD and she pays it as a DAP, that adds about $127.03 per day at the current MPIR of 8.43%.
Changes to the RAD (accommodation deposit)
The Refundable Accommodation Deposit (RAD) — the lump sum room payment — still exists under the new system. However, from 1 November 2025, there is an important change: providers can now retain a portion of the RAD.
The 2% annual retention rule
Under the new rules (applying to new residents from 1 November 2025), aged care providers are permitted to retain 2% per year of the RAD or RAC balance. The retention is:
- Calculated daily and deducted monthly from the RAD balance
- Applied for a maximum of 5 years
- Capped at a total maximum of 10% of the original RAD
The remainder is still refunded when the resident leaves or passes away, minus any outstanding fees.
Example
| RAD paid | Retention per year | Maximum total retention (5 years) | Minimum refund |
|---|---|---|---|
| $300,000 | $6,000 | $30,000 | $270,000 |
| $500,000 | $10,000 | $50,000 | $450,000 |
| $800,000 | $16,000 | $80,000 | $720,000 |
The DAP (Daily Accommodation Payment — the daily rental equivalent) continues unchanged. From 1 November 2025, the DAP is indexed twice yearly in line with CPI.
For a full explanation of how RADs work, read our RAD guide.
Support at Home: replacing Home Care Packages
Home care in Australia also changed fundamentally from 1 November 2025. The Support at Home program replaced the old Home Care Package (HCP) system.
What changed
- 8 funding levels instead of the old 4 (Level 1–4 HCPs)
- Care costs are split into three categories, each funded differently
- A formal lifetime contribution cap of $137,917.01 (indexed) — there is no general annual contribution cap under Support at Home
How costs are split
| Care category | Government funds | Full pensioner pays | Self-funded retiree pays |
|---|---|---|---|
| Clinical care (nursing, allied health) | 100% | 0% | 0% |
| Independence support (personal care, domestic assistance) | Subsidised | 5% | 50% |
| Everyday living (meals, transport, social activities) | Subsidised | 17.5% | 80% |
- Clinical care (nursing, allied health)
- 100%
- Independence support (personal care, domestic assistance)
- Subsidised
- Everyday living (meals, transport, social activities)
- Subsidised
- Clinical care (nursing, allied health)
- 0%
- Independence support (personal care, domestic assistance)
- 5%
- Everyday living (meals, transport, social activities)
- 17.5%
- Clinical care (nursing, allied health)
- 0%
- Independence support (personal care, domestic assistance)
- 50%
- Everyday living (meals, transport, social activities)
- 80%
Part-pensioners and Commonwealth Seniors Health Card (CSHC) holders pay rates between these two extremes, based on means-testing.
- From 1 July 2026, government price caps apply to every Support at Home service. Providers can no longer set their own rates, which makes costs more predictable and comparable between providers.
- From 1 October 2026, personal care moves out of independence support and into the clinical supports category. That means no participant contribution is payable for approved personal care — showering, dressing and continence support become fully funded, as nursing and allied health already are. For a full pensioner currently paying 5% of independence support, this removes a meaningful share of their contribution.
People already receiving a Home Care Package were automatically transitioned to an equivalent Support at Home funding level from 1 November 2025 without needing a new assessment.
New rights for older Australians
One of the most significant changes in the Aged Care Act 2024 is the introduction of a formal Statement of Rights — a legally recognised set of rights that apply to all older Australians receiving government-funded aged care services.
Key rights include:
- Independence and autonomy — the right to make your own decisions about your care
- Dignity and respect — to be treated with dignity in all interactions
- Privacy — control over personal and health information
- Safe and quality care — to receive care that meets your needs
- Freedom from abuse and neglect — protection from all forms of mistreatment
- Right to raise concerns — to make complaints without fear of reprisal or adverse consequences
Registered aged care providers are now legally required to uphold these rights. The Aged Care Quality and Safety Commission oversees compliance and handles complaints.
Already in care? What the 'no worse off' rule means
If your loved one entered residential aged care before 1 November 2025, the new fee rules do not apply to them. The government has committed to a 'no worse off' principle: existing residents continue to have their fees assessed under the old rules for as long as they remain in care.
What the old rules mean in practice
- Fees remain: basic daily fee + means-tested care fee (MTCF) + accommodation (RAD or DAP)
- RAD arrangements are fully refundable — the new 2% annual retention does not apply
- MTCF caps remain: $35,910.43 per year, $86,185.23 lifetime (indexed)
When grandfathering ends
The 'no worse off' protection stops if the person:
- Leaves aged care (e.g. returns home or passes away — if they return to care later, new rules apply)
- Voluntarily transfers to a different provider under the new system
The new rights framework (Statement of Rights) applies to everyone — both existing and new residents — regardless of when they entered care.
Key dates and timeline
| Date | What happened |
|---|---|
| March 2021 | Royal Commission into Aged Care Quality and Safety delivers final report |
| 25 November 2024 | Aged Care Act 2024 passed by Parliament |
| 20 September 2025 | Biannual rate indexation — basic daily fee, NCCC caps, and thresholds updated |
| 1 November 2025 | New Aged Care Act 2024 fully commences; new fee structure (NCCC, HSC) begins for new residents; Support at Home program replaces Home Care Packages and CHSP; RAD retention (2%/yr) commences; Statement of Rights, strengthened Quality Standards and new regulatory framework in full effect |
| 1 April 2026 | Part of the care funding for metropolitan non-specialised homes becomes tied to care minutes delivery. The supplement is zero for homes delivering less than 85% of both their total and RN targets |
| May 2026 | Star Ratings redesign takes effect. The Compliance rating is recalculated from graded assessment against the strengthened Quality Standards, with a new "exceeding" grade. Transition runs up to three years as each home is reassessed at registration renewal |
| 1 July 2026 | Government price caps apply to all Support at Home services |
| 1 August 2026 | Further increase to minimum award pay rates for registered and enrolled nurses in aged care |
| 1 October 2026 | Personal care moves to the clinical supports category under Support at Home. No participant contribution is payable for approved personal care such as showering, dressing and continence support |
Next steps for your family
Navigating the new system can feel overwhelming. Here is where to start:
- Check which rules apply. If your loved one entered care before 1 November 2025, the old rules apply and they are protected. If they are entering now, the new fees apply.
- Estimate the costs. Use our free aged care cost calculator to get a personalised estimate based on income, assets, and location.
- Understand the fees in depth. Read our how aged care fees work guide for a detailed breakdown with worked examples.
- Get professional advice. An accredited aged care financial adviser can model your specific situation and help you make the best decisions about RAD vs DAP, asset structuring, and the impact on the Age Pension.