5 key things to know about new Aged Care fees

Navigating aged care can be one of the most emotional and complex decisions you or your family may face. At Navwealth, we’re here to guide and support you through every step — whether you’re planning ahead for yourself or helping someone you care about.

With big changes to aged care fees coming into effect from 1 July 2025, it’s more important than ever to understand how the system is evolving and what it means for your financial future. These changes aim to create a more sustainable and fairer system, but they also bring new terms, rules, and cost structures that can feel overwhelming.

Here are five key things you need to know to prepare with confidence:

1. Aged care will cost more – but is still subsidised
If you or a loved one is moving into residential aged care after 1 July 2025, the amount you’ll need to contribute will be higher. That said, the Government will continue to fund a large share of care costs – around 73% on average. But it will be important to consider your cashflow.

2. Expect new terminology and fee calculations
The language is changing. Instead of the current “means-tested care fee,” you’ll now see new names like Hotelling Contribution and Non-Clinical Care Contribution. How much you are asked to pay will still be based on your income and assets, but new formulae may result in higher contributions than under the current rules.

3. Lifetime caps remain – but at a higher level
A lifetime cap will continue to apply to limit how much you can be asked to pay as a non-clinical care contribution over your total stay in residential care. This cap is increasing to $130,000, but with a new safeguard, that no matter how much you pay, you will only need to pay this fee for a maximum of four years. This helps ensure fairness between residents with different levels of wealth.

4. Retention amounts are being reintroduced
If you choose to pay a lump sum for your room (known as a refundable accommodation deposit – RAD), aged care providers will deduct a “retention amount” of up to 2% per year (capped at 10% over five years). While this increases the cost slightly, it may still be better value than paying the daily accommodation payment.

5. Good advice can prevent costly mistakes
Navigating these new rules can be confusing – especially when you need to make major decisions about the family home, assets or pension entitlements. The cost of getting good advice is often small compared to the cost of getting it wrong. That’s why seeking qualified aged care financial advice is more important than ever.

“When it comes to aged care, there’s no one-size-fits-all solution. Every family has unique circumstances, and getting the right advice can take an enormous weight off your shoulders.”
— Andrew Wem, Aged Care Advice Specialist at Navwealth

If you’re considering aged care for yourself or a family member, now is the time to plan with clarity and care. Our aged care advice team is here to help you navigate the changes, understand your options, and make informed choices with confidence and peace of mind.

The information is of a general nature only and has been prepared without consideration of your individual objectives, financial situation or needs. Before making any decisions, you should consider the appropriateness for your personal investment objectives, financial situation or individual needs. We recommend you see a financial adviser, registered tax agent or legal adviser before making any decisions based on this information. Current as at 15 April 2025.