Care Planning – What’s Changed and Why It Matters

When people think about retirement planning, aged care is often something that gets pushed to the side.

In reality, it’s one of the more important (and complicated) areas to get right particularly given the changes that came into effect from 1 November 2025, which have reshaped how care is funded.

Why the system changed

The updates stem from the Royal Commission into Aged Care Quality and Safety and, at a high level, were about making the system sustainable.

By late 2024, nearly half of aged care facilities were operating at a loss. With an ageing population, that simply wasn’t going to hold.

As a result, the system has shifted placing more of the cost burden on those with greater financial means, while also encouraging people to remain in their homes for longer where possible.

Support at home – a bigger focus going forward

A key part of the changes is the new Support at Home program.

The idea is relatively simple - reduce pressure on aged care facilities by helping people stay in their own homes for longer. The trade-off is that the level of contribution now varies more depending on your financial position.

At a high level, the contributions look like this:

Client Type	Clinical Services	Independence Services	Everyday Living Services
Full Pensioner	0%	5%	17.5%
Part Pensioner	0%	5% – 50% (means tested)	17.5% – 80% (means tested)
Self-Funded (with CSHC)	0%	5% – 50% (means tested)	17.5% – 80% (means tested)
Self-Funded (no CSHC)	0%	50%	80%

The deposit decision has become more important

One of the more significant changes is how the Refundable Accommodation Deposit (RAD) is treated.

Historically, this was largely returned to the residents or their estate. Under the new rules, providers can retain 2% of the deposit each year for up to five years, meaning up to 10% may not be refunded.

That naturally leads to the question—should you still pay it?

The alternative is to pay interest instead, which is currently sitting around 7.9% (subject to change).

• Pay the RAD → lose a portion over time

• Don’t pay the RAD → fund an ongoing interest cost

In practical terms, avoiding RAD may mean relying on investment returns to cover that ongoing cost, which can vary over time. It’s not a straightforward decision and is very dependent on individual circumstances.

Ongoing fees have also shifted

Another key change is to means testing.

• A Hotelling Contribution (covering accommodation-style living costs)

• A Non-Clinical Care Fee

These are calculated differently to the previous system and, in many cases, will result in higher costs particularly for those with more assets.

That said, there are caps in place, so these fees won’t apply indefinitely. In some situations, the new rules can actually work out more favourably than the old ones, depending on how assets and income are structured.

Where things can go wrong

Aged care remains one of the most complex fee systems in Australia, and the biggest issues we see typically come down to timing and structuring of assets however there are many ways mistakes can occur.

These decisions are often made too late, or without a clear understanding of the longer-term impact.

The challenge is that many of these decisions are difficult—or impossible—to unwind once care is required hence why it is vital to obtain financial advice.

These changes might have been necessary, but they have made the system more complex and, in many cases, more expensive.

What they’ve also done is reinforce the importance of planning ahead.

Aged care isn’t something to think about ‘later’—it now forms a key part of broader retirement planning, often years in advance. Getting it right can make a meaningful difference to both costs and outcomes over time.

If you would like to better understand how these changes could affect your personal situation, please contact us at the Zinc Wealth team. Understanding the rules early can make a significant difference when important decisions need to be made.

Disclaimer: This information is general in nature and does not take into account your personal circumstances. You should consider whether it is appropriate for your situation before making any decisions.