The rising cost of aged care in 2026

In November 2025, the Federal government rolled out major reforms affecting both in-home and residential aged care services, including how they are assessed, and how they are paid for. 

The reforms aim to improve the quality, safety and long-term viability of the aged care system and include increased funding from both the government and many aged care recipients.

Many of these reforms to the government aged care system were initially expected to start by 1 July 2025 but were delayed until 1 November 2025.

A ‘no worse off’ principle applies to protect people who were already receiving aged care services from paying more under the new rules.  

To determine a person's aged care needs under the new system, a new centralised Single Assessment System will undertake the assessments. This is designed to make it easier to move between in-home, transition care and residential care should needs change. 

There are two government-funded in-home care programs:

Offers entry level support for older Australians who need help with daily tasks including cleaning, meals, transport, personal care, home maintenance and social support.

What’s changed?

• As of 1 November 2025, the CHSP operates under the new Aged Care Act 2024, with strengthened quality standards and client rights.
• Only people aged 65+, Aboriginal or Torres Strait Islander people aged 50+, or those aged 50+ at risk of homelessness are eligible.

From 1 November 2025, the Support at Home program replaced the Home Care Packages Program and Short Term Restorative Care, delivering services to people with more complex health care needs.

What’s changed?

• Support Plan: Following assessment through the Single Assessment System, a person’s needs, goals, approved services and funding level are outlined in a Support Plan.
• New fee structure: Clients pay a set percentage of each service based on means testing including their Age Pension status and the type of service (clinical, independence, or everyday living) accessed.
  • Clinical services: Remain fully government‑funded. Includes medical and nursing care.
  • Independence supports: Users may pay between 5% and 50% of the cost of services such as transport or meal preparation.
  • Everyday living supports: Users may pay between 17.5% and 80% of the cost of services such as cleaning, gardening or help with showering.
• ‘No worse off’ protection: Anyone approved for or receiving a Home Care Package on 12 September 2024 will pay the same or less under the new system.
• New classification system: Eight ongoing classification levels replace the previous four Home Care Package levels, providing more tailored and consistent funding.
• Short‑term classifications: Three additional categories support restorative care, end‑of‑life care, and the Assistive Technology and Home Modifications (AT‑HM) scheme.
• Quarterly budgets: Clients receive a quarterly funding allocation. Up to the greater of $1,000 or 10% of the quarterly amount can be rolled over.

Residential care refers to full-time care in a live-in facility, including accommodation, meals, daily support and medical care.

What’s changed?

Changes to residential aged care generally aim to improve care and regulatory standards, as well as protect the safety, rights and dignity of residents. These include:

• Statement of Rights: Aims to protect the safety, privacy and dignity of older people
• Unified registration system: Aged care providers must be registered and meet obligations relevant to the services they provide.
• Improved standards: Strengthened regulatory, financial governance and care standards apply – including to food quality, staffing and care delivery.

For people entering aged care from 1 November 2025:

• Higher accommodation costs: Providers can now charge up to $758,627 for a room without requiring government approval, indexed to the Consumer Price Index (CPI).
• Introduction of a retention amount: Providers may retain 2% per annum of lump sum accommodation payments for a maximum of five years.
• Daily Accommodation Payments: Under the changes, these are now indexed to CPI.
• Means-tested Hotelling contribution: Up to $8,084.75 per annum to help cover everyday living expenses such as meals, cleaning and laundry.
• Non-Clinical Care Contribution: Up to $38,434.50 per annum to cover the cost of bathing, mobility assistance and provision of lifestyle activities. This is subject to a lifetime cap of $135,318.69 or four years – whichever occurs first.
• Higher Everyday Living Fee: Enables residents to purchase extra services, replacing additional services fees.

New means testing amount calculations apply with additional income and asset thresholds and new asset test taper rates.

For more information on means assessments, visit My Aged Care.