By Dennis Spiroski – Senior Financial Adviser, Navigate Advisory
If you’re thinking about residential aged care for yourself or a loved one, major changes are coming from 1 November 2025. These changes will impact the amount you pay and how fees are calculated.
As someone who works closely with families making aged care decisions, I want to make sure you understand what’s changing and how it might affect you.
What’s Changing: The Key Differences
The government is replacing the current fee system with what they say will be a simpler, more transparent structure. Here are the main changes:
Fee Structure Changes
| Current System (Before Nov 2025) | New System (From Nov 2025) |
| Basic Daily Fee | Basic Fee (same concept) |
| Means-Tested Care Fee | Hotelling Supplement Contribution (HSC) + Non-Clinical Care Contribution (NCCC) |
| Accommodation Payment | Accommodation Fee (with stricter transparency rules) |
| Additional Services (poorly explained) | Extra Services (must be clearly itemised upfront) |
The Big Change: RAD Refunds
What is a RAD?
A Refundable Accommodation Deposit (RAD) is a lump sum payment you can make to secure your accommodation in an aged care facility. Think of it like buying your spot rather than renting it. You can also choose to pay daily (called a DAP – Daily Accommodation Payment) or split between both options.
Current rules: RADs (lump sum accommodation payments) are 100% refundable when you leave care or pass away.
New rules: Providers can keep 2% of your RAD each year, for up to 5 years. This means you could lose up to 10% of your initial RAD payment.
How the Changes Work: An Example
To illustrate how the new fee structure works, let’s look at an example:
Mary’s situation:
- Age: 80, single
- Family home: $1,500,000 (family wishes to retain)
- Cash: $50,000
- Superannuation: $500,000
- RAD: $750,000 (paying $450,000 upfront, $300,000 as daily payments)
Daily Cost Comparison
| Fee Type | Current System | New System |
| Basic Daily Fee | $63.82 | $63.82 |
| Means Tested Fee / HSC & NCCC | $22.51 | $65.64 |
| Accommodation Payment | $63.95 | $63.95 |
| Total Daily Cost | $150.27 | $193.40 |
The difference: An extra $43.13 per day, or approximately $15,800 more per year.
Additional consideration: Under the new rules, up to 10% of the $450,000 RAD may not be refunded over time.
Who Will Be Affected
If you’re currently in aged care: No changes. Your existing fees and arrangements stay the same.
If you’re entering care from 1 November 2025: You’ll be under the new system.
If you’re planning for aged care in the next 1-2 years: The timing of your entry could significantly impact your costs.
Why This Matters for Your Planning
Understanding the Financial Impact
The new system is designed to provide more transparency and clarity around aged care costs. However, as shown in the example above, some people may face higher daily costs under the new structure.
Timing Considerations
If you’re planning to enter aged care in the next 12-18 months, you may want to consider the timing and financial impact of these changes. There may be circumstances where entering care before 1 November 2025 could result in different financial outcomes, depending on your assets, income, and personal situation.
Planning Opportunities
Understanding these changes early gives you time to:
- Compare costs under both systems for your specific situation
- Consider how aged care funding fits with your super and estate planning
- Explore different funding strategies
What You Should Do Now
If aged care is likely in the next 12-18 months:
- Compare costs under both systems for your specific situation
- Consider whether the timing of your entry affects your financial position
- Remember that care quality and suitability should be primary considerations
If aged care is further away:
- Factor the new costs into your retirement planning
- Consider how these changes affect your super and investment strategies
- Start conversations with family members about preferences and planning
For everyone:
- Don’t wait for a crisis to understand your options
- Get professional advice to model your specific situation
- Plan while you have time to make informed decisions
Getting the Right Advice
Aged care planning involves more than understanding fee structures. It’s about making sure you or your loved ones receive appropriate care while the funding approach works for your family and supports your financial goals.
I work with individuals and families to take the stress and emotion out of aged care decisions. We look at your specific situation, model your options under both the current and new systems, and create a strategy that fits your circumstances.
Dennis Spiroski is a Senior Financial Adviser at Navigate Advisory with extensive experience helping families navigate complex aged care and retirement planning decisions to safeguard wealth, optimise income, and plan for future care needs.
Book an introductory chat at navigateadvisory.com.au/contact/
Navigate Advisory has offices in Balmain, Brighton-Le-Sands and Hurlstone Park.
Any advice provided in this article is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making any decisions.