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2026 Federal Budget Aged Care Impacts for Older Australians and Families

Information current at time of writing: 14 May 2026. Many Budget announcements are proposals and may change before becoming law.

The 2026 Federal Budget aged care measures matter because they touch the decisions families are already struggling with: how to keep Mum safe at home, what happens if Dad needs residential aged care, whether care will be affordable, and how pensions, housing, investments and health costs may be affected.

For adult children helping a parent, the Budget is not just a political event. It can change cash flow, care choices and the timing of big decisions.

This article explains the key implications for ageing Australians, people receiving residential aged care, people using Support at Home, and families planning for future care.

Key takeaways

The Budget includes major aged care funding, including measures to increase residential aged care accommodation, accelerate Support at Home packages and improve affordability of some care services.
From 1 October 2026, eligible Support at Home participants with approved personal care may receive that care with no out-of-pocket contribution, provided they have available package funding.
Residential aged care providers are expected to receive new capital subsidies and higher accommodation support for supported residents, which may improve access over time but will not remove the need for careful RAD, DAP and means-test planning.
Older Australians may face higher private health insurance costs if age-based rebate advantages are reduced from 1 April 2027.
Age Pensioners may be treated more favourably than other taxpayers under the proposed minimum tax on capital gains, but the rules are not yet final.
Families should avoid rushed decisions about selling the home, changing investments or cancelling insurance until the final legislation and personal modelling are clear.
Online aged care advice can help families compare home care, residential care, pension, housing and estate outcomes before making irreversible choices.

2026 Federal Budget aged care changes at a glance
Why this Budget matters for older Australians
Support at Home: personal care becomes fully funded
What stays chargeable under Support at Home
Worked example: home care out-of-pocket costs
Residential aged care: more beds and accommodation support
RAD, DAP and accommodation pricing implications
Age Pension and Pension Supplement changes
Private health insurance implications for retirees
Tax, CGT and investment changes for older Australians
Family home implications
Decision checklist for families
Common mistakes to avoid
FAQs
What to do next

2026 Federal Budget aged care changes at a glance

The Budget includes a significant aged care package. The main aged care measures focus on increasing residential aged care accommodation, accelerating Support at Home packages, and improving the quality and affordability of aged care services.

For families, the most relevant measures are:

Area	Budget measure	Practical implication
Home care	Personal care under Support at Home to be fully funded from 1 October 2026	Some families may see lower out-of-pocket costs for approved showering, dressing and similar supports
Support at Home access	More Support at Home places to be brought forward	May help some people access care sooner, but wait times and assessment processes still matter
Residential aged care	Measures to support up to 5,000 additional beds a year	May improve access over time, especially in areas with limited supply
Supported residents	Accommodation Supplement changes and extra payment for homes with more than 60% supported residents	May encourage providers to accept more residents with limited means
Dementia care	Expansion of specialist dementia supports	Relevant for families where behavioural and psychological symptoms are making care at home difficult
Pension Supplement overseas	Full rate extended to 12 weeks overseas, then ceases for longer temporary departures; permanent departures lose it from departure	Important for pensioners planning extended overseas travel or relocation

Before focusing on the Budget measures alone, families should still understand the broader aged care fee system. Our guide to what aged care can actually cost explains the main fees families need to plan for.

Why this Budget matters for older Australians

The aged care system is already moving through major reform. The new Aged Care Act commenced in late 2025, Support at Home has replaced Home Care Packages and Short-Term Restorative Care, and residential aged care fees remain closely linked to means testing, accommodation choices and family home decisions.

The 2026 Budget builds on those reforms. It does not remove complexity. In some ways, it adds another layer of timing decisions.

For example, a parent already receiving care at home may need to know whether personal care costs reduce from October 2026. A parent moving into residential aged care may need to know whether a home sale, RAD, DAP, pension outcome or means-tested care fee is affected. Families should also revisit the aged care financial means test before making decisions, because Budget headlines rarely show the full household impact.

Support at Home: personal care becomes fully funded

The clearest direct win for many older Australians is the change to personal care under Support at Home.

From 1 October 2026, personal care will move from the “independence” category to the “clinical supports” category. This means participants who have personal care approved in their support plan, and who have available Support at Home funding, may be able to receive personal care with no out-of-pocket cost.

Personal care generally includes help with daily activities such as:

showering
dressing
eating support
mobility support linked to self-care
non-clinical continence support

This matters because personal care is often the service that keeps someone safely at home. It is not a luxury. It is the practical support that helps a person maintain hygiene, dignity and routine.

Who may benefit most?

This change may be particularly helpful for:

full and part Age Pensioners receiving regular personal care
self-funded retirees who need higher levels of physical assistance
people delaying residential aged care because they want to remain at home
family carers who are struggling with showering, dressing or continence support
people whose package budget is being stretched by daily care needs

The key condition is that the service must be approved in the person’s Support at Home plan and there must be available funding. This is not an unlimited entitlement to any level of care.

What stays chargeable under Support at Home

The Budget does not make every home care service free.

Support at Home generally categorises services into clinical supports, independence supports and everyday living supports. Personal care is moving into the fully funded clinical category from 1 October 2026, but other supports may still attract contributions depending on the person’s income, assets and pension status.

Services that may still involve contributions include things such as:

cleaning
gardening
meal preparation
shopping assistance
transport
social support
some independence-related services

Families should not assume that a parent’s total home care invoice will fall to nil. The better question is: “Which services are approved, which category are they in, and what contribution applies?”

Worked example: home care out-of-pocket costs

Example only. This is not a quote and does not reflect any one provider’s pricing.

Margaret receives Support at Home and has approved personal care for help showering and dressing. Her provider charges $70 per hour for this service, and she uses three hours per week.

Item	Before 1 October 2026	From 1 October 2026
Weekly personal care cost	$210	$210
Margaret’s contribution	Depends on assessed contribution	$0 if approved and package funds are available
Government/package funded amount	Balance of cost	Full cost, within available funding

If Margaret previously contributed 5%, her weekly out-of-pocket cost for those personal care services may have been $10.50. If she previously contributed 50%, it may have been $105. From 1 October 2026, the personal care component may become $0 out of pocket, provided the service is approved and she has available package funds.

However, if Margaret also receives cleaning or gardening, those services may still attract contributions.

Residential aged care: more beds and accommodation support

The Budget also targets residential aged care supply. The Government has announced investment to increase the supply of residential aged care accommodation and introduce measures to support up to 5,000 aged care beds a year.

For families, this is encouraging but not immediate relief for every situation.

More beds may help reduce pressure in some regions over time. It may also make it easier for low-means residents to access appropriate accommodation if provider incentives are well designed.

But families still need to compare:

room availability
Refundable Accommodation Deposit, or RAD
Daily Accommodation Payment, or DAP
Additional Services or Extra Services fees
means-tested care fee
family home treatment
Age Pension impact
estate planning consequences

The Budget may improve the system’s capacity, but it does not remove the need to choose how accommodation is paid.

RAD, DAP and accommodation pricing implications

A residential aged care place often comes with a major accommodation decision: pay a lump sum RAD, pay a DAP, or use a combination.

The Budget summaries flag that accommodation pricing remains under review and reform. Proposed measures include capital subsidies for new and improved homes, increases to accommodation supplements for supported residents, and a planned shift by 1 July 2027 to a different way of converting a daily payment into a refundable deposit.

That last point is important. The DAP is currently linked to an interest rate mechanism, and families often compare RAD versus DAP based on that rate, available cash, investment returns and estate priorities. If the conversion method changes, the “best” option may also change.

Families considering residential care should read our explanation of how RADs and DAPs work before entering negotiations with a facility.

Why supported resident changes matter

A supported resident is generally someone whose means are not sufficient to pay their full accommodation cost. The Budget package includes changes aimed at protecting equity of access for supported residents.

This could help families where a parent has limited assets and income. It may make some facilities more willing to accept supported residents, though availability will still depend on location, room type and provider participation.

Need clarity quickly?

Families often come to us when a hospital discharge, ACAT assessment or facility offer creates a tight deadline. An online aged care advice meeting can help you compare RAD, DAP, pension, home and estate outcomes without needing to travel. Documents can be collected securely, options modelled remotely, and the family can meet together by video.

Age Pension and Pension Supplement changes

The Budget includes a change for Pension Supplement recipients who travel overseas.

From 20 September 2026, the full rate of Pension Supplement is expected to be extended from 6 to 12 weeks overseas. After 12 weeks overseas, the Pension Supplement would cease for temporary absences. For permanent departures, the Pension Supplement would cease on departure. This measure is subject to legislation passing.

This may affect older Australians who:

spend extended periods overseas with family
are considering retiring overseas
regularly travel for more than 12 weeks
rely on the Pension Supplement as part of their fortnightly cash flow

For short trips, the change may be favourable. For longer trips or permanent relocation, it may reduce ongoing income.

Pensioners should confirm their circumstances with Services Australia before booking extended travel or relocating overseas.

Private health insurance implications for retirees

The Budget summaries indicate that from 1 April 2027, older Australians may no longer receive a higher private health insurance rebate simply because of age. Instead, the lower base rebate scale would apply across age groups, with income tiers still relevant.

For retirees, this could mean higher net premiums.

That does not automatically mean cancelling cover is the right answer. Before changing a policy, families should consider:

whether the parent uses private hospital cover regularly
whether waiting periods may apply if cover is later restarted
whether Lifetime Health Cover loading could be relevant
whether extras cover is still worthwhile
whether public hospital access is acceptable for the parent’s health needs
whether savings are meaningful after tax and rebate impacts

Older Australians often cancel insurance to save money, then regret it when health needs increase. The better approach is to review the level of cover, excess, inclusions and exclusions before making a final decision.

Tax, CGT and investment changes for older Australians

Although the Budget’s tax measures are not aged care measures, they may affect older Australians funding care.

The Budget proposes major changes to negative gearing and capital gains tax from 1 July 2027. The proposed negative gearing changes focus on residential property, while the proposed capital gains tax changes may affect individuals, trusts and partnerships holding taxable assets.

For ageing Australians, this may matter when:

selling an investment property to fund aged care
selling shares to pay a RAD
restructuring investments after moving into care
reviewing family trusts
deciding whether to sell, rent or retain the former home

Uploaded Budget summaries also indicate that income support recipients, including Age Pension recipients, may be exempt from the proposed 30% minimum tax on capital gains in the year the gain is realised.

That could be important for part pensioners or full pensioners selling taxable assets. However, families should wait for final legislation and obtain tax advice before relying on that exemption.

Family home implications

For many families, the biggest aged care decision is what to do with the home.

The Budget does not remove the emotional and financial complexity of that decision. Selling the home may create liquidity for a RAD or care costs. Renting it may help cash flow but can affect tax, pension and aged care means testing. Retaining it may preserve estate flexibility but increase DAP or cash-flow pressure.

Before making a decision, read our guide to what happens to the family home when moving into aged care.

Key questions include:

Is a spouse or protected person still living in the home?
Will the home be assessed for Age Pension or aged care purposes?
Is the family trying to fund a RAD, DAP or combination?
Will the home be rented?
Are there unpaid loans, reverse mortgages or family agreements?
What happens if the resident passes away within a short period?
How does the decision affect beneficiaries?

For couples, the decision is even more sensitive because one person’s care needs may affect the financial security of the partner still at home.

Decision checklist for families

Use this checklist before acting on any 2026 Federal Budget aged care headline.

1. Confirm the care pathway

Is the person staying at home, moving to respite, entering permanent residential aged care, or waiting for assessment?

2. Check what is already approved

For Support at Home, confirm the approved services, budget level, provider price and contribution category.

3. Identify which Budget changes apply

Personal care changes may apply from 1 October 2026. Residential aged care bed supply and accommodation supplement changes may affect access over time, not necessarily today.

4. Model cash flow

Compare pension income, super income, investment income, care fees, home costs, DAP, personal expenses and health insurance premiums.

5. Review the family home

Decide whether to retain, rent or sell only after modelling pension, aged care, tax, estate and cash-flow consequences. Our article on renting versus selling the family home may help frame the discussion.

6. Check legal authority

Make sure the right person has authority to sign forms, access bank information, deal with Services Australia and make accommodation decisions.

7. Do not rely on Budget announcements alone

Many measures are proposals. Wait for legislation, guidance and updated calculators where relevant.

8. Get advice before irreversible decisions

Selling assets, cancelling insurance, paying a RAD, gifting money or changing ownership can have long-term consequences.

Common mistakes to avoid

Mistake 1: Assuming home care is now free

Only approved personal care under Support at Home is moving to no out-of-pocket cost from 1 October 2026. Other services may still attract contributions.

Mistake 2: Selling the home too quickly

A quick sale can solve liquidity but may create Age Pension, aged care, tax and estate consequences.

Mistake 3: Choosing a RAD or DAP without modelling

The right answer depends on cash reserves, family home plans, investment returns, estate goals and how long the person may remain in care.

Mistake 4: Ignoring private health insurance changes

Higher premiums may make cover feel unaffordable, but cancelling can have longer-term consequences.

Mistake 5: Assuming Budget proposals are already law

Budget measures can change before implementation. This is especially important for tax, trust, pension and aged care accommodation rules.

Mistake 6: Not involving the attorney early

If capacity is declining, delays can make it harder to act when care needs become urgent. Our guide to power of attorney and aged care decisions explains why this matters.

FAQs

What did the 2026 Federal Budget change for aged care?

The Budget includes funding to increase residential aged care accommodation, accelerate Support at Home packages, make approved personal care fully funded from 1 October 2026, expand some dementia supports, and strengthen quality and regulatory arrangements.

Does the Budget make home care free?

No. The key change is that approved personal care under Support at Home is expected to have no out-of-pocket cost from 1 October 2026, provided the participant has that service approved and has available funding. Other services may still involve contributions.

What counts as personal care under Support at Home?

Personal care includes help with tasks such as showering, dressing and non-clinical continence management. These services are being moved into the clinical supports category from 1 October 2026.

Will there be more residential aged care beds?

The Budget aims to support up to 5,000 additional residential aged care beds a year through new provider incentives and accommodation support measures. This may improve access over time but will not guarantee immediate availability in every area.

Does the Budget change RADs and DAPs?

The Budget does not immediately remove RADs or DAPs, but accommodation pricing remains an active reform area. Families should watch for further detail before assuming today’s RAD/DAP conversion rules will apply unchanged in future.

Are Age Pensioners affected by the CGT changes?

They may be affected if they sell taxable assets, but Budget summaries indicate that income support recipients such as Age Pensioners may be exempt from the proposed 30% minimum tax on capital gains in the year the gain is realised. Final legislation should be checked before acting.

Will private health insurance become more expensive for retirees?

It may. Budget summaries indicate that the higher age-based private health insurance rebate for Australians aged 65 and over is proposed to be reduced to the standard base rate from 1 April 2027.

Should we sell Mum’s home to pay for aged care?

Not without modelling. Selling may help fund a RAD or simplify cash flow, but it can affect pension, aged care means testing, tax, estate planning and family outcomes.

Can aged care financial advice be done online?

Yes. Most aged care advice can be handled online using secure document collection, video meetings and modelling tools. This is often easier when adult children live in different cities or when a hospital discharge creates time pressure.

What to do next

The 2026 Federal Budget aged care measures are positive in several areas, especially personal care under Support at Home and residential aged care supply. But they do not make aged care simple.

Families should now:

Confirm whether the older person is receiving Support at Home, CHSP, respite or residential aged care.
Review current invoices and separate personal care from other services.
Check whether the person is a full pensioner, part pensioner or self-funded retiree.
Revisit the family home strategy before selling, renting or retaining it.
Compare RAD, DAP and combination options before signing residential aged care paperwork.
Confirm legal authority through enduring power of attorney or guardianship arrangements.
Wait for final legislation before acting on tax-sensitive Budget proposals.
Book personal advice before making irreversible decisions.

General advice only

This information is general in nature and doesn’t consider your objectives, financial situation or needs. Aged care, Centrelink, tax and Budget rules can change. Confirm details with My Aged Care, Services Australia, the Department of Health and Aged Care, the Department of Social Services or seek personal financial advice before acting.

Book an online aged care consult

Aged care decisions often need to be made quickly, but they should not be made blindly.

We can help you understand the financial impact of residential aged care, Support at Home, Age Pension, RAD/DAP options, the family home, superannuation and estate considerations through an online advice process. You can meet remotely, upload documents securely, and receive clear modelling before the family commits to a major decision.

Book an online aged care consultation to get clarity on the options, costs and next steps for your family.

Link map

Internal links used

what aged care can actually cost → https://agedcarefa.com/a-guide-to-the-costs-of-aged-care/
aged care financial means test → https://agedcarefa.com/aged-care-financial-means-test/
how RADs and DAPs work → https://agedcarefa.com/understanding-rad-and-dap-in-aged-care/
what happens to the family home when moving into aged care → https://agedcarefa.com/the-family-home-when-moving-into-care/
renting versus selling the family home → https://agedcarefa.com/renting-vs-selling-the-family-home/
power of attorney and aged care decisions → https://agedcarefa.com/power-of-attorney-and-aged-care-what-you-need-to-know/

External links used

My Aged Care → https://www.myagedcare.gov.au/
Services Australia → https://www.servicesaustralia.gov.au/
Department of Health and Aged Care → https://www.health.gov.au/
Department of Social Services → https://www.dss.gov.au/