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Australia’s aged care system is on the brink of its most significant transformation in decades. On 1 July 2025, the new Aged Care Act will come into effect, replacing the existing framework to better align with the rights, needs, and dignity of older Australians. Stemming from the findings of the Royal Commission into Aged Care Quality and Safety, this reform places people at the centre of the aged care system, introducing stronger quality standards, transparency, and new funding models.

For older Australians, their families, and aged care providers, understanding the implications of the new Act will be essential. In this article, we break down the upcoming changes, how they’ll impact you, and the practical steps you can take to prepare.

Understanding the New Aged Care Act

The existing aged care legislation, designed over 20 years ago, no longer meets the needs of Australia’s growing and ageing population. In response to calls for systemic reform, the Australian Government has introduced the 2025 Aged Care Act, which will be rights-based and person-centred.

The key aims of the new Act include:

• Empowering older Australians by embedding their rights into law.

• Enhancing care quality with stronger regulation and oversight.

• Creating transparency for families and care recipients.

• Ensuring financial sustainability to future-proof the system.

This legislation replaces outdated policies with a forward-thinking approach that recognises older Australians as individuals entitled to dignity, autonomy, and safe, high-quality care.

Key Rights for Older Australians

A cornerstone of the new Act is its focus on protecting and promoting the rights of older Australians. For the first time, these rights are explicitly enshrined in legislation, which means providers must deliver services that uphold them.

The key rights include:

• The Right to Safe and Quality Care: Care recipients are entitled to services that are safe, reliable, and tailored to their needs.

• The Right to Be Informed: Older Australians must receive clear, transparent information on available services, costs, and providers.

• The Right to Autonomy and Independence: Services must empower individuals to maintain control over their lives and decisions.

• The Right to Participation: Care recipients will have a say in how their care is delivered, ensuring it aligns with their personal preferences.

These rights shift the focus from a one-size-fits-all approach to a model where individual dignity and choice take priority. Providers found in breach of these rights will face significant penalties and accountability measures.

For further details, visit My Aged Care.

Key Changes Impacting Older Australians

The new Aged Care Act brings tangible changes to how services are delivered, funded, and regulated.

Stronger Aged Care Quality Standards

One of the most impactful changes is the introduction of enhanced Aged Care Quality Standards. These include:

• Higher standards for clinical care, including dementia support and palliative care.

• A focus on care planning that reflects individual preferences and goals.

The reforms aim to address long-standing issues, including neglect and inconsistent quality of care, highlighted in the Royal Commission’s findings.

New Funding Model and Financial Protections

To improve equity and sustainability, the government will introduce a new funding model that aligns costs with individuals’ financial circumstances. Key aspects include:

• Adjustments to means testing for residential and home care.

• The introduction of a lifetime cap on non-clinical care costs, ensuring families are protected from excessive financial burdens.

Wealthier Australians will contribute more, while low-income individuals will receive greater support. This shift aims to balance fairness with system sustainability.

Transparency from Aged Care Providers

Providers will be required to:

• Report on staffing ratios, outcomes, and costs.

• Publish performance data to help families make informed decisions.

This transparency ensures greater accountability, empowering families to compare providers based on quality and value.

Preparing for the Transition

To navigate the upcoming reforms effectively, older Australians and their families should take proactive steps now:

Review Current Aged Care Plans

Start by assessing existing aged care arrangements, including home care packages, residential care agreements, and out-of-pocket costs. Speak to your provider to understand how the reforms will affect your current services.

Understand Means Testing and Lifetime Caps

The new means testing model and cost caps will influence how much you pay for aged care services. Consult a qualified aged care financial adviser to assess the impact on your finances and plan accordingly.

Explore the Support at Home Program

From July 2025, the Support at Home Program will replace the current Home Care Packages and Commonwealth Home Support Programme. It will deliver personalised, flexible care services that allow older Australians to remain in their homes.

Key benefits include:

• Simplified access to support services.

• Greater control over the types of care received.

• Tailored services designed to meet changing needs.

To learn more, visit the Support at Home Program Overview.

Seek Expert Financial Advice

Aged care can be financially complex, particularly with changes to means testing and funding models. Seeking professional advice can help you:

• Understand your options.

• Develop a sustainable financial plan.

• Ensure you’re prepared for any additional costs.

Resources for Older Australians and Families

To support the transition, the government and independent organisations offer a wealth of resources, including:

• My Aged Care: Aged care information, service navigation, and assessments.

• Department of Health and Aged Care: Official updates and legislative details.

• Community support services such as Carers Australia and local advocacy groups.

If you need tailored advice, engaging an aged care financial adviser is highly recommended.

The Big Picture: Why This Matters

The 2025 Aged Care Act represents more than just legislative change—it is a fundamental shift towards respect, dignity, and choice for older Australians. By prioritising rights, improving transparency, and raising quality standards, the reforms address systemic gaps that have impacted the sector for too long.

For care recipients, this means better outcomes, safer care, and greater control over their lives. For families, it brings peace of mind knowing their loved ones are receiving the care they deserve.

Final Thoughts

With the new Aged Care Act coming into effect on 1 July 2025, the time to prepare is now. Whether you’re an older Australian, a family member, or someone planning for the future, understanding these reforms is critical. By taking proactive steps, staying informed, and seeking expert advice, you can navigate these changes with confidence.

For personalised guidance on aged care finances and planning, don’t hesitate to reach out to a trusted aged care financial adviser. The reforms mark a significant opportunity to ensure you and your loved ones receive the care, dignity, and respect you deserve in later life.

For further information on the reforms, visit the Department of Health and Aged Care and My Aged Care.