New Resident Classification and Funding Model: A Guide for Families and Advisers

Introduction: Navigating the New Rules of Residential Aged Care Funding

From November 2025, a new system for classifying aged care residents and funding their care will be in full effect across Australia. The Australian National Aged Care Classification (AN-ACC) system replaces the former Aged Care Funding Instrument (ACFI), and it marks one of the most significant shifts in how residential aged care is assessed, resourced, and managed.

For families placing a loved one into care — and for financial advisers supporting them — this change isn’t just administrative. It has direct and ongoing implications for:

• How residents are assessed for funding
• The viability of specific residential care homes
• The structure of care costs and affordability
• The role of care needs in provider payments
• Strategic decisions about the timing of entry and asset structuring

This article explains the AN-ACC system in plain English, explores the financial consequences for residents and their families, and offers actionable insights for advisers helping clients plan and fund residential aged care under the new model.

New Resident Classification and Funding Model

Why ACFI Was Replaced: A System in Need of Reform

The ACFI model — in place since 2008 — had numerous shortcomings:

• It encouraged providers to “up-code” resident needs to secure higher funding
• Assessments were infrequent and outdated, missing changes in care needs
• It failed to keep up with the rising complexity of resident conditions
• It created perverse incentives to delay rehabilitation
• Funding was often misaligned with the actual care being delivered

The Royal Commission into Aged Care Quality and Safety strongly recommended a new approach. Enter AN-ACC.

What Is the AN-ACC System? An Overview

The Australian National Aged Care Classification (AN-ACC) system is a resident classification tool linked to government funding for residential aged care services.

Key Features:

• 13 resident funding classes based on functional and clinical care needs
• An independent assessment process conducted before entry
• A fixed base care funding amount per resident, plus variable funding based on need
• Additional facility-specific loadings for regional, remote or specialist homes
• A strong focus on rehabilitation and person-centred care

This system ties funding to objective care needs, not to provider-submitted estimates.

How AN-ACC Works: The Resident Classification Process

Under AN-ACC, every resident entering permanent residential aged care is assessed by an independent assessor, usually before admission. This assessment:

• Takes place in the person’s home, hospital, or respite facility
• Measures mobility, cognitive function, behavioural needs, and medical complexity
• Produces an AN-ACC class, from 1 (lowest care need) to 13 (highest)

This classification determines how much the government pays the provider, not how much the resident pays.

Example (Indicative):

AN-ACC Class	Care Complexity	Daily Government Funding (Est.)
Class 1	Low needs	$200/day
Class 7	Moderate needs	$275/day
Class 13	High needs (palliative)	$355/day

AN-ACC vs ACFI: Key Differences Explained

Feature	ACFI	AN-ACC
Who assesses?	Provider staff	Independent assessors
Timing	After entry	Before entry (ideally)
Reassessment	Rare	Reassessed if care needs change
Gaming risk	High	Low
Focus	Care “deficits”	Functional support and rehabilitation
Funding certainty	Variable	Predictable and standardised

AN-ACC improves fairness, consistency, and transparency — but it also changes how families and providers approach the care journey.

What Does AN-ACC Mean for Families?

While AN-ACC determines provider funding, it indirectly impacts families in several ways:

• Access to care may change — providers might prioritise high-AN-ACC residents if they are more financially viable
• The level of care provided will align more closely with assessed need
• Delays in assessment could delay admission or create a mismatch in funding
• It may affect the type of facility a family chooses — some may specialise in certain AN-ACC levels

Most importantly, AN-ACC contributes to the overall financial viability of the aged care provider, which in turn influences fees, amenities, and quality of care.

What Does AN-ACC Mean for Financial Advisers?

For financial planners, aged care specialists, and advisers, AN-ACC presents:

• A new layer of complexity to navigate with clients
• A need to understand how care classifications affect placement timing
• An imperative to work more closely with care providers and placement consultants
• An opportunity to model affordability more accurately, knowing government funding is standardised

AN-ACC doesn’t alter resident fees directly, but it affects the provider’s revenue model, and therefore what they can offer, charge, or sustain over time.

Who Conducts AN-ACC Assessments?

AN-ACC assessments are carried out by independent aged care assessment organisations, funded by the government. These assessors are:

• Trained clinicians with expertise in aged care
• Disconnected from the care provider (to prevent bias)
• Often affiliated with state or regional health services

For families, the assessment is free and typically arranged after a successful outcome from an ACAT assessment confirming eligibility for residential care.

AN-ACC and Residential Aged Care Costs: What You Still Need to Pay

While AN-ACC governs the government funding paid to facilities, families must still pay the usual resident fees:

1. Basic Daily Care Fee

• Standard for all residents
• Currently $61.96/day (October 2025), indexed with the Age Pension

2. Means-Tested Care Fee (MTCF)

• Income and asset tested
• Up to $32,718.57/year and $78,524.69 lifetime cap (indexed)
• Can vary significantly based on financial structure

3. Accommodation Costs

• Paid as RAD (Refundable Accommodation Deposit), DAP (Daily Accommodation Payment), or a mix
• RADs can exceed $500,000 in metro areas
• Negotiable, subject to the person’s means

AN-ACC does not replace these costs — it simply determines the level of funding providers receive from the government.

What If My Loved One’s Needs Increase? Can the Classification Change?

Yes. AN-ACC allows for reassessment if a resident’s care needs change significantly due to:

• Medical decline
• Post-hospitalisation deterioration
• Emergent behavioural or cognitive issues

A new assessment can be triggered by the provider and approved through the My Aged Care system. However, families must monitor changes and advocate proactively if care needs have increased.

Impacts on Facility Viability and Consumer Choice

Because AN-ACC pays providers different amounts for different classes, some facilities may:

• Focus on high-need residents to boost revenue
• Exit the market if their model is no longer viable
• Refuse admissions for low-funding classes (e.g. Class 1–3)

This may result in:

• Reduced placement availability in regional areas
• Longer waiting times for certain classes
• Greater importance of timing assessments strategically

Advisers should work with families to identify facilities suited to the resident’s profile and ensure admission timing aligns with both funding and availability.

How AN-ACC Affects RADs and DAPs

RADs (Refundable Accommodation Deposits) and DAPs (Daily Accommodation Payments) are not determined by AN-ACC. However:

• Providers that receive lower AN-ACC funding may offset this by charging higher RADs or more “Additional Services” fees
• Facilities that specialise in higher AN-ACC classes may offer fewer luxury inclusions and more clinical support
• Families must weigh up care quality vs accommodation quality, understanding how the funding mix supports each

It’s crucial to look beyond room pricing and examine the care viability of the facility.

The Importance of Entry Timing and Pre-Admission Planning

Because AN-ACC assessments happen prior to permanent entry, families should:

• Engage early with My Aged Care and request an ACAT assessment
• Schedule the AN-ACC assessment with enough lead time for planning
• Avoid “rushed” admissions before an assessment is complete, as funding may lag or be misaligned
• Consider respite care as a transition pathway while permanent assessment occurs

Financial advisers can play a key role in:

• Modelling costs during the transition phase
• Managing cash flow while waiting for RAD refunds or home sales
• Structuring short-term funding options during the entry window

How Families Can Advocate During Classification and Care Reviews

Families should not assume AN-ACC assessments are a one-time process. Advocacy is essential:

• Keep a journal of health changes or care incidents
• Ensure communication between GPs, hospitals, and the aged care facility is clear
• Understand the indicators that may warrant a reassessment
• Request reclassification if funding appears misaligned with actual care

Facilities have a vested interest in accurate classification — but families must ensure the system is responsive to the resident’s evolving needs.

Aged Care Planning with AN-ACC in Mind: Financial Strategies for Advisers

For financial advisers, AN-ACC reshapes several planning considerations:

• Affordability Modelling: Now requires understanding the facility’s likely AN-ACC class mix
• Asset Structuring: Ensure means-tested care fees are optimised without reducing resident choice
• Home Strategy: Consider implications of keeping, renting, or selling the family home for RAD/DAP funding
• Cash Flow Planning: Bridge funding gaps between home sale and care entry, or RAD and DAP mixes
• Legal Planning: Align Powers of Attorney and guardianship appointments with care funding decisions

Case Study: How AN-ACC Affects Care and Costs

Scenario
Margaret, 84, is living independently but suffers a stroke. Her family arranges an ACAT assessment confirming eligibility for permanent care.

Before November 2025

• Facility admits Margaret based on provider assessment
• ACFI application is delayed
• Care needs rise, but funding is slow to catch up
• Family pays high RAD and extra fees for additional services

After November 2025 (AN-ACC)

• Margaret is assessed before admission, classified as AN-ACC Class 10
• Provider receives immediate and appropriate funding
• No delay in care delivery
• RAD/DAP decision is made knowing provider’s viability and service capacity

Result

More transparency, better funding alignment, and more accurate planning for the family.

Conclusion: The AN-ACC Era Requires a New Mindset

The introduction of the AN-ACC system is a positive step towards a more equitable, efficient, and clinically appropriate funding model for residential aged care. It allows facilities to focus on care delivery rather than paperwork and helps ensure that government funding follows real need.

But for families and advisers, it demands:

• Early engagement with the system
• Understanding of care classifications and implications
• Vigilant monitoring of care levels
• Strategic financial planning around costs and entry timing

By learning how AN-ACC works — and how it integrates with accommodation payments, means-tested fees, and cash flow strategies — you can help ensure the aged care journey is well-funded, well-timed, and well-supported.

Next Steps for Families and Advisers

1. Book an ACAT assessment if care is likely within the next 6–12 months
2. Engage with a financial adviser to model care affordability and entry options
3. Identify preferred facilities and assess their AN-ACC classification trends
4. Prepare legal documents (POAs, guardianship) to support future care decisions
5. Monitor care needs to ensure reassessments are timely and appropriate

Need help navigating aged care funding under AN-ACC?
We specialise in residential aged care financial advice — helping families structure assets, understand costs, and confidently plan care transitions.

Contact us today to arrange a confidential, obligation-free consultation.