Residential Aged Care in 2025: What’s Changing and What It Means Financially

Residential Aged Care in 2025

From November 2025, Australia’s aged care landscape is set to undergo one of the most significant transformations in decades. The Support at Home program will replace the existing Commonwealth Home Support Programme (CHSP), Home Care Packages (HCP), Short-Term Restorative Care (STRC) and parts of other in-home care services with a single, streamlined system.

This reform is designed to simplify access, improve service quality, and provide older Australians with more flexibility and control. But behind the policy headlines lies a crucial question for families and retirees: what are the financial implications of the Support at Home program?

In this article, we unpack what the reform means for older Australians, family carers, and their advisers — from fee structures and funding caps to budgeting risks and strategic planning opportunities.

Understanding the Support at Home Program

The Support at Home program is the government’s response to longstanding issues in aged care, as identified in the Royal Commission into Aged Care Quality and Safety. The new model is built around:

• A single funding model replacing CHSP, HCP, and STRC
• Individualised budgets based on assessed care needs
• Standardised fee schedules and service pricing
• Increased transparency and accountability for providers

This reform aims to improve equity, reduce administrative complexity, and support ageing in place.

Key Financial Changes at a Glance

Here’s a quick comparison of financial differences between the current system and Support at Home:

From Home Care Packages to Tailored Budgets: A New Approach

One of the most significant shifts is moving away from fixed Home Care Package levels to tailored individualised budgets based on comprehensive assessments.

Financial Impact:

• No more package level caps — funding is tied directly to care needs
• Potential for more granular allocation — avoiding over- or under-funding
• But also, reduced predictability — families may need to reassess support levels more often

This requires ongoing financial review and advisory support, especially as care needs evolve.

Changes to Client Contributions and Co-Payments

The current system creates confusion with its inconsistent approach to fees. Under Support at Home, a standardised client contribution schedule will apply, though income testing will still play a role.

What We Know:

• The government will set standard hourly fees for each type of service
• Clients will be expected to contribute unless they qualify for exemptions
• Fee waivers may still apply for those on full Age Pension or with financial hardship

Financial Considerations:

• Self-funded retirees may see increased out-of-pocket expenses
• A clear income assessment strategy will be critical
• Advisers may need to model cash flow impact of client contributions across different service levels

Goodbye to Unspent Funds: What This Means for You

Currently, HCP recipients can accumulate unspent funds — sometimes tens of thousands of dollars — if services aren’t fully utilised.

From November 2025:

• Unspent funds will no longer accrue
• Budgets will be based on assessed need, not entitlement
• Use it or lose it – unused funds won’t be carried over

Financial Impact:

• No more safety net for later-stage care increases
• Planning will shift from accumulation to maximisation of entitlements
• This increases the importance of proactive service usage and review

Provider Payment Reforms and How They Affect You

Another key financial shift: under Support at Home, providers will be paid in arrears, only for services delivered.

This removes the need for large government pre-payments (as with HCP), but more importantly:

• Your funds are not “held” by the provider
• You see where every dollar goes
• Greater transparency and accountability

However, some providers may become selective in taking higher-needs or low-paying clients. Clients may face limited provider choice in rural or thin markets, making financial planning around service delivery more important than ever.

Introduction of Service Lists and Price Caps

The government will define a national service list and price caps, designed to prevent overcharging and service manipulation.

Services include:

• Personal care
• Domestic assistance
• Allied health
• Nursing
• Meal prep, transport, and home modifications

Financial Implications:

• No more “market-priced” extras unless privately funded
• Self-funded retirees may need to budget for top-up services beyond capped items
• Service bundling may require more careful provider contract reviews

The Role of My Aged Care: More Power, Less Flexibility?

Assessments, eligibility, and budget approvals will all flow through My Aged Care, centralising control.

While this increases equity and transparency, it also means:

• More paperwork and time delays
• Reduced ability to “negotiate” with providers directly
• Delays in reassessments may delay funding increases

This has cash flow implications — families may need to pre-fund care while waiting for approval.

Will You Be Financially Better or Worse Off?

This depends on a few key factors:

Managing the Transition: Timing Is Everything

The transition from HCP and CHSP to Support at Home involves:

• Automatic transfers of existing recipients
• Reassessment of care needs
• Migration of unspent funds (subject to government rules)

Strategic Timing Tips:

• Review current package usage before November 2025
• If underutilised, consider accelerating service use
• Consider bringing forward major care expenses (home modifications, equipment)

Family Contributions and Informal Carer Roles

Under the new model, the government is encouraging greater use of informal care and family support where possible. However, this can introduce complex financial dynamics, especially where family members:

• Move in to support a parent
• Provide unpaid personal care
• Contribute financially to cover service gaps

This increases the need for formal family agreements, ideally documented and reviewed with a financial adviser to:

• Avoid Centrelink gifting issues
• Protect estate planning outcomes
• Prevent future family disputes

Impacts on Centrelink and Means Testing

The Department of Human Services will continue to income-test for aged care services. However, the means testing framework may evolve as the new system matures.

Points to monitor:

• Will there be new thresholds or taper rates?
• Will unspent funds in old packages affect Centrelink entitlements?
• Will the pensioner treatment of new services differ?

Advisers must review Age Pension entitlements post-transition, especially where cash flow or care costs increase.

The Importance of Scenario Planning and Modelling

Under Support at Home, predictability is reduced, so it’s critical to model multiple financial outcomes, including:

• Best-case and worst-case care needs
• The effect of changing service fees
• The timing of assessments and approvals

This supports better decision-making around retirement income streams, downsizing, and aged care bonds (if residential care is needed later).

Opportunities for Financial Advice and Early Planning

The transition to Support at Home represents an opportunity for proactive families and advisers to:

• Review aged care strategy holistically
• Reassess estate plans and enduring powers of attorney
• Structure income and assets for optimal Centrelink and care outcomes
• Prepare for possible transition to residential care under the new system

Early planning is now not just beneficial — it’s essential.

Conclusion: Clarity Amid Complexity

While the Support at Home program promises a simplified system, the financial reality is anything but simple. The move away from fixed packages and towards a needs-based, fee-standardised model introduces new risks and opportunities — particularly for self-funded retirees, families providing informal care, and those with evolving care needs.

Families should treat November 2025 as a planning deadline, not just a policy change. Aged care financial advice will play a more critical role than ever in ensuring affordability, maximising entitlements, and protecting wealth and wellbeing across generations.

Next Steps

• Review your current home care usage and funding levels
• Book a comprehensive aged care financial review before November 2025
• Discuss with your adviser whether early spending or reassessment is appropriate
• Prepare legal and financial documents to support your care journey

Need support navigating the aged care reforms? Speak with a qualified aged care financial adviser to protect your finances, optimise your care options, and confidently plan for the future.