Changes are coming to residential aged care in Australia. From 1 November 2025, the Australian Government will implement a new Aged Care Act, designed to place older Australians at the heart of the aged care system. These reforms respond to the findings of the Royal Commission into Aged Care Quality and Safety and aim to deliver safer, fairer, and more respectful care for all.
Under the new legislation, aged care will be guided by a rights-based framework, ensuring that older people have the freedom to make decisions about their care, maintain their dignity, and stay connected to their communities.
The reforms also introduce stronger protections, clearer standards for providers and workers, and improved transparency across the sector.
Frequently Asked Questions
– The Government is making positive, lasting changes to aged care to put the rights and needs of older people first.
– We all want to feel confident that we will be able to access affordable, safe and suitable support as we age.
– A ‘no worse-off’ principle will apply to everyone in residential care before 1 November 2025.
– Existing individuals retain their existing contribution arrangement for the entirety of their stay in residential care.
– The Government will continue to fund the majority of aged care.
– All individuals will continue to pay the Basic Daily Fee.
– The way different types of income and assets are assessed in residential aged care will not change.
– Current financial hardship assistance arrangements will continue.
1. How will it affect individuals?
Individual contracts before 1 November 2025 will have the Grandfathering rule apply. The current fee arrangements will continue for individuals in residential care before 1 November 2025.
What is Grandfathering?
Grandfathering means that if you’re already receiving aged care services before 1 November 2025, you will continue under the existing rules, instead of being automatically switched to the new arrangements.
This ensures stability and protects individuals from sudden changes in fees, conditions, or agreements.
This includes current individuals:
– Pre-1 July 2014 class
– Post-1 July 2014 class
Individuals will be able to ‘opt out’ of their grandfathered fee arrangements at any time.
a. Residential Aged Care Individuals
– If you entered care before 1 November 2025, your accommodation payment arrangements (RAD, DAP, combination, drawdowns, etc.) will continue under your original agreement.
– Your means-tested care fee arrangements will remain as they were when you entered.
b. Other Existing Agreements
– Any existing contracts or rights under the current Aged Care Act will stay in place for those who entered before the reforms start.
When entering residential aged care you need to agree on an accommodation price with the aged care facility. Whether or not you need to pay the agreed amount will depend on your means assessment.
You can pay the Accommodation Fee as a lump sum called a Refundable Accommodation Deposit (RAD) or as a Daily Accommodation Payment (DAP) which is a non-refundable daily payment, or a combination of both.
From 1 November 2025, aged care facilities will be required to retain 2% per annum of the RAD/RAC* balance. The retention amount will be calculated daily and deducted monthly for a maximum of 5 years from when the RAD/RAC was paid.
The DAP will be indexed twice per year in line with changes to the Consumer Price Index. The DAP will continue to be calculated based on the outstanding RAD and Maximum Permissible Interest Rate applicable at date of entry.
The Daily Accommodation Contribution (DAC) for low-means individuals will not be indexed and will continue to be calculated based on their means.
*RAC – Refundable Accommodation Contribution may apply to some low means individuals who are eligible for government assistance towards their accommodation costs based on the outcome of the means-test.
In residential aged care, all individuals pay the Basic Daily Fee to cover the day-to-day expenses such as meals, laundry and cleaning.
From 1 November 2025, the Hotelling Supplement Contribution (HSC) will be introduced to fund day-to-day expenses in addition to the Basic Daily Fee. The HSC will be payable depending on the individual’s assessable assets and income with a daily cap set by the Government.
In residential aged care, you may also pay the Means Tested Care Fee. This fee is an additional contribution as determined by your means assessment. It is an ongoing fee towards personal and clinical care costs.
From 1 November 2025 the Non-Clinical Care Contribution (NCCC) will replace the previous Means Tested Care Fee (applicable before 1 November 2025) as a contribution towards non-clinical care costs. The NCCC will be payable depending on an individual’s assessable assets and income with a daily cap set by the Government.
The NCCC will also have a lifetime cap where it will no longer be payable when:
• the individual has been in aged care for more than four years; or
• the individual has paid the cap set by the Government in total NCCCs
2. Fees and Costs Explained
When first entering the world of aged care, it can be confusing to understand the different fees. Within Australia’s aged care system (before 1 November 2025 aged care reforms), there are four fees you may be required to pay:
Basic Daily Fee
Means Tested Care Fee
Accommodation Fee
Additional or Extra Services Fee
Anyone entering residential aged care is required to pay the Basic Daily Fee, indexed at 85% of the single aged pension. This fee helps to pay for day-to-day living costs such as meals, cleaning, laundry, heating, and cooling, (applies before and after 1 November 2025).
The cost for Short-Term Care includes only the Basic Daily Fee plus any Extra or Additional Services Fees that may apply with certain accommodation options at certain residences (applies before 1 November 2025).
Depending on the result of your asset and income assessment by Services Australia, the Means Tested Care Fee only applies to seniors who are assessed to have income or assets above a set threshold. Annual and lifetime caps apply†.
Please note until the determination is received from Services Australia, an interim fee of $25.00 will be charged to individuals who have not presented a valid and current Australian Pension Card. Your account will be reconciled once to the Services Australia advice when received.
† There are annual and lifetime caps that apply to the Means Tested Care Fee. Once these caps are reached, you cannot be asked to pay any more Means Tested Care Fees.
The cost of your residential aged care accommodation will vary depending on the accommodation type, location, and provider. Whether you are then required to pay this cost will depend on your income and means assessment. The Accommodation Fee covers the cost of your room, bathroom facilities, and access to all communal areas.
This can be paid in three ways:
1. Refundable Accommodation Deposit (RAD)
A one-off lump sum deposit, 100% guaranteed by the Federal Government.
A Daily Accommodation Payment applies until you’ve paid the RAD
2. Daily Accommodation Payment (DAP)
You pay a fee as a daily payment, calculated using the Government approved interest rate which is set at date of entry.
3. RAD & DAP Combination Payment
This payment gives you the choice to combine the RAD and DAP options.
Please note you will have 28 days after admission to notify us how you would like to pay your accommodation costs. Until you notify us you will be charged a DAP.
Learn more about TriCare’s extensive range of Aged Care Accommodations and Room Costs with our pricing calculator.
For existing individuals at TriCare with an Additional or Extra Services Fee, this fee will be valid until 31 October 2026. Services will end by 31 October 2026 unless previously advised by TriCare.
Extra Services Fee is set by the Commonwealth Government and Additional Services Fee is set by Aged Care providers. They only apply to seniors who choose to access these services.
The set fee specific to each TriCare Aged Care Residence is included in your agreement.
Those services can include hotel-type features as well as entertainment equipment and special food services such as alcohol, more menu options, newspapers, magazines, pay TV, beauty and wellbeing services.
Costs vary based on the residence and preferences.
Anyone entering residential aged care is required to pay the Basic Daily Fee, indexed at 85% of the single aged pension. This fee helps to pay for day-to-day living costs such as meals, cleaning, laundry, heating, and cooling, (applies before and after 1 November 2025).
The cost for Short-Term (Respite) residential care includes only the Basic Daily Fee from 1 November 2025 as the Higher Everyday Living Fee (HELF) option is not currently available.
The cost of your residential aged care accommodation will vary depending on the accommodation type, location, and provider.
Whether you are then required to pay this cost will depend on your income and means assessment. The Accommodation Fee covers the cost of your room, bathroom facilities, and access to all communal areas.
There are three payment options available to fit your budget and circumstances:
1. Refundable Accommodation Deposit (RAD):
– A one-off lump sum deposit, 100% guaranteed by the Federal Government.
– Retention amounts apply to all lump sum RAD/RAC*’s paid, calculated daily and deducted monthly at the rate of 2% per annum, and capped at a maximum of 5 years.
2. Daily Accommodation Payment (DAP):
– Non-refundable, rental style, daily accommodation payment.
– Indexed twice a year (20 March and 20 September) with the change in the Consumer Price Index (CPI).
3. Combination RAD/DAP:
– a combination of a RAD and DAP payment.
– RAD retention & DAP indexation also apply to combination payments.
*RAC – Refundable Accommodation Contribution may apply to some low means individuals who are eligible for government assistance towards their accommodation costs based on the outcome of the means-test.
• Starting 1 November 2025, the Hotelling Supplement Contribution will be means tested for new individuals.
• Individuals who can afford to pay their full accommodation costs will contribute to daily living costs such as food, cleaning, laundry and utilities.
• The Government will fully fund all clinical care costs in residential aged care.
• For new individuals from 1 November 2025, the new means-tested Non-Clinical Care Contribution (NCCC) will replace the Means Tested Care Fee.
• The NCCC will be for non-clinical care costs such as bathing, mobility assistance and lifestyle activities.
• It will only apply to individuals who can afford to pay the full Hotelling Supplement Contribution (HSC).
• It is paid until the individuals has contributed to the cap set by the Government in total NCCCs or has been in residential care for 4 years, whichever occurs first.
– A new optional fee introduced from 1 November 2025
– Replaces the previous Extra Services Fee & Additional Services Fee for new individuals from 1 November 2025
– Opportunity for individuals to purchase additional goods and services at a higher standard than required
– Based on goods and services only, regardless of the room a person occupies
– HELF can only be agreed to AFTER a person enters care
Please note TriCare will not be providing new individuals HELF from 1 November 2025. There is a transitional period where TriCare may decide to offer HELF post 1 November 2026 and information will be released when available to existing and new individuals.
More Frequently Asked Questions Aged Care Reforms
From 1 November 2025, the Government is introducing a new Aged Care Act. Here’s what it means depending on when you enter care:
BEFORE 1 NOV 25
AFTER 1 NOV 25
You will stay on the same payment and fee arrangements you already have. Nothing changes for you.
You will move onto the new payment and fee arrangements set out under the new law.
Your current agreement remains in place – you don’t need to sign a new one.
You will be given a new agreement that follows the new rules.
You will continue to receive care and services with no disruption.
Your care and services will follow the new rules under the new Aged Care Act.
The RAD^/RAC* retention and DAP^ indexing will apply for the following individuals,
1. Who first enter residential care from 1 November 2025
2. In care immediately before 1 November 2025
– If they move to a new service after they have opted in to the 2025 consumer contribution arrangements while in a service
– If they opt into the 2025 consumer contribution arrangements when they move to a new service
– If they leave permanent residential care for more than 28 days other than on approved leave (only applied to post 2014 accommodation class)
Q. If I enter permanent residential care before 1 November 2025 and choose to pay the DAP initially, will the RAD retention apply if I decide to make a lump sum payment towards the RAD after 1 November 2025?
A. No. Since you entered into a permanent agreement before 1 November 2025, the terms of that agreement will continue to apply. Your agreement is ‘grandfathered’ under the current rules and not subject to the new Reform changes.
Please see table below for scenario examples.
ENTERED CARE
SCENARIO
RAD/RAC retention applies
DAP indexing applies
On/after 1 November 2025
First enters permanent residential care
YES
YES
In ongoing care before 1 Nov 2025
In permanent residential care
NO
NO
In ongoing care before 1 Nov 2025
Moves to a new service
NO
NO
In ongoing care before 1 Nov 2025
Discharges from care for more than 28 days and re-enters ongoing care
YES
YES
In ongoing care before 1 Nov 2025
Opts into the post-2025 fee arrangements while in a service (room changes only)
NO
NO
In ongoing care before 1 Nov 2025
Moves to a new service after opt-ins into post-2025 fee arrangements
YES
YES
^You can pay the Accommodation Fee as a lump sum called a Refundable Accommodation Deposit (RAD) or as a Daily Accommodation Payment (DAP) which is a non-refundable daily payment, or a combination of both.
*RAC – Refundable Accommodation Contribution may apply to some low means residents who are eligible for government assistance towards their accommodation costs based on the outcome of the means-test.
Existing individuals with Additional Services or Extra Services will be valid until 31 October 2026.
TriCare is reviewing future plans over the coming 12 months and deciding on a way forward. The Government has given a 12 month transition and grace period.
Please note HELF is not available for new TriCare individuals from 1 November 2025 but may be available before 1 November 2026 once determined further, information will be shared with new and existing individuals.
There are three payment options available to fit your budget and circumstances:
1. Refundable Accommodation Deposit (RAD):
– A one-off lump sum deposit, 100% guaranteed by the Federal Government.
– Retention amounts apply to all lump sum RAD/RAC*’s paid, calculated daily and deducted monthly at the rate of 2% per annum, and capped at a maximum of 5 years.
2. Daily Accommodation Payment (DAP):
– Non-refundable, rental style, daily accommodation payment.
– Indexed twice a year (20 March and 20 September) with the change in the Consumer Price Index (CPI).
3. Combination RAD/DAP:
– a combination of a RAD and DAP payment.
– RAD retention & DAP indexation also apply to combination payments.
*RAC – Refundable Accommodation Contribution may apply to some low means individuals who are eligible for government assistance towards their accommodation costs based on the outcome of the means-test.
For more information specific to the Aged Care Reforms coming 1 November 2025 please see the government website.
