Moving into residential aged care is one of the biggest financial and emotional decisions many families will ever face. And understanding the new aged care rules from 1 November 2025 is critical for many.<\/p>\n
For many people, one of the first questions is:\u00a0\u201cHow will we pay for the room?\u201d<\/p>\n
The answer is no longer as straightforward as it once was.<\/p>\n
Throughout 2025, aged care room prices increased significantly, with average rises of around 12% nationally \u2014 often adding approximately $60,000 to the cost of entering care.<\/p>\n
This increase was driven by:<\/p>\n
For families, this means entering care now requires much more careful financial planning than ever before.<\/p>\n
When entering residential aged care, residents are generally asked to pay for their accommodation in one of three ways:<\/p>\n
Historically, many families preferred paying a RAD if they had available assets, because the RAD was fully refundable when the resident left care or passed away.<\/p>\n
That has now changed.<\/p>\n
One of the biggest changes introduced from 1 November 2025 is the return of retention deductions on RADs.<\/p>\n
Under the new rules, aged care providers can retain up to 10% of the RAD over five years.<\/p>\n
This effectively means part of the RAD is now consumed over time rather than fully refunded.<\/p>\n
For example:<\/p>\n
This is a major shift in how families should think about accommodation payments.<\/p>\n
The decision is no longer simply:<\/p>\n
\u201cShould we invest the money or pay the RAD?\u201d<\/p>\n
Now there is also a direct cost associated with paying the RAD itself.<\/p>\n
Families choosing to pay via a DAP also face new challenges.<\/p>\n
DAPs are now indexed every six months for new residents entering care after 1 November 2025.<\/p>\n
This creates an escalating cashflow risk over time.<\/p>\n
While a DAP may initially appear manageable, ongoing increases can significantly affect affordability for residents who remain in care for many years.<\/p>\n
This makes long-term cashflow modelling more important than ever.<\/p>\n
A commonly used strategy is to pay part of the RAD and retain some funds to gradually cover ongoing DAP costs.<\/p>\n
This can still be effective.<\/p>\n
However, the assumptions behind this strategy now need far more careful review due to:<\/p>\n
There is no longer a \u201cone size fits all\u201d approach.<\/p>\n
Residents who entered aged care before 1 November 2025 are generally protected under the previous rules.<\/p>\n
This means they are usually not subject to:<\/p>\n
However, there is an important catch.<\/p>\n
If an existing resident later decides to move to another aged care provider, they may be required to move onto the new fee structure.<\/p>\n
This can create unintended financial consequences for families simply trying to relocate closer to loved ones or access different care services.<\/p>\n
One welcome improvement is the removal of the old 28-day deadline for choosing between a RAD and a DAP.<\/p>\n
Previously, families often felt pressured into making quick financial decisions during an already stressful time.<\/p>\n
Now, residents only need to confirm their intention to pay a RAD when they are actually ready to do so.<\/p>\n
This gives families more breathing room and allows better strategic planning.<\/p>\n
For example:<\/p>\n
Importantly, the timing now sits more firmly in the client\u2019s control rather than the provider\u2019s.<\/p>\n
A late legislative change introduced another practical hurdle.<\/p>\n
Clients must now have their Means Tested Assessment (MTA) completed by Services Australia before they can pay a RAD.<\/p>\n
This creates the risk of administrative delays causing families to pay DAPs longer than expected.<\/p>\n
Our advice is simple:<\/p>\n
Start the paperwork early.<\/p>\n
Delays in lodging or processing assessments can have real financial consequences.<\/p>\n
The aged care changes introduced from 1 November 2025 have added another layer of complexity to accommodation decisions.<\/p>\n
Families now need to carefully balance:<\/p>\n
Most importantly, these decisions should not be rushed.<\/p>\n
Good aged care advice is no longer just about understanding the rules. It is about helping families navigate one of life\u2019s most emotional transitions with clarity, confidence, and care.<\/p>\n