How the Aged Care Reforms 2026 Affect What You Pay

Planning for aged care can feel overwhelming, especially with the major reforms kicking in from late 2025 into 2026. If you're an Aussie wondering how the Aged Care Reforms 2026 affect what you pay, you're not alone—thousands of families are crunching the numbers right now to secure quality care without breaking the bank.

These changes, rolled out under the new Aged Care Act 2024, aim to make the system fairer, safer, and more sustainable. But they also mean shifts in costs for residential care, home support, and everyday services. We'll break it down step by step, with practical tips tailored for Australian families, so you can plan ahead using tools from Services Australia and My Aged Care.

What Are the Aged Care Reforms 2026?

The reforms started phasing in from 1 November 2025, with key elements like the Support at Home program fully launching by 1 July 2026. They're driven by the Aged Care Act 2024, which prioritises quality and transparency while asking more from those who can afford it.

Government funding is rising—such as the Australian National Aged Care Classification (AN-ACC) price jumping to $295.64 per resident per day from 1 October 2025—but so are some resident contributions. The big shift? A new means-tested model that bases what you pay on your income, assets, Age Pension status, and service type.

Key Dates for 2026

• 1 January 2026: Indexation updates to pensions and fees, plus PBS prescription caps drop to $25 for non-concession card holders (relevant if meds factor into care budgets).
• 1 July 2026: Support at Home program with price caps and consumer protections fully online.

How Residential Aged Care Costs Are Changing

For those entering residential care, the biggest hits come to accommodation and daily fees. Providers now have more flexibility, but safeguards like means-testing and caps protect lower-income Aussies.

Accommodation Payments: Higher Caps and New Rules

Providers can charge up to $758,627 for a room without government approval—indexed to the Consumer Price Index (CPI)—a jump that's got many families rethinking refunds and bonds. Daily Accommodation Payments (DAPs) are now CPI-indexed, potentially increasing costs over time.

New: A retention amount lets providers hold 2% per year of lump-sum Refundable Accommodation Deposits (RADs) or Accommodation Bonds for up to five years. If you're paying a RAD, factor this in—it's like a slow drip on your savings.

Practical tip: Use Services Australia's fee estimator to model RAD vs. DAP options based on your finances. Existing residents only switch to new rules if they opt in—and it's irreversible, so chat with a financial adviser first.

Means-Tested Daily Contributions

Expect these annual caps, means-tested against your assets and income:

Contribution Type	Annual Cap (2026)	What It Covers
Means-tested Hotelling Contribution	Up to $8,084.75	Meals, cleaning, laundry
Non-Clinical Care Contribution	Up to $38,434.50	Bathing, mobility, activities

The Non-Clinical Care Contribution has a lifetime cap of $135,318.69 or four years. A new Higher Everyday Living Fee replaces extras fees, letting you buy add-ons like premium meals.

If you're on the Age Pension, your basic daily fee stays at 85% of the single pension rate, with government covering the rest via the age pension means test.

Support at Home Reforms: What You'll Pay from July 2026

The shift from Home Care Packages (HCP) to Support at Home brings price caps by 1 July 2026, plus protections like no hidden entry/exit fees and a $130,000 lifetime co-contribution cap.

Fees are now tiered by service:

• Clinical services (nursing, medical): Fully government-funded.
• Independence supports (transport, meals): 5-50% user-paid, means-tested.
• Everyday living (cleaning, showering): 17.5-80% user-paid.

No worse off principle: If your HCP fees were set by 12 September 2024, you'll pay the same or less. Providers must discuss pricing from April 2025, with agreements signed before 1 July 2025.

Financial Safety Nets

• Hardship provisions for those who can't pay.
• Grandfathering for existing packages.
• Pooled care management from 1 July 2025 using 10% of funding.

Practical Tips to Manage Your Aged Care Costs

1. Assess your means now: Use My Aged Care's free financial assessment tool or call 1800 200 422 to estimate contributions.
2. Get independent advice: Financial counsellors via National Debt Helpline (1800 007 007) or Services Australia can model scenarios.
3. Compare providers: Check the My Aged Care Finder for transparent pricing—reforms mandate clearer service agreements.
4. Opt in wisely: For residential residents, only switch fee arrangements after reviewing the opt-in form with Services Australia.
5. Plan for indexation: Fees and pensions rise 1 January and 1 July—budget using ABS CPI data.
6. Explore extras: Higher Everyday Living Fee for lifestyle boosts without uncapped extras.

Real example: A couple with $500,000 in assets and partial Age Pension might pay $20-30/day extra for hotelling but stay under caps, saving via clinical funding.

Next Steps to Protect Your Finances

Don't wait—contact My Aged Care on 1800 200 422 for a free assessment today. Review your assets with Services Australia's tools, speak to a financial adviser, and compare providers early. These reforms balance quality with fairness, but proactive planning ensures you pay what's right for you. For personalised advice, visit Services Australia or your local Aged Care Quality and Safety Commission office.