Aged Care Financial Planning in Australia: Navigating the 2026 Reforms

Australia's aged care system underwent its most significant transformation in decades on 1 November 2025, when the Aged Care Act 2024 came into force. For families navigating residential care entry, home-based support, or planning ahead for future care needs, the new fee structures, means assessment rules, and contribution caps are genuinely complex. Engaging a qualified financial planner with aged care expertise has never been more important — or more valuable.

Understanding the New Aged Care Financial Framework

The aged care reforms introduced two distinct financial frameworks depending on when a person enters residential care. Understanding which framework applies to your family member is the essential first step in any aged care financial plan.

For residents who entered permanent residential care before 1 November 2025, the previous system continues to apply. This includes the Means Tested Care Fee (MTCF), which is a daily contribution toward personal and clinical care, subject to an annual cap of approximately $35,910 and a lifetime cap of approximately $86,185 (indexed periodically).

For residents entering care on or after 1 November 2025, the new framework applies. Under this system, clinical care is fully funded by the government for all residents. Residents contribute through two separate fees: the Hotelling Contribution (covering daily living services such as meals and laundry, capped at approximately $22.15 per day with no lifetime cap) and the Non-Clinical Care Contribution (NCCC) (covering personal care services such as bathing and mobility assistance, capped at approximately $107.32 per day with a lifetime cap of approximately $137,917 or four years of cumulative contributions, whichever occurs first).

All residents, regardless of means, pay a Basic Daily Fee set at 85% of the single person rate of the basic Age Pension — currently approximately $66.80 per day.

The Support at Home Program: What Changed in 2026

For Australians receiving care at home, the previous Home Care Packages system was replaced by the Support at Home program from 1 November 2025. This new program introduces eight funding classification levels, with annual government subsidies ranging from approximately $11,795 to $78,106 depending on assessed care needs.

Services under Support at Home are divided into three categories: Clinical Care (fully government-funded), Independence Services, and Everyday Living services. A significant milestone in 2026 is that personal care services — including showering, dressing, and incontinence management — will become fully government-funded with zero co-contribution required, effective 1 October 2026.

The government is also implementing price caps across all Support at Home services from 1 July 2026, providing greater transparency and preventing excessive provider charging. Monthly statements detailing available funds and expenditures are now mandatory for all providers.

Importantly, individuals who held an approved Home Care Package or were on the waiting list on or before 12 September 2024 are protected by a "No Worse Off" provision, meaning they remain under the previous fee arrangements regardless of their entry date into the new system.

Key Financial Considerations for Aged Care Planning

The financial decisions made at the point of aged care entry can have lasting consequences for retirement savings, Age Pension entitlements, and estate planning. A qualified financial planner will help you navigate the following critical considerations:

• Means assessment completion — A formal means assessment conducted by Services Australia is essential. Without it, residents and home care recipients are automatically charged the maximum possible fees. The assessment evaluates income (including Age Pension, superannuation income streams, and deemed income from financial investments) and assets (including financial assets, investment properties, and a capped value for the family home if not occupied by a protected person).
• Refundable Accommodation Deposit (RAD) vs Daily Accommodation Payment (DAP) — Residents can pay their accommodation costs as a lump-sum RAD (which is refunded when they leave), a daily DAP (an ongoing daily charge), or a combination of both. The optimal choice depends on your liquidity, investment returns, and estate planning objectives.
• Age Pension impact — Decisions about how to structure assets and income can significantly affect Age Pension entitlements. A financial planner can model the interaction between aged care fees, asset thresholds, and pension payments to optimise your overall position.
• SMSF considerations — For those with Self-Managed Super Funds, the transition to aged care raises specific questions about investment strategy, pension phase management, and the fund's ability to meet liquidity requirements.
• Family home treatment — The family home receives special treatment in the means assessment, particularly when a protected person (such as a spouse or carer) continues to reside there. Understanding these rules is critical to avoiding unnecessary fee increases.
• Estate planning alignment — Aged care financial planning must be integrated with broader estate planning, including wills, powers of attorney, and superannuation beneficiary nominations.

Common Mistakes Families Make When Planning for Aged Care

Without professional guidance, families frequently make costly errors when navigating the aged care system. A financial planner specialising in aged care will help you avoid the following common pitfalls:

• Delaying the means assessment — Failing to complete the Services Australia means assessment promptly results in automatic maximum fee charges. This can cost thousands of dollars that could have been avoided with timely action.
• Selling the family home prematurely — The family home is often exempt from the assets test while a protected person resides there. Selling it before understanding the full financial implications can trigger significant fee increases and reduce Age Pension entitlements.
• Choosing RAD or DAP without modelling — The decision between a lump-sum RAD and ongoing DAP payments is not straightforward. It depends on investment returns, liquidity needs, and how long the resident is expected to remain in care. Without modelling, families often make the more expensive choice.
• Ignoring the "No Worse Off" provisions — Families with members already in the system before the reform dates may be entitled to protection under the transitional provisions. Failing to identify and claim this protection can result in unnecessary additional costs.
• Not reviewing the plan after entry — Aged care financial plans are not set-and-forget. Changes in health, assets, income, or government policy can all affect the optimal strategy. Regular reviews with a financial planner are essential.

Australian Regulatory Context for Aged Care Financial Advice

Financial planners providing aged care advice in Australia must meet strict professional standards regulated by the Australian Securities and Investments Commission (ASIC). Under the Corporations Act 2001 and the professional standards framework, all financial advisers providing personal advice to retail clients must be registered on the Financial Advisers Register, hold appropriate qualifications, and comply with the Financial Planners and Advisers Code of Ethics 2019.

A critical deadline passed on 1 January 2026, by which all existing financial advisers were required to meet the updated qualifications standard. Advisers who failed to meet this standard had their authorisation cease by operation of law. When engaging a financial planner for aged care advice, always verify their registration on the ASIC Financial Advisers Register at moneysmart.gov.au.

The Aged Care Quality and Safety Commission (ACQSC) oversees compliance by aged care providers under the new Aged Care Act 2024, including financial and prudential management standards. While the ACQSC regulates providers rather than advisers, its oversight of provider transparency and fee disclosure directly affects the information available to families and their financial planners.

The Australian Financial Complaints Authority (AFCA) provides an independent dispute resolution service for complaints about financial advice, including aged care financial planning. If you believe you have received inappropriate advice, AFCA is the appropriate body to contact.

Questions to Ask a Financial Planner About Aged Care

Selecting a financial planner with genuine aged care expertise requires asking the right questions. Consider the following when evaluating potential advisers:

1. Are you registered on the ASIC Financial Advisers Register? — This is a non-negotiable requirement for any adviser providing personal financial advice in Australia.
2. Do you hold specialist aged care accreditation? — Look for advisers who hold the Aged Care Specialist Adviser (ACSA) designation or equivalent specialist training in aged care financial planning.
3. How do you charge for aged care advice? — Understand whether the adviser charges a fixed fee, hourly rate, or ongoing percentage-based fee, and ensure you receive a written Statement of Advice (SOA) before any recommendations are implemented.
4. Will you model the RAD vs DAP decision for our specific circumstances? — A competent aged care financial planner should be able to provide detailed modelling of accommodation payment options.
5. How will you coordinate with our accountant and solicitor? — Aged care planning intersects with tax, estate planning, and superannuation. An adviser who works collaboratively with your other professionals will deliver better outcomes.
6. How often will you review our plan? — Aged care financial plans require regular review as circumstances and government policy evolve.

How MyMoney® Can Help

Aged care financial planning is one of the most emotionally and financially significant challenges Australian families face. The right financial planner — one with genuine expertise in the new aged care framework — can save families tens of thousands of dollars while ensuring their loved ones receive the best possible care.

MyMoney® connects Australian families with qualified financial planners who specialise in aged care advice, means assessment strategy, accommodation payment modelling, and the integration of aged care planning with broader retirement and estate planning.

Post a Brief to describe your aged care financial planning needs and receive proposals from specialist financial planners. Or Browse Financial Planners to find professionals with the specific aged care expertise your family requires.

With the right guidance, navigating Australia's new aged care system does not have to be overwhelming. A specialist financial planner will help you make informed, confident decisions that protect your family's financial wellbeing for years to come.