Residential Aged Care:
Key changes to Accommodation Costs
Increase in Maximum Accommodation Price
Since January 1, 2025, the maximum price for residential aged care accommodation that providers can charge without needing approval from the Independent Heath and Aged Care Pricing Authority increased from $550,000 to $750,000.
Refundable Accommodation Deposit (RAD) Retention
From July 1, 2025, aged care providers will be required to retain 2% per year of the RAD, capped at 5 years.
Annual Indexation
The maximum accommodation price will be subject to annual indexation starting from July 1, 2025.
Indexation of Daily Accommodation Payments (DAP)
For new residents entering aged care after July 1, 2025, DAPs will be indexed twice a year based on the Consumer Price Index (CPI). This is a substantial change from current arrangements whereby the DAP is fixed at time of entry.
Implications for New Aged Care Clients
These reforms will have several implications for those entering care after July 1, 2025:
- Higher Upfront Costs – clients planning to move into residential care may need to prepare for higher upfront costs due to the increased maximum accommodation price.
- Financial Planning Adjustments – the introduction of RAD retention and indexation of DAP will require careful financial planning to ensure people can meet these new costs without compromising their financial stability.
- Increased Choice and Control – the reforms are part of a broader effort to provide older Australian with more choice and control over their aged care arrangements, ensuring they receive the care they need in a setting that suits them best.
Matthew Kelly CFP®
Representative (No 314983)
