On 12 September 2024, the Hon Anika Wells MP and Prime Minister Anthony Albanese announced that the Federal Government will introduce the new Aged Care Act into the House of Representatives, after reaching bipartisan support.

Some of the key changes noted in the announcement include:

• A $4.3 billion package for the new 'at-home support' program beginning 1 July 2025: The new program will support 300,000 new participants over the next 10 years and will include eight classifications, increasing the maximum available support from $61,000 to $78,000 (including up to $15,000 for home modifications).
• New aged care funding model for future care recipients: In residential care, the mean-tested daily fee will increase twice a year in line with inflation and the maximum amount providers can charge for a room will increase from $550,000 to $750,000. Additionally, providers will be able to retain two percent of the Refundable Accommodation Deposit (RAD) every year for five years. The Government also noted it will consider phasing out RADs from 2035. The treatment of the family home will be unchanged, with only the first $206,039 assessable for means-testing.
• Home care will feature three categories of support including clinical care, independence, and everyday living. Fees will be means-tested, and the Government has committed to covering all costs associated with clinical care. Self-funded retirees will be required to pay 80% of the everyday living costs and 50% of independence costs. A lifetime contribution cap of $130,000 will apply to contributions a person makes to both their Support at Home and to the cost of their non-clinical care in residential care.
• No worse off principle: People who, on 12 September 2024, were either receiving a Home Care Package (HCP), in the National Priority System, or assessed as eligible for a HCP, will continue to make the same contributions, or lower, than they would have under Home Care arrangements. When these participants move to residential care, they will stay on the existing contribution arrangements unless they opt to move to the new program. Additionally, people who have a HCP, who are in the National Priority System, or who are assessed as eligible for a HCP before 1 July 2025 will receive the same package level under Support at Home when the program starts, including any unspent funds.

The Government has pledged $5.6 billion to support substantial reforms in the aged care sector, with Treasurer Jim Chalmers highlighting that these reforms are expected to yield savings of $12.6 billion over the next decade. Alongside the announcement, the Department of Health and Aged Care has released a variety of useful resources.

We will continue to keep you updated as the reforms progress through Parliament.