As Australia’s aged care landscape shifts, many families and residents face a critical question: “Who pays what?” The new Aged Care Act, which introduces sweeping financial reforms starting in late 2025, is reshaping how costs are shared – between the individual and government. At Finley Regional Care, we believe in transparency and helping you make sense of these changes so you can make informed decisions. Below, we break down the key payment components under the new regime.
The Basic Daily Fee: everyone contributes
No matter your financial situation, every resident in permanent residential care will continue to pay a Basic Daily Fee (BDF). This covers the essentials: meals, cleaning, laundry, and day-to-day living.
Importantly, this fee remains unchanged under the new rules and is set at 85 percent of the full single Age Pension. That ensures a stable baseline cost for daily care.
Hotelling Contribution: paying for everyday comforts
One of the most significant changes is the introduction of a means-tested Hotelling Contribution (sometimes called a hotelling supplement), starting for new residents after 1 November 2025.
- This contribution is designed to cover non-clinical living costs (things like cleaning, catering, gardening, and shared amenities).
- Whether a resident pays none, some, or all of this supplement depends on their assessed income and assets.
- For example, individuals with assets over ~$238,000 or income above ~$95,400 may contribute toward it.
- The total amount a person pays is capped daily, and the thresholds for contribution are indexed over time.
In short: the more you can afford, the more you may share in costs for everyday “hotel-style” comforts, but the government still carries part of the load.
Non-Clinical Care Contribution (NCCC): replacing the old Means-Tested Fee
Perhaps the biggest shift in the payment structure is the Non-Clinical Care Contribution (NCCC), which replaces the previous Means-Tested Care Fee for new residents.
Why this change? The government will now fully subsidise clinical care; that is, nursing, medical treatment, rehabilitation, and other clinical services. But for non-clinical care (help with bathing, mobility, personal support, lifestyle activities), the NCCC ensures that those with greater means contribute.
Here’s how it works:
- The NCCC is calculated based on income and assets.
- There’s a daily cap (for 2025, around $101.16 per day) so contributions don’t spiral out of control.
- There are also annual and lifetime limits. Under current rules, after four years in care, or once a person has paid $130,000 (indexed) in NCCC, they stop paying this contribution altogether.
These caps are designed to provide protection and certainty, especially for long-term residents.
Accommodation Costs: RAD, DAP, and Retained Amounts
Accommodation costs are another major piece of the puzzle. Under the new Act, there are two main ways to pay for your room:
- Refundable Accommodation Deposit (RAD) – a lump sum payment
- Daily Accommodation Payment (DAP) – a “rent-style” daily payment.
Here’s what’s changing:
- Providers will now be allowed to retain 2% annually from the RAD, up to 5 years (total up to 10%).
- The DAP will become indexed twice a year based on inflation (CPI), rather than staying fixed.
- For residents who are considered “low means,” there may be a Daily Accommodation Contribution (DAC)instead of a DAP, and this may not be indexed in the same way.
- The maximum RAD that providers can charge without special approval is rising to $750,000 (from previous limits).
These changes give more flexibility (but also more complexity) when choosing how to fund your accommodation.
Optional/Premium Services: Higher Everyday Living Fee
In addition to the “standard” cost structure, residents may choose enhanced or premium services: think more luxurious room finishes, additional lifestyle perks, or upgraded living experiences.
- The old “extra services fee” is being replaced by a “Higher Everyday Living Fee (HELF)”.
- This fee is negotiated between the resident (or their representative) and the provider.
- It is indexed to CPI, so it may change over time.
This means that if you want a more “premium” standard of living, you’ll be asked to pay, but only for the extras you select.
Caps, assessments, and subsidies
A key part of the new system is the means assessment, conducted by Services Australia. They assess both income and assets to determine which contributions a resident will pay.
Once that assessment is made:
- Means-tested contributions (hotelling and NCCC) are applied according to a person’s capacity to pay.
- Daily, annual, and lifetime caps limit how much a person may pay over time.
- For those who pay very little or whose assets/income are low, the government covers nearly all of the cost, including both accommodation-related subsidies and non-clinical care costs.
This means the system aims to be fairer, more transparent, and more sustainable.
Why these changes matter – and what it means for you
These reforms represent a delicate balance:
- Fairness and sustainability: The government is shifting more non-clinical care cost onto those who can afford it, helping to support the long-term viability of aged care.
- Choices for residents: With new payment options (RAD vs DAP), capped contributions, and optional premium services, people have more flexibility in planning their accommodation and care costs.
- Transparency: The means assessment and caps are designed to make it clearer how much a resident will pay over time.
- Protection for lower-income residents: Even with higher contributions for some, the most vulnerable will continue to receive strong support.
What this means for Finley Regional Care and our residents
At Finley Regional Care, these changes mean that:
- We’ll continue to provide high-quality daily care, supported by the revised subsidy model.
- Our administrative and financial teams will help new residents and families understand which fees apply to their situation, based on means assessments.
- We’re committed to offering clarity and choice, whether you’re considering paying a RAD or a DAP, or opting for enhanced services.
- For current residents, the changes may not apply the same way (“grandfathering” arrangements exist), but we’ll support everyone through any reassessments or transitions.
Planning and advice: a smart next step
Given the complexity of the new fee structure, here are some practical tips:
- Speak with a financial advisor: Understanding how your income and assets interact with the new means assessments is critical.
- Get a means assessment early: Services Australia handles this, and knowing your assessed category helps you plan.
- Consider your accommodation payment strategy: Decide whether to pay RAD, DAP, or a mix – and think about how long you plan to stay.
- Talk to us: At Finley Regional Care, our team is here to walk you through the options, explain the costs, and help you make the choice that suits your needs.
The new Aged Care Act brings important changes: a shift toward more means-tested contributions, smarter caps, and greater transparency in who pays what. While this may create more financial responsibility for those with means, it also offers greater choice and long-term sustainability of the aged care system.
At Finley Regional Care, our priority remains the same: to deliver compassionate, high-quality care with clarity around cost. We want every resident and family to feel confident in understanding the financial side of care – because knowing “who pays what” is just as important as knowing who cares.
Click here to read more about how to get help with aged care costs.
