Why this new policy could mean you miss out on aged care

2 hours ago 1

Opinion

September 17, 2025 — 5.01am

For those approaching aged care, there is a common misconception that if you don’t have any money, you won’t get in. However, it’s a myth that may end up becoming a reality for some unless the government increases the accommodation supplement paid for residents of low means.

In January this year, the government lifted the market price cap – the maximum amount aged care homes can charge without seeking approval – from $550,000 to $750,000. Many homes that had set their price at the previous cap simply lifted their price to the new ceiling, with those priced somewhere in between also pulled upwards. When the cap was indexed on July 1, it rose to $758,627.

With many aged care prices now at $750,000 – equivalent to about $160 a day – the supplement is looking increasingly insufficient.

The trouble is that while market prices have climbed, the government contribution for those who can’t afford them hasn’t budged. These people, known as low-means residents, have some or all of their accommodation costs met by the government.

To receive the maximum accommodation supplement of $70 per day, an aged care home must have at least 40 per cent of its beds occupied by low-means residents. Drop below that, even by a single bed, and the supplement falls by 25 per cent to just $52 per day.

The funding was designed to encourage providers to accept those who can’t pay the market price. But with many prices now at $750,000 – equivalent to about $160 a day (if residents do not pay the lump sum) – the supplement looks increasingly inadequate.

Take a home with 100 beds as an example. If 60 residents pay the market price of $750,000 and 40 are funded as low-means residents at $70 per day, the home meets its 40 per cent requirement and secures the supplement.

But if that home reduces its low-means ratio to the minimum seen in many metropolitan areas – closer to 20 per cent – it will lose some government funding but more than make up the difference by filling those beds with market-price residents. In effect, the government has priced many low-means residents out of the care they need.

The stakes are high. Many aged care homes are full and have long waiting lists. Tracey Burton, the head of Uniting NSW.ACT, has been blunt about the issue: “The risk in those conditions is that providers can either take a privately funded resident, and all costs are covered, or take a resident funded by the government’s $70 a day, that will literally cost them money because $70 does not meet the costs.”

The government has promised an independent review of accommodation pricing and supplements – but not until July 2026. In the meantime, providers face thousands of hard choices, and for older Australians with limited means, the danger is clear: access to aged care could shift from being based on need to being based on money.

Rachel Lane is the author of Downsizing Made Simple, a book and website aimed at demystifying downsizing.

Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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