You Could End Up Paying $40K+ More Each Year for Aged Care

We’ve been comparing the upcoming residential aged care means testing rules against the current system, and the findings speak for themselves and this Is How You Could End Up Paying $40K+ More Each Year for Aged Care from July 1 this year.

This heat map makes it clear: those with assessable assets around $1 million are squarely in the sights of the regulators. Under the new rules, they will face significantly higher means-tested fees.

And it gets worse.

For those who pay a Refundable Accommodation Deposit (RAD)—which remains an assessable asset—there’s also a 2% annual “retention” fee.

Consider this scenario:

• Someone sells their home and pays a $750K RAD.

• They have $250K in savings.

• Under the new rules, their means-tested fees increase by around $28K per year.

• On top of that, their RAD shrinks by $15K per year due to the retention charge.

That’s $43K in extra costs per year—compared to today’s system.

Meanwhile, some of the mechanics of how this is all going to work remain unclear.

• How will the Daily Accommodation Payment (DAP) be indexed over time?

• As the RAD decreases due to retention, will the DAP change accordingly?

Maybe the answers are buried somewhere in the 566-page Explanatory Memorandum- still a bit of work to do - however, the reality is this:

This new system isn’t simple. It’s more complex.

From 1 July 2025, we will have two systems running at once—making financial decisions even more critical for those entering care.

This makes urgent planning essential. Understanding the new rules before moving into care will be more important than ever—so assets can be strategically structured to achieve the best means-tested outcomes and ensure cash flow can meet the system’s growing financial demands.

Until there is a new set of numbers that are up to date for all of the inputs required to crunch these numbers (I'm talking about all the income and asset test thresholds, max accommodation supplements, means-tested fee caps, etc), the numbers in the table below are approximate.

The finding is becoming increasingly clear - if you have c$1m in assessable assets, expect to pay a lot more from July 1.

If you need help navigating those new complexity, get in contact today.