Access to advice ‘critical’ as aged care reforms draw nearer

After the royal commission into aged care found that the previous Aged Care Act was no longer fit for purpose last year, the new Aged Care Bill was introduced to Parliament on 12 September, officially passing through both houses on 25 November.

Set to take effect on 1 July 2025, the new Aged Care Act is set to introduce several changes to Australia’s aged care system, such as a new means-tested services contribution for Australians entering aged care and a lower asset threshold for maximum fees from around $2 million to $1 million.

The new legislation will also replace Home Care Packages and Short-Term Restorative Care programs with the Support at Home program, introducing eight levels of ongoing funding from $11,000 to $78,000 a year while also implementing a new lifetime cap of $130,000 for non-clinical care contributions.

With the reforms less than six months away, Brisbane-based HLB Mann Judd financial adviser Luke Robson said it is essential for older Australians to have access to an adviser to help them navigate the changes.

“The need for financial advice becomes more critical under the new rules as many people will need guidance on whether to pay upfront through a refundable accommodation deposit (RAD) or through daily payments,” Robson said.

“RADs, while refundable, now come with a 2 per cent annual retention fee for up to five years.

“Selling or retaining the family home is another decision potentially impacted by these changes; retaining the home can offer pension benefits for two years post-admission to a care facility whereas selling it might affect means testing at a greater rate than that which previously applied.”

While financial advisers will play an essential role in helping clients implement the changes once they come into play, Robson explained that access to advice prior to 1 July could also help those not yet in aged care make appropriate decisions.

“These are significant changes to how the aged care systems worked in the past. Older Australians will need to navigate these new rules which are complex, so they will need to carefully manage their financial situation,” he said.

“For those considering entering aged care this year, it may be advantageous to enter before 1 July 2025, as existing residents will be grandfathered under the current rules.”

Despite the widespread recognition that advice is highly valuable to clients navigating Australia’s aged care system, in a submission to the Senate prior to the bill passing, the Financial Advice Association Australia backed Aged Care Steps’ argument for stricter controls around aged care advice.

“Aged care advice is complex and when it is provided by someone who is unqualified and unlicensed, can lead to significant financial harm for older Australians,” the FAAA said.

“The submission calls for stronger regulations to ensure that only licensed professionals provide aged care advice.”