Funding and Fee Structure Under the New Aged Care Act

Share

[addtoany]

The upcoming Support at Home program introduces major changes to how aged care services are funded and delivered.

Let’s unpack what these reforms mean in terms of funding and fee structures.

Q: How will the New Aged Care Act change the way funding flows to providers?

A: The Support at Home program shifts providers to a unit-based pricing model, with clear rules around consumer (now participant) contributions and lots of operational changes including:

• Unit-based pricing: Providers must align their fees with Department of Health, Disability and Ageing benchmarks. From 1 July 2026, capped pricing will apply, informed by the Independent Hospital and Aged Care Pricing Authority (IHPA).
• Claiming processes: Providers will need updated software workflows to lodge claims with Services Australia, via API or bulk upload.
• Billing rules: Participants must receive an itemised monthly statement, increasing transparency.
• Care management cap: Only 10% of the budget can go to care management, pooled across the provider.
• Included/excluded items: Clearer definitions of what can and can’t be billed under Support at Home.

Q: What are the differences in consumer contributions under the new system?

A: Contributions are income-tested and percentage-based:

When the new Support at Home program starts, people receiving aged care services (called “participants”) will have to make a financial contribution to some of their services, depending on their income and assets.

• Income-tested means: The government looks at whether you’re a full pensioner, part pensioner, or self-funded retiree.
• Percentage-based means: Instead of paying a set dollar amount, you pay a percentage of the service cost. That percentage depends on your income/asset level.

For example:

• If you’re a full pensioner, you might pay only 5% of the service cost.
• If you’re a self-funded retiree, you might pay up to 50% of the service cost.

Clinical care (like nursing, wound management, or medical treatment) has no contributions at all. These are considered essential health services, so participants don’t have to pay out-of-pocket.

To expand on this:

• Clinical care → no contributions.
• Independence and everyday living services → contributions vary depending on income/asset levels.
• Lifetime caps apply to non-clinical contributions, combined across home care and residential aged care.
• Grandfathering rules protect existing Home Care Package consumers so they are not worse off.

Q: Can you clarify what “lifetime cap” means?

A: A lifetime cap sets the maximum amount a participant will ever pay in contributions across their life.

• Once someone reaches the cap—whether in Support at Home or residential aged care—they stop paying contributions permanently.

Q: Can you give a simple example of how contributions work now compared to before?

A: Contributions are determined by means testing, for example:

• A full pensioner receiving a massage service may contribute just 5% of the cost.
• A self-funded retiree receiving the same service may contribute 50% of the cost.
• Importantly, clinical care services remain free of contributions, no matter your means.

Q: What changes should consumers expect in pricing transparency?

A: The goal is greater clarity.

The Department of Health, Disability and Aging has released pricing guidance from industry benchmarks that is available for both participants and providers to reference. Fundamentally, this is:

• All-inclusive unit pricing (e.g., no separate travel line items).
• Monthly itemised statements with a granular breakdown of delivered services.
• Annual price caps set by the Independent Health and Aged Care Pricing Authority, will be providing independent pricing recommendations to the department each year to inform what the annual price caps are for different services.

This should make it easier for participants to see exactly what they’re paying for.

Take 5’s Take on the New Funding and Fee Structure Under the New Aged Care Act

One of the key outcomes or recommendations of the Royal Commission into Aged Care was to improve transparency across all areas.

Transparency has improved, particularly with pricing and itemised statements. But ease of navigation has not improved:

• For providers: new claiming rules, quarterly budget cycles, contribution and rollover rules add administrative burden.
• For participants: understanding contributions across different service categories can be confusing. For example, something like personal care currently attracts a contribution, even though many believe it should be classified as clinical care.

So while the reforms push for fairness and accountability, there are still challenges in making the system easy to use and for equity of access to some services that arguably should be classified as clinical (e.g personal care).

Do you have questions for Take 5 Learning?

At Take5 we are focused on making learning the ins and outs of Support at Home and the Aged Care Act and Quality Standards easy for aged care organisations and staff.

If you are looking for a mandatory training solution – get in touch through our contact page.