Understanding Aged Care in Australia: What It Is (and What It Isn’t)

NOTE: The below rates are accurate as at 15th May 2025 but will change on the 1st of July 2025.

For many Australians, aged care becomes relevant very suddenly—often after a fall, a hospitalisation, or a worrying call from a parent. But while the need can appear overnight, the system behind it is anything but simple.

This introductory conversation breaks down the aged care landscape in Australia and helps you understand what aged care really is, what it isn’t, and how to start thinking about it—before you’re in crisis mode.

Aged Care Is a System—Not Just a Place

Aged care isn’t just a building or a service—it’s a federally funded system that supports Australians from age 65 onwards. Before that, care needs may fall under the NDIS. Once you’re in the Aged Care system, you’re dealing with two key streams:

• Home care: Support delivered in the home

• Residential care: What many still call a nursing home

Understanding the distinction early matters. Not all support for older Australians is aged care—and not all options are equal.

Retirement Villages ≠ Aged Care

A common misconception is that retirement villages are part of the aged care system. They're not. They’re private businesses with their own contracts and rules. While they can offer support and lifestyle benefits—such as security features, community, or even affiliated care providers—they are not government-funded aged care.

The marketing may blur the line, but knowing the legal and financial difference can protect you or your family from unexpected costs or confusion later.

Accessing Care Starts with an Assessment

You can’t just turn up to an aged care facility and drop Mum off.

Everyone entering the aged care system—whether for home care or residential care—must be assessed first. That’s currently done through an ACAT or ACAS team (depending on your state), who evaluate someone’s ability to live independently.

This assessment is essential. It determines what kind of care—and how much funding—the person is entitled to. Without it, even a genuine need won’t unlock government support.

Home Care Isn’t Just for Frail People

Home care can be the start of the conversation, not the end of independence. It allows someone to stay in their home with a little extra help—whether that’s housework, meals, personal care, or other support.

It’s not about “giving up.” In fact, home care can preserve dignity and autonomy longer. It’s also often a softer entry point for families struggling with the guilt or fear of moving a parent into full-time care.

The Cost of Aged Care: More Than One Number

There are three key costs associated with residential care:

1. Accommodation payment (RAD/DAP/RAC/DAC): This is either a lump sum (often $550,000 to $750,000) or a daily interest-based payment—or a mix of both.

2. Care fees: Everyone pays a daily care fee, and some pay a means-tested care fee (up to ~$34,000/year), depending on assets and income.

3. Additional services fee: This covers extras like wine, Foxtel, or upgraded meals. It can range from a few dollars to over $100 per day, and is sometimes an optional requirement for entry into certain facilities.

These fees are complex—and they vary. That’s why advice matters. The way you fund accommodation or assess your means can dramatically shift what you pay, and what your parent receives.

Planning Before Crisis Makes All the Difference

Most people don’t talk about aged care until they have to. But that delay can mean fewer choices, more stress, and rushed decisions. Having conversations early—about values, expectations, and what support looks like—helps everyone feel more prepared.

It also respects the reality that your parents may be navigating a loss of independence, unfamiliar technology, and shifting roles in the family. That emotional transition deserves as much planning as the financial one.

Final Thought: This Is Complicated—for Everyone

No one has this figured out perfectly. The aged care system is evolving, emotionally fraught, and often overwhelming. Whether you’re dealing with guilt, financial pressure, or confusion about next steps—you’re not alone.

This episode is just the start of a bigger series on aged care. And if it helped you see things more clearly, we’d love for you to share it.