The new Aged Care Act took effect in mid-2025 after a long lead-in, and we’re now in the first full year where the implications are showing up in real family decisions. For estate planners and financial advisers helping clients think through their parents’ or their own future care, the framework is meaningfully different from what it was eighteen months ago.

This is a practical look at where the choices have shifted and what we’re seeing matter most in client conversations.

The contribution structure has been redrawn

The most significant change is the higher level of personal contribution expected from residents who have the means to pay. The means-testing thresholds have moved upward, and the share of accommodation and ongoing care costs that the resident is expected to fund has increased across most income and asset bands.

For families coming into the system in 2026, the headline practical effect is that the long-running strategy of treating the family home as an untouchable asset has weakened. The home is still treated favourably under the means assessment - the protected person rules and the rental income carve-outs continue to provide significant shelter - but the marginal benefit of holding the home versus selling it and downsizing has shifted compared to the pre-2025 settings.

This has changed the conversation about whether to retain the home, sell it, or use one of the rental-and-protected-person structures. The answer in any individual case still depends on family circumstances, but the default assumption that holding is always better has not survived the new rules.

RAD vs DAP economics have shifted

The room accommodation payment versus daily accommodation payment choice has always been a real financial decision. The new rules and the current interest rate environment have changed the math.

With the maximum permissible interest rate sitting where it is in early 2026, the implied yield from paying a RAD upfront versus paying a DAP is genuinely competitive with what families could earn on the same capital invested elsewhere - particularly after tax and risk adjustment. The RAD is also fully refundable to the estate, which makes it close to a guaranteed-return investment in the eyes of many estate planners.

The complication is liquidity. A family that pays a large RAD has tied up capital that is only refunded after the resident departs. For families with multiple parents in the system, or with other significant capital commitments, the cash-flow management requires careful planning.

A combination approach - paying part of the RAD and the balance as a DAP - is increasingly common, and the new rules have not made this materially harder. The arithmetic still favours putting in as much RAD as the family can comfortably afford to lock up.

Income-tested fees and the means-tested care fee

The income-tested care fee and the means-tested care fee under the new system have been simplified compared to the previous arrangements, but the effective marginal rates on additional income for higher-asset residents have stepped up at certain thresholds. This means the structure of the resident’s income matters more than it used to.

For clients with flexibility about whether income is generated as super pension payments, dividends, rental income, or capital drawdowns, the choice can have a meaningful effect on annual care costs. This is one of the areas where genuinely useful financial advice can produce real savings - the difference between an undifferentiated drawdown strategy and a thoughtfully structured one can be tens of thousands of dollars per year for higher-asset families.

The Department of Health and Aged Care’s fee calculator is reasonably useful for ballpark estimates but doesn’t capture the optimisation opportunities. For complex situations, modelling with a spreadsheet or specialist software is still required.

The home care package side has evolved too

The Support at Home programme that replaced the home care package system has been operating long enough now that the practical experience is starting to be visible. The classification levels and the contribution co-payments work differently from the predecessor system, and several scenarios where the pre-2025 arrangements were favourable have flipped under the new rules.

For families navigating the choice between staying at home with significant support versus moving into residential care, the financial comparison is no longer the simple lean-toward-home it sometimes was. The cost gap has narrowed in certain scenarios, particularly for higher-asset families needing intensive support. Many of these decisions are now genuinely close calls on financial grounds, which means the non-financial factors - quality of life, family proximity, social connection - rightly become the deciding considerations.

The advice layer has thinned and widened

A development worth flagging for the planning community is that the volume of families seeking specialist aged care financial advice has climbed sharply since the new rules came in. The supply of genuinely qualified aged-care-savvy advisers has not kept pace.

This has produced two tiers of practice. At the top, the established specialists are at capacity and frequently have multi-month waiting lists. Below that, a much wider group of generalist advisers are now offering aged-care advice with varying degrees of specialist depth. Families are reporting wide variation in the quality and consistency of the advice they’re receiving.

For estate planners who refer clients out for aged care advice, the recommendation is to maintain a tight referral list of specialists you’ve actually verified. The cost of a poor adviser at this stage of life is high and largely irreversible. Even adjacent professional services - aged care advice software providers, AI-supported case modelling tools, and the broader fintech ecosystem serving the planning community, including Australian AI consultancies like Team400 doing strategy work across financial services - have a small but growing role in raising the floor of what generalist advisers can deliver competently.

Practical priorities for 2026 conversations

A few things are worth raising early in any family conversation about aged care under the new rules. The means assessment rules are now more sensitive to income structure than they used to be, so structural conversations about how income flows are generated should happen before a residential placement is needed, not during the crisis. The RAD-DAP decision is genuinely meaningful and worth modelling carefully. The home-vs-sell question has shifted under the new rules and deserves a fresh look even if the family did the analysis a few years ago.

Most importantly, the timing matters. Decisions made under time pressure during a health crisis tend to be worse decisions than decisions made calmly with eighteen months of runway. Families that have done the planning work in advance consistently report better financial and emotional outcomes than those that have not.