Aged care changes: What’s new for 2025

The new year always brings change and 2025 is no different for the aged care sector. As of January 1, several new measures came into effect that will directly impact service providers, staff and care recipients.

This included the latest increase in award wages that builds on the 15% increase many workers received in 2023. The additional increase varies depending on worker classification and role. 

The Minister for Aged Care, Anika Wells, said it was another historic day for aged care workers as they received the wage increase they deserve. 

“The Albanese Government funding supports around 340,000 aged care residential and home care workers to be paid fairly and valued for the important work they do,” Minister Wells said.

“These award wage increases apply to workers who provide more direct support and care to older people – personal care workers, assistants in nursing, recreational activities officers and home care workers. 

“They also apply to those workers whose roles support the running and functioning of residential care services – administration staff, drivers, maintenance staff and gardeners, laundry hands, cleaners and food services assistants.”

The Department of Health and Aged Care has published detailed information on the changes. This includes further details on award increases and new classification structures such as: 

• The award wage increases of 3% for ‘general and administrative services’ employees employed under the Aged Care Award 2010 (Aged Care Award)
• A larger 6.96% award wage increase for Level 2 laundry staff, cleaners, and food services assistants reclassified to Level 3
• Further award wage increases for direct care aged care employees employed under the Aged Care Award and employees under the new Schedule F of the Social, Community, Home Care, and Disability Services Industry Award 2010 (SCHADS Award)
• The movement of aged care assistant in nursing/nursing assistants from the Nurses Award 2020 (Nurses Award) to the Aged Care Award and the new Schedule F of the SCHADS Award, depending on whether they work in residential aged care or home care
• Who will receive their full increase from January 1, 2025, and who will also receive a second increase from October 1, 2025, due to their wage rise being split in two

Importantly, the aged care sector will access funding to pass on this award wage increase through existing pathways such as AN-ACC. This includes an additional $3.8 billion investment from the government over four years on top of the $11.3 billion commitment in 2023 to fund the previous 15% award wage increase.

Elsewhere, government funding for measures to improve career pathways and the workforce supply pipeline has come into effect. This includes:

• $18.4 million in the Aged Care Nursing Clinical Placements program to support up to 8,000 nursing students
• $10.3 million to continue supporting nurses from the start of their careers through the Aged Care Transition to Practice Program. This funding will support up to 2,125 nurses to build their skills and experience in their first aged care role

An additional $157.8 million has also been allocated to continued COVID-19 support for residential aged care providers combating outbreaks. 

This includes the continuation of the Aged Care Outbreak Management Support Supplement, a surge workforce program to help aged care homes during critical staff shortages, and measures to address low vaccination rates in aged care homes.

Changes to fees and charges 

Several previously announced changes to fees and charges within aged care are now active. One of the most notable changes is the new maximum room price a residential aged care provider can charge without approval.

Effective from January 1, providers can charge up to $750,000 without Independent Health and Aged Care Pricing Authority (IHACPA) authority, The maximum accommodation price for RADs was previously $550,000.

This means providers who secured approval to advertise or charge a RAD (or equivalent DAP) above $550,000 and up to $750,000 will not have to reapply for approval if a current approval expires. 

However, if the advertised price is still higher than the new $750,000 threshold, providers must reapply for IHACPA approval. The new maximum accommodation amount that can be charged without approval will not be applied retrospectively to past approvals, either.

More information on RAD approvals and the higher maximum accommodation price is available here. 

The six-month countdown to further changes is underway as well. These wide-ranging changes will come into effect alongside the new Aged Care Act and Support at Home program.

One of the changes highlighted by the department is the new Higher Everyday Living Fee replacing the Extra Service Fee and Additional Service Fee. 

Under the Higher Everyday Living Fee, residents and providers will agree to additional goods and services, offering increased clarity on what goods and services can and cannot attract a higher fee. It will streamline administration requirements. 

The Higher Everyday Living Fee is an optional fee charged for additional goods and services not otherwise required to be provided under the Aged Care Rules and in line with the Aged Care Quality Standards. 

This enables the resident to tailor additional goods and services to suit them. The goods and services must be of a quality significantly higher than what is required by the Rules. It features increased consumer protections as outlined here. 

The Extra Service Fee and Additional Service Fee will be phased out in response. No new agreements for an Extra Service Fee or Additional Service Fee can be made after June 30, 2025, and providers have until June 30, 2026, to transition residents. Providers need to enter into new agreements with residents as part of the transition. 

“Our investment is focused on delivering the largest improvement to aged care in 30 years, building and strengthening the aged care workforce with better and fair wages, and improving aged care for over 500,000 older people seeking aged care every year,” Minister Wells said.

Commonwealth Home Support Programme (CHSP) meal providers have also received a minor funding boost as they will receive a 10% cost-of-living top-up of their meals funding to alleviate cost pressures and reduce the impact on service delivery. 

“Our $37 million investment in CHSP meals will help providers to continue delivering an essential service this year – bringing healthy meals to older Australians to help them stay healthy and connected to their community,” Minister Wells added.