Practical solutions to Aged Care Act 2024 challenges

The Aged Care Act 2024 has introduced new complexities to aged care planning and systems by bringing focus to improved care standards and a new rights-based framework. However, it’s also created new opportunities for advisers to become central to the new landscape.

Bring aged care conversations forward 

Aged care changes have put greater importance on advisers to have earlier conversations with their clients about planning for their later years. 

It may be a difficult conversation, but it’s more important than before because: 

• Home care packages may take more than a year to access, and the waitlist could further lengthen as the flexibility of the packages becomes more attractive. This reflects a model where clients only pay for the services they actually use. 
• The volume of associated home and aged care costs – beyond funded packages – requires more decision making on the client’s part and potentially lifestyle compromises.  
• Costs are likely to vary significantly between clients. 
• As more costs become means-tested and time sensitive, “crisis decisions” may be more financially risky. 

Ultimately, early planning helps clients prepare ahead of care needs, enabling smarter decisions and reducing pressure, compromises, and rushed choices later.

Specialisation in aged care advice 

The legislation complexity could accelerate the aged care specialisation trend we’ve seen building in the past few years. 

Changes to means testing, co-contributions and accommodation payment structures have made aged care advice more nuanced, requiring a detailed and evolving understanding of how different funding options interact with pensions, tax and estate planning outcomes. 

More importantly, specialist aged care advisers may be able to achieve scale more easily through workflows, processes and systems to engage with facilities and government bodies, and quickly model different outcomes.

Plan for more variable and means-tested costs 

The Aged Care Act 2024 changes have made asset test reduction strategies more important. 

Previously, many clients would hit their cap on means-tested fees after a few years, with the average stay in residential care between 2.5 and 3 years. Once the home was sold and fees capped, there was limited benefit in more complex structuring. In other words, outcomes were more predictable. 

However, with more costs now means-tested, new co-contributions for non-clinical care are less predictable.

In addition to this, it’s also important to consider the order of financial decisions, particularly the timing of selling the family home and structuring payments between Refundable Accommodation Deposits (RAD) and Daily Accommodation Payments (DAP), as these choices can materially impact overall costs. 

Long-term funding strategies

As aged care costs become more fluid, ongoing and closely tied to cash flow, it’s crucial to understand the value of structuring retirement income in ways that support later‑life care needs. 

Innovative Retirement Income Stream (IRIS) can play a key role by:

• Providing a lifelong income base to help fund sustained in‑home care costs over time. 
• Reducing asset testing – IRIS can reduce its assessable value to nil over time because investment earnings can materially increase the account balance above the purchase amount while commutations fully reduce the purchase amount dollar for dollar.
• Reducing income testing – a deferred IRIS has a nil income test (even though retirement or care funding can be derived from lump sum commutations), and an income-paying IRIS only assesses 60% of the actual income, noting that there is no minimum drawdown requirement. 
• Improving the sequencing of decisions around liquidity, estate value and accommodation payments.
• Supporting client confidence by helping them meet essential later-life costs alongside lifestyle spending earlier in retirement. 

Aged care should be embedded into long‑term retirement income planning while recognising how advisers generate and structure income can materially influence both care affordability and overall outcomes.

For a deeper dive into the costs of aged care, download our whitepaper. 

Information is current as at 22 July 2026  and has been prepared provided by NMMT Limited ABN 42 058 835 573, AFSL 234653 (NMMT).

It contains general information advice only and does not take account of your personal objectives, financial situation or needs. You should consider whether this information is appropriate for you before making any decisions.  Information contained in this Whitepaper is for adviser use only and isn’t intended for retail clients. The adviser remains responsible for any advice or services they provide to clients using this information, including making their own inquiries and ensuring that the advice or services are appropriate and in accordance with all applicable legal requirements. 

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