Home Care: Preparing for new changes in 2025

As published in the Autumn edition of Aging Australia’s Aged Care Today magazine

What will it mean for providers?

The Minister for Aged Care Anika Wells announced in parliament in early December 2024 the passing of the Aged Care Bill 2024, meaning the new Aged Care Act (including the Support at Home program) will commence on 1 July 2025.

Support at Home will consolidate funding streams from the Home Care Packages program and Short-Term Restorative Care Programme, and leverage a single assessment tool to determine the eligibility, care needs and financial capacity of recipients to contribute to the cost of their own care.

Around 1.4 million people are expected to utilise the new program by 2035, which includes:

• eight levels of funding for ongoing care (initially up to around $78,000 per year per client)

• improved short-term supports under the new Assistive Technology and Home Modifications (AT-HM) scheme and new restorative care pathway

• a new end-of-life pathway that provides a higher level of funding accessible by older Australians with less than three months to live via a high-priority assessment system.

The Support at Home Program is a transformative development for the aged care sector and it is important providers are prepared for the changes.

Consider your clients

Ahead of 1 July 2025, providers must consider how the new program may impact their existing and future home care clients. Understanding how the new program may impact customer experience too, is a critical step.

As more Australians enter the aged care system for the first time and the grandfathering arrangements taper off, the proportion of clients adopting the new co-funding model will progressively increase.

Providers must plan for changes to their business models and processes, and enhance their communication strategies to support clients through this potentially confusing transition.

Providers should also assess their clients’ budgets under the new funding model, to identify any potential opportunities or adverse impacts and ensure wellbeing outcomes are maximised.

Plan for funding changes

Home care provider remuneration will see a significant reduction in fixed fees from 1 July 2025, as well as new pricing caps for services set by the Independent Health and Aged Care Pricing Authority (IHACPA) each year.

With increased emphasis on service delivery and funding utilisation, providers will need strong financial and operational discipline to identify opportunities to improve performance and address inefficient or non-sustainable activities.

Many of the processes relating to assessment, claims, payment and accumulation of government subsidies are expected to change, including the introduction of a new payment platform for recurring services.

Providers may also need to prepare for events outside of their control, including unexpected delays in delivery of specialised support, goods, equipment, assistive technologies and home modifications, or other factors impacting cash flow (e.g. system related issues and non-payment of co-contribution accounts).

There will be significant funding model changes, including a new funding pool for minor additional services, supplementary grants as part of ongoing funding for providers operating in thin or niche markets (e.g. rural and remote areas), grant funding for specialised support services and separate funding for goods, equipment and assistive technology and home modification. Providers will need to evaluate these changes and identify any shortfalls, or opportunities to secure further funding, to support business operations and client service.

Stay competitive

A new tiered registration model will also reduce requirements for new market entrants to provide some low-care services such as domestic assistance and transport services, and some advisory services such as basic care management.

Providers may find increased competition in these service areas and as a result, may need to adapt their business models to a changing competitive environment.

As the industry adapts to the new model for home care, it is important providers strategically assess and forecast the expected impacts of implementation to ensure a successful transition and minimise business risk.