Aged Care Funding Explained: What Every Provider Needs to Know About Levels, Funding and Compliance
- Leapfrog Team
- 3 days ago
- 7 min read
Australia's aged care system has undergone its most significant transformation in decades, driven by new aged care standards in Australia under the Aged Care Act 2024. For providers, understanding how aged care funding works under the current framework is not optional. It directly affects finances, compliance obligations, workforce planning and the quality of care you can deliver.
This post breaks down the two main care streams, how classifications and funding work in each, what assessment looks like, and what providers need to have in place to stay compliant and financially viable.
What is Aged Care Funding?
Under the Aged Care Act 2024, the financial framework has changed substantially.
There are now two distinct funding streams:
Support at Home: for older Australians living in the community
Residential Aged Care: for those living in an approved care home
Each stream has its own classification system, funding model and compliance requirements. Providers operating across both streams need to understand them separately.
Support at Home: The New In-Home Classification System
The Support at Home program commenced 1 November 2025, replacing the Home Care Packages (HCP) Program and the Short-Term Restorative Care Programme.
Under Support at Home, each participant is assigned one of 8 funding classifications based on assessed care needs. Annual funding ranges from $10,731 at Classification 1 through to $78,106 at Classification 8 (effective 1 November 2025, indexed annually each July).
What Each Classification Covers
The 8 classifications span from minimal assistance with everyday living tasks through to high-level, complex care needs.
The key change from the old Home Care Package (HCP) is that that the older person contributes to the costs of the Support at Home program based on the type of service and their income and assets assessment. There are 3 types of services:
Clinical support: this is fully funded by the government, and the older person is not required to contribute for the services.
Independence: a moderate older person contribution is required for independence services such as personal care, products and equipment under the Assistive Technology and Home Modifications (AT-HM) scheme.
Everyday living: the highest contribution is applicable for everyday living services such as domestic assistance and gardening.
How Quarterly Budgets Work
Funding is broken into quarterly budgets. Participants can carry over unspent funds up to $1,000 or 10% of their quarterly budget, whichever is greater. Providers must manage spending within these parameters and deliver at least one care management activity per participant per month. 10% of each participant’s quarterly budget is set aside for care management and pooled across participants, giving providers some flexibility to allocate care partner time where it is most needed.
Transitioned HCP Recipients
Existing HCP recipients as of 31 October 2025 moved to a transitional Support at Home classification, retaining their existing funding level. New participants assessed from 1 November 2025 onwards are placed directly into one of the 8 ongoing classifications. Providers need to understand which care and services each older person has been assessed as requiring, as obligations and budget management differ.
Residential Aged Care: The AN-ACC Funding Model
For residential aged care, funding is determined through the Australian National Aged Care Classification (AN-ACC) model, which replaced the Aged Care Funding Instrument (ACFI) in October 2022.
How AN-ACC Classifications Work
AN-ACC places each permanent resident into one of 13 classes based on functional and clinical care needs. Each class attracts a daily subsidy calculated by applying National Weighted Activity Units (NWAUs) to the AN-ACC price.
There are also 3 separate classifications for respite residents, determined through a needs assessment using the Integrated Assessment Tool (IAT).
Fixed and Variable Funding Components
The AN-ACC Daily Basic Subsidy comprises two components:
Base Care Tariff (BCT): a fixed daily amount covering common care needs
Variable component: linked to the older person’s specific AN-ACC class and care needs
Additional supplements apply in some circumstances, including for specialised care homes, remote or thin market providers, and the 24/7 registered nurse supplement.
Care Minutes and Funding Linkage
From April 2026, care minutes delivered by non-specialised metropolitan homes that do not meet their care minutes targets will see funding adjustments. This makes accurate workforce rostering, time recording and reporting a compliance and financial imperative, not just a quality obligation.
How Assessment Works Across Both Streams
Assessment pathways differ depending on which stream a person is entering.
Support at Home Assessment
Under Australia’s Single Assessment System, older people are assessed through a unified assessment workforce rather than separate RAS or ACAT services. Assessors consider factors including physical health, mobility, cognitive function, daily living capacity, living arrangements, emotional wellbeing, and support networks to determine eligibility and appropriate care classifications. Assessments can be reviewed and updated if a person’s needs change over time.
Residential Aged Care Assessment
For residential aged care, an AN-ACC funding assessment is conducted by independent assessors, not provider staff. An initial assessment is completed on or around entry for permanent residents. Providers can request reassessment if a resident’s care needs change significantly. Classification results are available in the My Aged Care Service and Support Portal, typically within 24 hours of assessment completion.
For providers, the assessment outcome directly determines the subsidy received. Accurate and timely engagement with the assessment process is critical to financial planning and care delivery.
What Providers Must Deliver: Obligations Across Both Streams
Understanding classifications and funding is only part of the picture. Providers have substantial obligations in how they manage, document and report on care delivery.
Care Planning and Review
Every older person in aged care must have a current, individualised care plan. Under the Aged Care Act 2024 and Aged Care Rules 2025, care plans must reflect assessed needs and be reviewed regularly. For Support at Home providers, care management activities must occur at least monthly. For residential providers, care plans must be reviewed in response to any significant change in condition and as per the organisations policy and procedure.
Budget Transparency and Statements
Support at Home providers must deliver clear, itemised statements to participants showing how their quarterly budget has been spent. Transparency in budget management is a regulatory requirement, not a courtesy. Providers who cannot demonstrate clear budget accountability face compliance risk.
Subcontracting and Workforce Obligations
Under the new framework, each Support at Home participant has a single registered provider responsible for their care. That provider is accountable for services whether delivered directly or through subcontractors. Workforce obligations, including care minutes in residential settings and care partner requirements in Support at Home, must be met and documented.
Reporting and Audit Readiness
Aged care providers are required to report on income and expenses through the Aged Care Financial Report (ACFR) and the Quarterly Financial Report (QFR). Both streams operate under active regulatory oversight by the Aged Care Quality and Safety Commission. Providers must be ready to demonstrate compliance at any point.
Common Compliance Risks Providers Need to Manage
The shift to the new framework has created a range of compliance pressure points that provider leadership teams need to actively manage:
Inaccurate or outdated care plans that do not reflect current assessed needs
Poor budget management leading to overspend or unexplained underspend in Support at Home
Failure to meet care minutes targets in residential settings, now impacting the funding of AN-ACC for non-specialised residential care homes in the metropolitan regions
Inadequate documentation of care management activities
Subcontractor management gaps where accountability is unclear
Incomplete or late financial reporting
Each of these represents not just a compliance risk but a financial and reputational one. The Aged Care Quality and Safety Commission has strengthened its oversight powers under the Aged Care Act 2024, and providers operating without robust systems are increasingly exposed.
How the Right Systems and Support Make a Difference
Managing aged care and services across either or both streams requires more than good intentions. It requires systems, processes and expertise that are built for the current regulatory environment.
A cloud-based quality management system designed specifically for aged care gives providers the infrastructure to manage care planning, incident reporting, policy compliance, audit readiness and workforce obligations in one place. When your QMS is built on best practice and evidence-based frameworks, it reduces the administrative burden on clinical and management staff and gives leadership real-time visibility over compliance performance.
For providers facing complex change, access to experienced consulting support across clinical governance, management, project delivery and training can be the difference between reactive firefighting and proactive, confident compliance.
Frequently Asked Questions
What are the Support at Home levels in Australia?
The old four-level Home Care Package system has been replaced. Under Support at Home (commenced 1 November 2025), there are now 8 funding classifications for in-home care, ranging from Classification 1 (low needs) to Classification 8 (high, complex needs). For residential aged care, funding is determined through 13 AN-ACC classes.
How is eligibility for aged care services assessed?
For support at home aged care services, the assessment determines the participant’s support classification and the types of services they may receive under the Support at Home program.
For residential aged care, an additional funding assessment is conducted using the Australian National Aged Care Classification (AN-ACC) model to determine the funding level based on the person’s care needs. Assessments can be reviewed and updated if an individual’s circumstances or care requirements change over time.
What changed under the Aged Care Act 2024 for providers?
The Aged Care Act 2024 and the Aged Care Rules 2025 introduced significant changes:
A new Support at Home program with 8 classifications
Strengthened rights for older people
Stronger provider registration requirements
Expanded Aged Care Quality and Safety Commission oversight powers
How do providers manage unspent funds under Support at Home?
Participants can carry over unspent funds up to $1,000 or 10% of their quarterly budget, whichever is greater. Providers must manage budgets transparently and provide itemised statements. Unspent funds beyond the carryover limit do not accumulate, so timely, needs-based service delivery is important.
What support is available for providers to meet compliance obligations?
Providers can access cloud-based quality management systems built for aged care, as well as specialist consulting support covering clinical governance, management, project delivery and staff training. Having the right systems and expertise in place is the most reliable way to stay ahead of regulatory requirements.
Ready to Strengthen Your Compliance Framework?
The aged care landscape has changed. The providers who will thrive are those who move quickly to build the systems, processes and expertise required under the current framework.
Whether you need a quality management system that keeps pace with the Aged Care Act 2024, specialist consulting support, or training for your team, we can help.
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