The Australian Government has confirmed significant funding increases for residential aged care, with new pricing arrangements set to take effect from next month.
From 20 September 2025, the hotelling supplement – which covers everyday living services such as food, cleaning, and laundry – will increase by 42%, from $15.60 to $22.15 per resident, per day. The change is designed to help providers address rising costs, with the Independent Health and Aged Care Pricing Authority (IHACPA) identifying a funding gap of up to $12.48 per bed day for operators that do not charge additional service fees.
From 1 October 2025, the Australian National Aged Care Classification (AN-ACC) price will lift to $295.64 per resident, per day, a 5.6% rise on last year’s $280.01 rate and up more than 33% on the original $221.50 set in 2022–23. The revised figure incorporates the Fair Work Commission’s aged care work value case (17.2%), superannuation increases (1.2%), and broader wages and inflation (11.9%), alongside $1.59 per day earmarked for outbreak management.
Other changes include adjustments to AN-ACC fixed and variable funding categories, updated care minutes for each classification, and revised supplements for 24/7 registered nurses to reflect higher staffing costs. The AN-ACC Transition Fund will also be extended for a further 12 months to support providers in smaller or regional markets.
“More funding for aged care homes, supporting higher wages for workers and better care for our loved ones.”
Minister for Aged Care and Seniors Sam Rae
The announcement follows repeated sector criticism of late pricing releases, with providers again given only weeks to prepare despite a government commitment to publish figures each August.
While the funding uplift is expected to ease some financial pressure, aged care analysts, including StewartBrown have warned that hotelling services remain underfunded by around $8 per bed day. Sector leaders are likely to question whether the new rates will keep pace with rising workforce and operational costs – or be enough to stimulate investment in new residential capacity.
The new AN-ACC price will apply for the period 1 October 2025 to 30 September 2026.
Further information: health.gov.au/our-work/AN-ACC/residential-aged-care-funding-updates
