The May 2026 budget is expected to focus heavily on stabilising the Support at Home program, which replaces the Home Care Packages (HCP) program. Building on reforms passed in late 2025, the 2026 financial year will see a shift toward tighter price controls, increased user contributions, and a stronger focus on accountability for service providers.

Key expected impacts on aged care for 2026 based on the reformed landscape include:

In-Home Care (Support at Home Program)
Government Price Caps: From 1 July 2026, government-set price caps will apply to services under the Support at Home program, aiming to stop excessive charging by providers.
New Funding Structure: Support at Home replaces HCP and Short-Term Restorative Care, featuring eight new funding classifications designed to provide more tailored, higher-level care at home.
Increased User Contributions: The system brings in new, higher user co-contributions for “independence” and “everyday living” services (e.g., cleaning, gardening), while the government pays 100% of clinical care (nursing).
Expansion of Places: The budget is expected to support the release of 63,000 new Support at Home places by 30 June 2026 to help address long waitlists.
“No Worse Off” Protections: For individuals who were already receiving or approved for a package on or before 12 September 2024, protections will apply to ensure they do not pay more under the new system.
Residential Aged Care
Care Minute Accountability: From April 2026, residential homes will face stricter “prove it” requirements, linking a portion of their funding directly to their ability to demonstrate they are delivering the required care minutes.
Accommodation Price Increases: For new residents entering care after 1 November 2025, providers can charge up to $758,627 for a room without requiring government approval, indexed to CPI.
New “Hotelling” Fee: A new means-tested fee for daily “hotelling” costs (meals, cleaning) may apply to new residents.
Workforce and Sustainability
Wage Increases: The budget continues to support the Fair Work Commission Aged Care Work Value Case, with $2.6 billion allocated over five years to support increased wages for nurses and support workers to improve retention.
Sector Viability: With many providers experiencing financial difficulties, the 2026 budget is expected to focus on adjusting funding to better reflect the true cost of care.
Health and Pension Impacts
Age Pension Increases: The Age Pension will increase on 20 March 2026 to match cost-of-living rises, which may automatically trigger changes to aged care fee assessment thresholds.
Cheaper Medicines: The maximum co-payment for PBS medicines is expected to drop to $25 for non-concession holders on 1 January 2026, and remain frozen at $7.70 for pensioners.