Aged care: a quick guide

Updated 30 April 2021

PDF version [357 KB]

Rebecca Storen (an update of an earlier quick guide by Alex Grove)
Social Policy


The aged care system caters for older Australians who can no longer live without support in their own home. Care is provided in people’s homes, in the community and in aged care homes (also known as nursing homes or residential aged care facilities) by a wide variety of providers. The Australian Government is the primary funder and regulator of the aged care system. Government expenditure on aged care services, largely by the Australian Government, was $21.5 billion in 2019–20.

The Aged Care Act 1997 (the Act) and the associated Aged Care Principles set out the legislative framework for the funding and regulation of aged care, although services are also provided through contractual arrangements outside of the Act. The Australian Government Department of Health (DoH) is responsible for the operation of the Act.

This quick guide provides a brief overview of aged care in Australia. It describes the types of care provided, the people who use aged care, the process for accessing care, the organisations that provide care, and the regulatory arrangements for ensuring quality care. In addition, this quick guide includes a brief overview of the Royal Commission into Aged Care Quality and Safety. It does not describe care that is provided outside of the formal aged care system, such as care provided by family members or accommodation in retirement villages.

Types of care

The Australian Government subsidises aged care services for older people. Aged care provided under the Act consists of home care, residential care and flexible care. Care provided through funding agreements between the Australian Government and providers (rather than under the framework specified in the Act) includes home support and Aboriginal and Torres Strait Islander flexible care.

Home support

The Commonwealth Home Support Programme (CHSP) provides entry-level home support services to assist older people, as well as respite services to support carers. The CHSP is designed to help people to remain independent and safe at home with services available at home or in the community. Services include social support, transport, help with domestic chores, personal care, home maintenance, home modification, nursing care, meals and allied health services.

As part of the eligibility criteria, a person must be 65 years or older (or 50 years or older for Aboriginal and Torres Strait Islander people) or 50 years or older (45 years or older for Aboriginal and Torres Strait Islander people) on a low income who are experiencing homeless, or at risk of being homeless.

Clients pay a contribution (which varies between providers) towards the cost of services. CHSP providers receive Australian Government funding through grant agreements, with funding having been extended for existing CHSP providers until June 2022. The CHSP provides small amounts of support to a large number of people, with each client having received, on average, around $2,949 worth of services in 2018–19 (p. 36).

Home care

For older people requiring a greater level of support to remain at home, the Home Care Packages (HCP) Program offers coordinated packages of care from an approved home care provider. HCP are designed to provide more comprehensive care and support than the CHSP and seek to support people to maintain their independence and remain safely at home. Each package of services is customised to meet the individual’s needs.

There are four levels of HCP, ranging from Level 1 (supporting people with basic care needs) to Level 4 (supporting people with high care needs). Annual Australian Government subsidies range from around $9,000 for a Level 1 package to around $52,000 for a Level 4 package. Additional supplements may also be paid depending on a person’s individual circumstances.

HCP clients are expected to contribute to the cost of their care. Anyone receiving a HCP can be asked by their provider to pay the basic daily fee, which is a percentage of the single basic age pension. Part pensioners and self-funded retirees can also be asked to pay an income-tested care fee (subject to annual and lifetime caps).

Residential care

Residential aged care is provided in aged care homes on a permanent or respite (short-term) basis. It is for people who need more care than can be provided in their own homes. Services include personal care, accommodation, laundry and meals, nursing and some allied health services.

Residential aged care is funded by both the Australian Government and contributions from residents. The Australian Government pays subsidies and supplements to approved providers for each resident. The average government payment for each permanent resident was $69,055 in 2019–20 (p. 95). The majority of this payment is the basic care subsidy, which is calculated using the Aged Care Funding Instrument (ACFI). The ACFI is a tool providers use to claim care subsidy for each resident in permanent residential aged care. The Government is trialling a new residential aged care funding tool to potentially replace the ACFI called the Australian National Aged Care Classification (AN-ACC). From April 2021, the DoH commenced a 12 month ‘shadow assessment’ period, which requires everyone living in residential aged care (excluding palliative residents) to be assessed under the AN-ACC by one of six independent assessment management organisations. ACFI will continue to operate during the shadow assessment period.

Residents also pay costs and fees which contribute to the cost of their care and accommodation. All residents can be asked to pay a basic daily fee set at 85 per cent of the single basic age pension. Some residents also pay a means-tested care fee based on an assessment of their income and assets. Some residents will have their accommodation costs met in full or in part by the Australian Government, but those with greater means are required to pay an accommodation price (formerly known as a bond) agreed with the aged care home.

Flexible care

Flexible care caters for older people who need a different approach to care than is offered by mainstream home and residential services. Four types of flexible care are provided under the Act:

  • The Transition Care Programme is jointly funded by the Australian and state and territory governments, and provides up to 12 weeks of care and recovery on discharge from hospital. This can be provided in aged care homes, in the community or in a person’s home.
  • The Short-Term Restorative Care (STRC) Programme is available to older people to reverse or slow a decline in function (not linked to a recent hospital admission), which may help them to stay at home or delay entry to higher levels of care. It provides up to eight weeks of services to improve wellbeing and function and is subsidised by the Australian Government.
  • The Multi-Purpose Services (MPS) Program provides integrated health and aged care services in small rural and remote communities. MPS are jointly funded by Australian and state and territory governments to serve regions that cannot support stand-alone hospitals or aged care homes.
  • The Innovative Care Programme consists of a small number of grandfathered places from pilot projects of top-up services for people with disability living in state-funded supported accommodation. No new places are being allocated. This program is subsidised by the Australian Government.

Flexible care is also provided for Indigenous Australians outside of the framework of the Act. The National Aboriginal and Torres Strait Islander Flexible Aged Care Program makes grants to services that provide culturally appropriate residential and home care for Indigenous Australians, mainly in rural and remote areas.

Aged care consumers

In 2019-20, 839,373 people received support through the CHSP (p. 28). As of  30 June 2020, 142,436 people were receiving an HCP and 183,989 people were receiving permanent residential aged care (pp. 33 and 49).

There is no minimum age requirement to access aged care services under the Act, rather it is assessed need that determines access, although aged care services are targeted at people aged 65 or older (50 or older for Indigenous Australians) (p. 6). In 2019-20, the average age on entry to a HCP was 80.9 years for men and 81.1 years for women. For permanent residential aged care, the average age on entry was 82.5 years for men and 84.8 years for women (p. 11). Indigenous Australians access aged care at younger ages than non-Indigenous Australians.

More women than men use aged care services, reflecting their longer life expectancy. People living in major cities and inner regional areas use residential care and HCPs at higher rates than people living in more remote areas of Australia.


As of 30 June 2019, around 53 per cent of people living in permanent residential care had been diagnosed with dementia. ACFI funding for residential care is based on a person’s assessed needs, which can include needs associated with dementia. In 2019, people living with dementia were assessed as having ‘high’ care needs more often than people who had not received a diagnosis of dementia for two of the three ACFI domains. The third domain, complex health care, had a similar assessed care rating between people with and without dementia. Around one in 11 people who receive an HCP also receive the dementia and cognition supplement, which is a payment for people with moderate to severe cognitive impairment. The Australian Government also funds a number of dementia-specific programs and services, including:

Special needs

The Aged Care Diversity Framework encourages providers to meet the diverse needs of all older Australians and has several action plans. The Act (section 11‑3) lists groups of people who may have ‘special needs’ that can be taken into account in the aged care planning process. Specific programs and initiatives are available for ‘special needs’ groups, including Indigenous Australianspeople from culturally and linguistically diverse backgroundspeople who live in rural and remote areaspeople who are financially disadvantagedveteranspeople facing homelessnesscare leavers (people who were in institutional or foster care as a child) and lesbian, gay, bisexual, transgender and intersex people.

Consumer support

The National Aged Care Advocacy Program (NACAP) provides independent, free advocacy support and information to older people and their carers. The Older Persons Advocacy Network  is funded by the Australian Government to deliver the NACAP.

The Community Visitors Scheme provides volunteers to visit socially isolated people in residential and home care. It is funded by the Australian Government and delivered by community organisations.

The Government is trialling a range of Aged Care System Navigator programs to help people understand and access the system. A market has also arisen for private placement consultants who, for a fee, help people navigate the system.

Access to aged care

My Aged Care is the single entry point for Australian Government-funded aged care. My Aged Care staff screen people over the phone, and can refer them for a face-to-face assessment to determine their eligibility for services. People needing entry-level home support will be referred by My Aged Care to a Regional Assessment Service. Clients seeking subsidised home care, residential care or flexible care under the Act require comprehensive assessment and approval for care by an Aged Care Assessment Team (ACAT).

Allocation of places

The Australian Government controls the number of subsidised aged care places that are available. New residential and STRC places, and home care packages are made available based on levels of current provision, population projections and the aged care target provision ratio, which determines the number of subsidised places per 1,000 people aged 70 years and over. Residential and flexible places are allocated to approved providers. Eligible clients must find a provider with an available place to access care. Residential and STRC providers who want to increase their allocation compete for new places through the annual Aged Care Approvals Round.

Since February 2017, HCPs are allocated to eligible clients based on a national prioritisation system (also known as the home care waiting list). The client can then select an approved home care provider to deliver their package. As at 31 December 2020, there were 96,859 people waiting for an HCP at their approved level. Of these, 60,456 had not been offered an interim HCP, while the other 36,403 people had been offered an interim lower level package while waiting for an HCP at their approved level. The majority of people waiting for an HCP at their approved level were also approved to access CHSP. In addition, 61 per cent of people waiting for an HCP at their approved level were also approved for a permanent place in residential aged care.

Aged care providers

Aged care services are delivered by a range of not-for-profit, for-profit and government providers. Not-for-profit providers make up the majority of residential, home care and home support providers . In 2018-19, there were:

  • 873 organisations operating 2,717 residential aged care services
  • 928 organisations operating 2,691 home care services and
  • 1,458 organisations operating 3,717 home support outlets.

Individual services and facilities can be located through the ‘Find a provider’ directory on the My Aged Care website.

The Aged Care Financing Authority and StewartBrown chartered accountants both produce regular reports on the financial performance of aged care providers.


According to the National Aged Care Workforce Census and Survey (2016), there were an estimated 366,000 aged care employees, with two-thirds in direct care roles, in 2016. Most direct care workers were female and worked as personal care attendants or community care workers. There is no minimum qualification requirement for these roles, although in 2016, 67 per cent of personal care attendants in residential care had a Certificate III in Aged Care and 23 per cent had a Certificate IV in Aged Care. For home care and support, 51 per cent of community care workers had a Certificate III in Aged Care and 27 per cent had a Certificate III in Home and Community Care. Only 15 per cent of community care workers had an Aged Care or Service Co-ordination Certificate IV qualification in 2016. In 2016, Registered Nurses and Enrolled Nurses made up about 15 and 10 per cent of the PAYG direct care workforce in residential aged care respectively. In home care and home support, Registered Nurses made up 8 per cent of the direct care workforce.

In 2011, the Productivity Commission found that almost one million direct care workers may be required by 2050. The Aged Care Workforce Strategy Taskforce’s A Matter of Care: Australia’s Aged Care Workforce Strategy (Aged Care Workforce Strategy) sets out areas of ‘strategic action’ needed to develop the aged care workforce. The Australian Government has funded the Aged Care Workforce Industry Council to implement the strategic actions and recommendations in the strategy. In addition, the Australian Government funds a range of programs to support workforce recruitment, retention and training, although many are not specific to the aged care sector. The Australian Government announced additional funding for the aged care sector in response to COVID-19, including the Aged Care Workforce Retention Bonus Payment.

Regulation and quality

The Aged Care Quality and Safety Commission (ACQSC) is an independent statutory agency established under the Aged Care Quality and Safety Commission Act 2018. Since January 2020, the ACQSC has the regulatory functions for providers of aged care services, including the assessment and approval of approved provider applications and assessment of Commonwealth subsidised aged care services against the Aged Care Quality Standards.

Approved providers are accountable for the care they provide, and have responsibilities relating to the quality of care, the rights of care recipients and governance under Chapter 4 of the Act. If providers fail to comply with their responsibilities, the ACQSC can take different courses of action, including issuing a notice of non-compliance or impose sanctions on the provider. In addition to the non-compliance register on the ACQSC website, My Aged Care has a non-compliance checker, which people can search by location, name or date range.

Royal Commission

The Royal Commission into Aged Care Quality and Safety was announced in September 2018. Its terms of reference include inquiring into the quality of aged care services, how best to deliver aged care (including for people with disability or dementia), and the future challenges and opportunities for delivering care. The Interim Report was presented to the Governor-General on 31 October 2019. The Final Report was presented to the Governor-General on 26 February 2021 and was released by the Government on 1 March 2021.

The Parliamentary Library has published two quick guides on the Royal Commission. The first quick guide was published in September 2019 and outlines the scope and aims of the Royal Commission. The second quick guide focuses on the Final Report and four of the fundamental elements that the Commissioners recommend to reform the aged care system.