Senior citizens will be given more support and choice to live their golden years in dignity.
After a breakthrough deal with the coalition, the federal government will help Australians live at home for longer and improve conditions and protections for people residing in aged care facilities.
A $5.6 billion reform package will be the largest improvement to aged care in 30 years, according to Prime Minister Anthony Albanese.
"This is about caring for the generation that cared for us," he said in Canberra on Thursday.
"We will deliver historic aged care reforms to ensure the viability and quality of our aged care system and support the growing number of older Australians choosing to retain their independence and remain in their homes as they age."
A $4.3 billion package called Support at Home will come into effect from July and is expected to help 1.4 million Australians live independently in their home with support before going into aged care by 2035.
It will provide support for nursing, occupational therapy and day-to-day tasks such as cleaning, showering, dressing and shopping.
The government will pay all of the cost of clinical care services, while individuals will make means-tested payments for services to relating to everyday living and independence.
A new lifetime contribution cap of $130,000 will apply for non-clinical care costs.
Those using the Support at Home program could also get $25,000 in aid to spend their final three months at home, rather than at a hospital.
During the next four decades, the number of Australians over the age of 65 is expected to double and those older than 85 is predicted to triple.
But residential aged care providers are struggling to stay afloat and a taskforce report found the sector would need $56 billion to upgrade facilities and build the additional rooms needed to accommodate projected demand.
The Labor government will introduce reforms to ensure aged care providers can attract investment and keep facilities open.
Laws will be introduced to protect the rights of Australians living in aged care, along with a regulator with investigative powers.
The rights of older Australians in aged care will be enshrined in laws, which providers will be forced to abide by.
New aged care quality standards will be implemented to improve the sector and drive higher-quality care.
The aged care agreement will provide a no-worse-off principle for people already in care facilities.
Under the changes, the annual growth on government spending for aged care will moderate from 5.7 per cent to 5.2 per cent.
For every $1 per person in aged care contributes, the federal government will chip in $3.30 on average to residential care and $7.80 for Support at Home.
Aged Care Minister Anika Wells said the changes would lead to more services for older Australians.
"Our reforms will create better and safer care, help reduce the fear of a system that has been neglected for far too long," she said.
Aged care providers have broadly welcomed the reforms though some have suggested new legislation include criminal penalties for serious harm and neglect.
