What happens if I go over or under on my NDIS plan? And what do shorter funding periods mean for me?

The National Disability Insurance Scheme (NDIS) is undergoing another round of major reforms.

One key change relates to the funding periods in which participants are allowed to spend their budgets.

While these aim to improve the scheme’s sustainability, they risk making an already complex system even harder to navigate.

A common question participants ask is: what happens if they overspend or underspend on their NDIS budgets?

There isn’t a simple answer. But let’s unpack the components of budgets and set out some practical tips for NDIS participants.

What is driving this round of NDIS reforms?

Concerns about the growing NDIS budget prompted the government to limit annual growth to a target of 8% a year by mid-2026.

One cost pressure the government has identified is intra-plan inflation. This happens when NDIS participants spend their budget before the end of their plan, meaning they need to ask for extra funding within their plan timeframe.

In the 12 months to February 2024, the National Disability Insurance Agency (NDIA) – the body responsible for the NDIS – estimated intra-plan inflation costs more than A$3.3 billion. Around 15% of participants spend their budget before the end of their plan.

Several changes are now in place to address this.

What causes plans to be overspent (or underspent)?

Overspending occurs when a participant runs out of funding before the end of their plan period.

This can happen when a participant receives a plan that is insufficient to meet their needs, which is more common with first plans.

It can also occur when a participant has a change in circumstances which means their support needs change, so they increase their spending before their plan can be reviewed.

In both circumstances, participants must request additional funding so they can keep receiving supports.

Participants might also find they underspend their budget.

This can occur because of confusion over what is funded and how funds can be spent.

But it can also be because of a lack of appropriate services near where the participant lives.

Research shows Aboriginal and Torres Strait Islander people, people with psychosocial disability (from mental health issues such as schizophrenia or post-traumatic stress disorder) and people living in rural and remote areas are more likely to underspend.

What an NDIS plan includes

Each NDIS plan includes a total budget amount, which is the amount of funding allocated for all supports expected to last for the full duration of their plan.

But this doesn’t mean participants can use this budget in whatever way they want.

Participant spending needs to meet a set of criteria and can only be spent in the way the NDIA describes.

NDIS supports are provided in plans using four support categories:

• core supports – help with everyday activities such as personal care, household tasks and support to join in community activities

• capacity-building supports – help to build or maintain skills and independence such as behaviour support, employment-related support and therapies

• capital supports – high-cost assistive technologies, home modifications and specialist disability accommodation

• recurring supports – regularly paid directly to a participant’s account and typically include costs for transport.

In each category, supports are labelled either flexible or stated. Flexible supports allow for some discretion in how funds are used.

“Assistance with daily life” can cover a range of tasks including household cleaning or meal preparation. These core support funds tend to be the most flexible.

Stated supports, on the other hand, must be used exactly as the plan describes.

Not all plans have funds in every category.

Importantly, funds can’t be shifted from one category to another. You can’t, for example, use core funding for capacity building supports.

New funding periods introduced

In May, changes were introduced for new plans, meaning funds are released over set time periods.

While the total value of the plan remains the same, there are now limits on when funds can be accessed and how long they need to last.

Funding can be allocated over different periods:

• quarterly – released in three-month blocks so spending is spread over the full length of the plan

• monthly – for high-cost ongoing supports such as supported independent living

• up-front – funding for one-off supports such as assistive technology can be released in full at the start of a plan.

Participants may have different funding periods for different parts of their plan, although most funds will likely be released quarterly.

If funds aren’t used in an allocated period they roll over into the next time block in the same plan.

However, any funds left unused at the end of the full plan duration are returned to the NDIS funding pool.

What’s the government trying to do?

The change means participants can’t draw on future allocations if funds for a current period run out. Nor can funds be shifted between categories.

If a plan is exhausted, participants may be left without support or face out-of-pocket costs, particularly if plans are self-managed.

Service-providers may stop delivering support if they’re notified that a participant’s budget has run out.

In some cases, the NDIS may consider persistent overspending as a sign the participant cannot effectively manage their plan. This could result in the NDIA taking over management of their plan.

If a participant consistently finds their funds run out early, or if they need more funds because their circumstances change and they need more support, they can request a review of their plan to seek more funding.

However, requesting a plan review can sometimes affect other areas of a participant’s plan. So some people may be reluctant to ask for a review and instead try to manage with less supports than they need.

A number of disability rights organisations have spoken out against these changes, stating they have the potential to impact NDIS participants’ autonomy, safety and wellbeing.

Tips for NDIS participants to manage their plans

Ensure you understand your plan and how the funds are split between support categories and funding periods. It might be helpful to discuss this with a family member, friend or support coordinator.

Remember, not everyone gets everything they ask for in their plan, so make sure you’re clear on the funding you received.

If your plan seems insufficient for your needs, consider asking for a review.

A good way to ensure your spending stays on track is to set budget goals for a plan. There are several different apps and software programs that can help with this.

Finally, a range of websites offer advice and resources to help NDIS participants understand their budgets and spending. You can sometimes claim for these resources within your NDIS funding.