What happens if you overspend or underspend your NDIS plan budget?

The National Disability Insurance Scheme (NDIS) is undergoing another round of major reforms, including changes to how participants access their funding. One key change is the introduction of set “funding periods” that spread out when money becomes available to spend, rather than giving participants their full budget upfront. While these changes aim to improve the scheme’s financial sustainability, they also add new layers of complexity to an already complicated system. A common question many people have is: what happens if you spend more than your NDIS budget (overspend) or don’t spend it all (underspend)? There’s no single straightforward answer. Let’s break down how NDIS plan budgets work and then explore some practical tips for participants and service providers.

What is driving the latest NDIS reforms?

Concerns about the rapidly growing NDIS budget have led the government to set a target of capping annual growth at about 8% by mid-2026. In other words, they want to slow the steep increase in NDIS costs to make the scheme more sustainable. One factor identified as driving up costs is “intra-plan inflation.” This happens when NDIS participants use up all their funding well before the end of their plan period and then request additional funding to top up their plan. In the 12 months to February 2024, the National Disability Insurance Agency (NDIA) – which administers the NDIS – found that intra-plan inflation added over A$3.3 billion in extra costs, with roughly 15% of participants (about 100,000 people) spending their entire plan budget before the plan’s end date. Several changes have been introduced to address this issue, including the new funding period system discussed below, as part of broader reforms to contain costs.

Why might an NDIS plan be overspent or underspent?

Overspending occurs when a participant runs out of funding before their plan is finished. This can happen if the plan budget was set too low to meet the person’s needs (which is a common problem for people receiving their first NDIS plan), or if the participant’s circumstances change – for example, a change in health or living situation that suddenly requires more support – causing them to spend faster than anticipated before a plan review can adjust their funding. In both cases, the participant would need to request additional funding or an early plan review to continue receiving supports once their budget is exhausted.

Participants can also end up underspending – leaving some of their allocated funds unused by the end of the plan. This can happen due to confusion about what supports are covered or how funds can be used, or because of a lack of suitable services in the participant’s area (for instance, there may be no available therapy providers or support workers nearby, so the participant can’t spend their funds on those services even though they need them). Research has shown that certain groups are more likely to under-utilise their NDIS funds – in particular, Aboriginal and Torres Strait Islander participants, people with psychosocial disability (mental health-related disability), and those living in rural or remote areas. These participants often face additional barriers (like cultural, communication, or service access issues) that can result in lower spending of their approved supports.

What’s included in an NDIS plan budget?

Each NDIS plan comes with a total budget amount – the sum of funding allocated to cover all your disability supports for the duration of the plan (usually 12 months). However, this doesn’t mean you can spend that money on anything you wish. All spending must meet the NDIS criteria for “reasonable and necessary” supports and align with the purposes set out in your plan. In practice, your plan funding is divided into specific categories for different types of supports:

• Core supports – funding for everyday activities and essential needs. This can include things like personal care, assistance with household tasks, groceries or meal preparation, and support to participate in community activities. Core support budgets tend to be the most flexible. For example, an item labelled “Assistance with daily life” in your core supports could be used for a range of tasks (cleaning, cooking, personal care, etc.) based on what you need at the time. Core funds are usually flexible, meaning you have some discretion in how to use them across different core services as long as they meet your needs. (In some cases, a core support might be stated as specific, but generally core is flexible.)
• Capacity-building supports – funding to help you build skills or independence. These might include therapies (like physiotherapy, occupational therapy or psychology sessions), employment support, learning new skills, or behaviour support plans. Capacity-building supports are typically stated funding, which means the money is earmarked for particular uses or programs defined in the plan and cannot be used for other purposes. For instance, funding for an employment training program must be spent on that program and not on something else.
• Capital supports – funding for one-off high-cost items like assistive technologies (wheelchairs, communication devices, etc.), home modifications (such as installing a ramp or bathroom modifications), vehicle modifications, or specialised disability accommodation. Capital supports are stated in the plan; you can only spend this portion on the specific approved items or modifications listed and nothing else. These are usually large purchases that are not flexible across other needs.
  
• Recurring supports – funding that is provided on a regular recurrent basis, often paid directly into a participant’s account on a schedule. The most common example is transport funding (for travel support), which might be paid weekly or fortnightly. Recurring support funding is typically separate from the other budgets and is meant for ongoing expenses like transportation costs. If your plan has recurring supports, the plan will specify the amount and frequency (e.g. a certain dollar amount per month for transport).

Not every plan will have funding in all four categories – it depends on your personal circumstances and approved supports. Importantly, you cannot move funds from one support category to another. Money allocated for one purpose cannot be used to pay for a different purpose. For example, you cannot use unspent core support funds to pay for additional therapy sessions if your capacity-building budget runs low, and vice versa. Each category’s funds must be used as described in your plan and cannot be swapped around.

New NDIS funding periods: how do they work?

In May 2025, the NDIA introduced “funding periods” for new and renewed plans – essentially breaking the plan budget into smaller time-based instalments. The total amount of funding in your plan stays the same, but now it is released in chunks over set intervals rather than being available all at once at the start. The idea is to help participants budget more easily and reduce the risk of running out of funds too early.

Here’s how funding periods work in practice:

• Quarterly funding – Many supports will be funded on a quarterly basis, meaning you get access to roughly one quarter of your annual budget every three months. This spreads your spending more evenly across the year. For example, if you have a 12-month plan, about 25% of your funding would be available in each 3-month block.
• Monthly funding – Certain high-cost ongoing supports might be released monthly. A prime example is Supported Independent Living (SIL) arrangements (for people who receive daily support with living). In these cases, funding could be provided month-to-month to closely match regular expenses. Monthly release could also apply to other services where needed (often for participants who are considered higher risk of overspending or who need very steady cashflow for services).
• Up-front funding – For one-off purchases or needs, funding can still be released in full at the start of the plan. This typically applies to capital items like assistive technology devices, home modifications, or equipment. For instance, if you are approved to buy a powered wheelchair, the full amount for that wheelchair might be made available immediately so you can purchase it when the plan begins. After all, it wouldn’t make sense to give you only a quarter of the cost of a wheelchair and ask you to wait multiple periods to accumulate the full amount.

It’s possible for a single NDIS plan to have different funding periods for different parts of the budget. For example, your core and capacity-building supports might be on quarterly funding, while your home modifications funding is up-front, and your SIL support is monthly. However, most funds for most participants are expected to be on quarterly releases by default, with exceptions made based on individual circumstances.

If you don’t use all the funds in a given period, the unused amount rolls over into the next period of the same plan. In other words, you won’t lose that money during your current plan – it will accumulate and still be available to use later in the plan if needed. However, any funds left unspent by the time your plan reaches its end date will not carry over to a new plan – those remaining funds are returned to the NDIS pool. Essentially, when your plan is reviewed or renewed for a new period (typically after 12 months, unless you have a shorter plan), you start fresh with a new budget allocation, and any leftover from the previous plan is gone. This has always been the case in the NDIS: underspending your plan means the unused money goes back to the scheme.

What is the government aiming to do with these changes?

The main goal of introducing funding periods is to prevent rapid overspending and improve budget control. Under this change, participants can’t dip into future funds ahead of schedule if they run out of money for the current period. Similarly, you still cannot shift money between categories as noted earlier. This means if you exhaust the funds available for the current quarter (for example), you will generally have to wait until the next quarter’s funds are released to continue spending, unless you seek a plan review.

If a plan (or a particular budget within the plan) is completely exhausted before the next release, the participant may be left without funded support for a time or might have to cover costs out-of-pocket until the issue is resolved. This situation can especially affect people who self-manage their plans, as they are directly in control of payments. Service providers (such as therapists, support workers, or care agencies) might also stop providing services if they receive notification (through the NDIS provider portal) that a participant has no funds remaining for that support. Essentially, providers can’t get paid if there’s no budget left, so they have to pause services to avoid doing work they won’t be funded for.

In some cases, the NDIA might view persistent overspending as a red flag that a participant is struggling to manage their plan funds appropriately. The Agency now has the ability to change a participant’s plan management type in certain situations, which could result in the NDIA (or a plan manager) taking over direct management of the budget. For example, if someone who is self-managing repeatedly exhausts their funding early by making improper claims or not budgeting, the NDIA could decide to shift them to an Agency-managed plan to ensure tighter control. The NDIS Act was amended to allow such interventions “where someone needs support to manage and spend their plan funds within the funding amount”.

If you find that your funds consistently run out early, or if your needs increase and you genuinely require more support than your plan provides, you can request a plan review (often called a change of circumstances review or an unscheduled review) to seek additional funding. However, participants are sometimes reluctant to ask for a review because a review opens up the entire plan for reconsideration – in some cases, other supports might be reduced or changed as a result. This fear means a few people try to “stretch” what they have, potentially going without some supports, rather than risk a review that could alter their plan in unpredictable ways. It’s a tough balance between advocating for the right level of support and managing within the system’s processes.

It’s worth noting that a number of disability advocacy and rights organisations have criticised the new funding period approach, arguing that it could undermine participants’ autonomy and wellbeing. These groups point out that strictly rationing funds by time blocks might leave people without supports when they need them (if, say, they have higher needs in one part of the year), and that the changes were introduced with minimal consultation or communication to participants. In a joint statement, several disability organisations expressed deep concerns that inflexible funding periods do not reflect the real-world variability of people’s lives – needs can spike unexpectedly and services aren’t always available on a neat monthly or quarterly schedule. They have called for more flexible application of these rules and better information for participants.

Tips for NDIS participants to manage their plans

Managing an NDIS plan effectively is crucial to make sure you get the support you need without running into funding shortfalls. Here are some practical tips for participants (and those supporting them, such as support coordinators or plan managers) to stay on top of NDIS plan budgets:

• Understand your plan breakdown: Take the time to clearly understand how your funding is allocated – both by support category (core, capacity building, etc.) and by funding period if your plan has staggered funding. Know which parts of your budget are flexible and which are strictly set for specific purposes. If the concept of funding categories or periods is confusing, discuss it with someone who can help – this could be a family member, a trusted friend, your support coordinator, or your plan manager. Having a clear picture of your plan’s structure will prevent accidental misuse of funds.
• Be sure what’s included (and what isn’t): When your plan is approved, not everyone gets 100% of what they asked for. Make sure you’re clear on what supports and amounts were actually funded in your plan. Read the plan document carefully and check which requests were granted. If you requested certain therapies or supports and they weren’t included, recognise that those will not have funding – it sounds obvious, but it’s easy to assume something was funded and then later find out it wasn’t. Knowing exactly what you can spend your NDIS funds on will help you avoid both underspending (due to uncertainty) and overspending on things that aren’t covered.
  
• Speak up if the plan isn’t enough: If you feel your plan budget is insufficient for your genuine needs, consider requesting a plan review sooner rather than later. It can be a difficult decision (as reviews can be stressful), but if, for example, you only have a 6-month plan and it’s clearly not meeting your needs, an early review might be warranted. Prepare evidence (like reports or letters from therapists or doctors) to support why you need more funds. While it’s true that a review can potentially change other parts of your plan, the risk of not having enough support might outweigh that. Don’t suffer in silence – the NDIS is meant to cover reasonable and necessary supports, and if you truly need more, you have the right to ask for it.
• Set budget targets and track your spending: A good strategy to avoid running out of funds is to plan out a budget for each week or month of your plan. For example, if you have $20,000 in core supports for a 12-month plan, that averages to about $1,667 per month – use that as a guide for how much you should be spending monthly so that the funding lasts. You can adjust if you have higher needs in some months, but tracking it will show if you’re burning through funds too quickly. Consider using budgeting apps or software that are designed for NDIS participants to monitor spending against your plan categories. There are several apps (for example, budgeting tools offered by plan management services) that can send alerts when you’re spending faster than planned or help you visualise how much is left in each category. Many participants find that setting these “budget goals” for each quarter or month keeps them on track.
• Utilise available resources and supports: Don’t hesitate to use the resources out there for NDIS participants. There are websites, online communities, and information guides (many provided by advocacy groups or NDIS itself) that offer advice on understanding your plan and clever ways to use funding. Some non-profit organizations run workshops or have helplines for NDIS navigation. If you have funding for support coordination, your support coordinator can also educate you on how to manage the plan budget. In some cases, the NDIS will even fund capacity building supports to help you with plan management – for example, training on how to self-manage or tools for managing your funding. (Check if such supports can be claimed under your plan; sometimes resources like financial skills training or mentoring can be covered.) Taking advantage of these can empower you to use every dollar effectively. Remember, the goal is to use your funding to get the supports you need – neither going over budget nor leaving necessary supports on the table.
  

By staying informed about your NDIS plan and being proactive in managing your spending, you can reduce the risk of unpleasant surprises like running out of funds, and ensure you’re getting the maximum benefit from the supports available to you. The NDIS can be complex, especially with new rules like funding periods, but with careful planning and a bit of support, you can navigate these changes successfully and keep your plan on track.