Staying Ahead of NDIS Policy Changes: What You Need to Know About Impairment Categories
As the NDIS reforms affect how participants access funding and supports, impairment categories are now a key pillar of the disability requirements.
As this change takes effect, it’s essential to have current, high-quality evidence that accurately reflects your functional capacity and support needs. In many cases, an up to date occupational therapy Functional Capacity Assessment (OT FCA) will play a critical role in demonstrating your current level of impairment and accessing appropriate supports.
Here’s what you can do now to help you avoid unnecessary complications during plan reviews.
Understanding the direction of NDIS reforms
Over the past couple of years, the NDIS has started to implement a series of reforms designed to improve consistency, transparency and long-term sustainability. One important change is the move towards making funding decisions based on a participant’s level of impairment rather than just their diagnosis.
Historically, a participant’s primary disability was central to funding discussions. Under the new framework, there is increased emphasis on how a person’s impairment affects their everyday functioning across key areas of life.
The quality and recency of supporting evidence about a participant’s functional capacity is therefore increasingly important.
What are the impairment categories?
To meet NDIS eligibility requirements, the NDIA needs evidence that your disability (or psychosocial disability) is related to one or more impairments in these categories:
- intellectual
- cognitive
- neurological
- sensory
- physical.
The impairment must also lead to a significant change in how your body works (its functions), its structure, or the way you think and learn.
Other requirements related to impairment
To be eligible for NDIS funding, you’ll also need to demonstrate that the impairment:
- is likely to be permanent – even if it comes and goes or you’ve tried all possible treatment options
- has a substantial impact on your functional capacity – e.g. if you need significant support from others, assistive technology or home modifications to function
- affects your ability to study, work, or socialise
- means you’ll need support from the NDIS for life.
Why impairment categories matter
Although many participants might share the same diagnosis, no two people experience disability in exactly the same way.
For example, two people diagnosed with autism, cerebral palsy or multiple sclerosis may have very different needs related to:
- Personal care
- Communication
- Mobility
- Learning
- Social participation
- Managing daily activities
- Making decisions
- Accessing the community
The impairment-based framework aims to better recognise these differences by categorising participants according to their functional impairment – rather than their diagnosis alone.
The impairment category you’re allocated may influence how your future plan is developed and what the NDIA believes are reasonable and necessary supports.
It’s therefore important to ensure the NDIA has accurate, up-to-date information about your current functional abilities.
What is an impairment notice?
As part of the NDIS policy 2025 updates, participants started receiving a Notice of Impairment that explains the impairment category or categories that underpin their NDIS eligibility. A Notice of Impairment does not list a person’s specific diagnosis or medical condition. For children who access the NDIS through developmental delay, the notice will state developmental delay. The notice is designed to help participants understand how the NDIA has determined their eligibility.
All existing participants are expected to receive one as part of the transition to the new NDIS planning framework. If you believe the notice is incorrect or does not accurately reflect your current circumstances, you can apply to have it changed. The NDIA can also update a notice if it identifies an error or receives new information about a participant’s impairments.
Why the evidence on file matters
The NDIA is expected to rely heavily on the evidence already available within a participant’s portal when making future planning decisions.
This means that if reports are outdated, incomplete or no longer reflect your current circumstances, they may not provide an accurate picture of your functional impairment.
Reports that are more than 12 months old may carry significantly less weight during plan reviews.
Rather than waiting until you get an unexpected funding decision, it’s worth reviewing whether the evidence that’s on file still accurately reflects your:
- current functional capacity
- changes in health or disability
- support needs
- assistive technology requirements
- risks to independence or safety
- informal support arrangements.
If not, you might want to consider having another assessment before your next review.
Having up-to-date evidence on file with the NDIA can help ensure you get appropriate supports
Why an OT Functional Capacity Assessment is so valuable
An occupational therapy Functional Capacity Assessment (OT FCA) is one of the most comprehensive pieces of evidence showing how disability affects a participant’s everyday life.
Unlike medical reports, which mainly focus on diagnosis, an OT FCA examines how impairments impact your ability to function across multiple areas of daily living.
A comprehensive assessment may cover:
- Personal care
- Domestic activities
- Mobility and transfers
- Communication
- Cognitive functioning
- Sensory processing
- Emotional regulation
- Community participation
- Education or employment
- Home environment
- Equipment requirements
- Informal support needs
- Risks and safety considerations
Most importantly, an OT FCA connects these functional challenges directly to the supports you need to achieve greater independence and quality of life.
Support coordinators play a critical role
Support coordinators often have the most up-to-date understanding of a participant’s circumstances.
They may notice when:
- support hours are no longer meeting demand
- family carers are experiencing burnout
- mobility has declined
- behaviours of concern have increased
- participants are becoming less independent
- existing reports no longer reflect reality.
By recognising these changes early, support coordinators can help participants obtain updated assessments before formal plan reviews occur.
An OT FCA helps ensure your NDIS funding matches your needs and goals
Support coordinator tips for managing these reforms
Review evidence regularly
Reports completed several years ago may no longer be appropriate.
It’s a good idea to ask:
- Is this report still accurate?
- Does it correctly describe current functioning?
- Has the participant’s condition changed?
- Would someone who is not familiar with the participant fully understand their support needs from this report alone?
Check participant portal information
Participants should be encouraged to log into their NDIS portal and confirm that their primary diagnosis and personal information are recorded correctly.
If they find anything that’s not accurate, encourage participants to contact the NDIA to discuss updating their records.
Ensuring records are accurate now may help reduce complications as impairment-based planning is introduced.
Plan ahead
If you wait until a review meeting is scheduled, there may not be enough time to arrange assessments, complete reports and submit updated evidence.
Instead, plan for reviews several months in advance. This can help reduce stress and ensure you have plenty of time to gather comprehensive supporting documentation.
How support coordinators can prepare participants now
Although implementation timelines continue to evolve, you can take some practical steps now to prepare for the changes related to impairment categories.
Encourage participants to:
- Review their NDIS portal information for accuracy
- Confirm their primary diagnosis is correctly recorded
- Identify reports that are more than 12 months old
- Arrange a new occupational therapy Functional Capacity Assessment where appropriate
- Gather supporting reports from other treating professionals if circumstances have changed
- Discuss upcoming reviews well in advance rather than waiting for planning meetings
At Active Ability, we’re keeping a close eye on the NDIS reforms. If you have any questions about OT Functional Capacity Assessments or how we might be able to help you, call us on (02) 8678 7874, email [email protected] or complete our contact form.
Frequently asked questions
Why are Functional Capacity Assessments becoming more important under the NDIS?
As the NDIS moves towards funding decisions that are based more heavily on impairment categories, current evidence demonstrating how a person’s disability affects their everyday life is increasingly important. A Functional Capacity Assessment (FCA) completed by an occupational therapist provides detailed evidence of a participant’s current support needs.
How often should an occupational therapy Functional Capacity Assessment be updated?
While there is no formal requirement for assessments to be updated every 12 months, reports older than a year may carry less weight during plan reviews. If a participant’s circumstances or support needs have changed, an updated assessment can provide more accurate evidence for future planning.
What are impairment categories?
Impairment categories are part of the NDIS reforms. They classify participants based on how their disability affects their everyday functioning rather than relying primarily on diagnosis. These categories are expected to play a greater role in future planning and funding decisions.
Should participants check their NDIS portal information?
Yes. Participants should ensure their primary diagnosis and personal details are correctly recorded in the NDIS participant portal. Accurate information can help reduce delays or complications as future reforms are introduced.
What does an occupational therapy Functional Capacity Assessment include?
An OT Functional Capacity Assessment evaluates how a person’s disability affects daily living across areas such as personal care, mobility, communication, cognition, home activities, community participation, safety, equipment needs and support requirements. The report provides comprehensive recommendations that can inform future NDIS planning.
When should a support coordinator recommend an updated OT assessment?
Support coordinators should consider recommending an updated assessment when a participant’s abilities, health, living arrangements or support needs have changed, when existing reports are more than 12 months old, or when a plan review is approaching.
