Making sense of RAD and DAP

Accommodation Costs in Residential Aged Care

Navigating aged care payments doesn’t have to be complicated. Understanding the difference between a Refundable Accommodation Deposit (RAD) and a Daily Accommodation Payment (DAP) is essential when planning for residential aged care in Australia.

These two payment options represent different ways to cover the cost of accommodation in aged care homes, and each comes with its own benefits, risks, and financial implications.

Whether you're preparing for your own aged care needs or helping a loved one transition into care, having a clear understanding of RAD and DAP will empower you to make informed, confident decisions that suit your financial situation and long-term goals.

RAD vs DAP: Quick Comparison

Feature	RAD	DAP
Refundable	Yes – refunded when you leave care	No – non-refundable
Payment Structure	Lump sum up front	Regular daily payments
Flexibility	Less flexible – large capital required	More flexible – no lump sum
Estate Impact	Preserves capital (refundable)	No estate value retained
Optimal For	Those with access to liquid funds	Those wanting to preserve capital or cash flow
How Fees Are Calculated	Varies by provider; published via RAD	Based on room price × MPIR / 365

Key Rules and Timelines

You have 28 days from your move-in date to confirm your preferred payment method (RAD, DAP, or both). Until then, you’ll automatically be charged DAP
If paying via RAD, your provider must allow up to six months from your entry date to pay the lump sum.
RAD and DAP amounts vary by location, room type, and facility features. If a provider charges above $750,000, they must seek approval from the Aged Care Pricing Commissioner.

What is a RAD and DAP?

Below, you'll find a summary of the accommodation pricing for residential aged care in Australia. We recommend that you seek independent financial advice to decide on the payment option that works best for you and your family.

When you begin researching residential aged care, you will come across four acronyms relating to the price of residential aged care, that are essential to understand.

The Refundable Accommodation Deposit (RAD) is a standard room price set by the respective aged care home and is paid by a refundable lump sum.

The Refundable Accommodation Contribution (RAC) is when the government assists with the costs of your care. The provider works out the cost of the RAC based on the DAC (determined by Services Australia and based on your means assessment).

The Daily Accommodation Payment (DAP) is the RAD equivalent paid periodically. The DAP amount is calculated by applying the maximum permissible interest rate (MPIR) to the room price and dividing the amount by 365.

The Daily Accommodation Contribution (DAC) is when the government assists with the cost of your care. The DAC is determined by Services Australia and based on your means assessment.

When does the RAD need to be paid?

From the day of entering their care, the new resident has 28 days to work out whether they want to pay the facility a lump sum, daily payment, or some combination of the two. If you choose to pay by RAD (lump sum), your aged care provider must give you six (6) months from your move in date to pay the full lump sum.

The RAD and DAP is determined on the quality, location and features of the accommodation and can vary from bed to bed.

If a facility wants to charge more than $750,000 for their RAD, they need to seek approval from the Aged Care Pricing Commissioner.

Providers must advertise their accommodation prices in both RAD and DAP figures prior to charging their clients.

Under the Living Longer, Living Better reforms, the resident must be left with a minimum asset value of 2.25 times the basic age pension at the time of entry.

Aged Care Means Tested Care Fee

Alongside the RAD and DAP, a means test measuring a combination of assets and income will determine how much the government will contribute to a person’s accommodation and how much each person/family will also have to contribute.

The means-tested care fee will be different for each resident, and not everyone has to pay it.

Click here to find out more about aged care fees

Everyone, regardless of whether they are liable to pay for accommodation, must pay the daily care fee, which is 85 per cent of the single pension. You will pay this fee directly to your aged care home on a fortnightly or monthly basis.

Frequently Asked Questions About RAD and DAP

Q1: What is a RAD in aged care?
RAD stands for Refundable Accommodation Deposit. It’s a one-time, upfront payment made when entering residential aged care. This amount is refunded in full when the resident leaves the facility or passes away, minus any agreed fees.

Q2: What is a DAP in aged care?
DAP stands for Daily Accommodation Payment. It’s a non-refundable daily payment made instead of, or in combination with, a RAD. The DAP is calculated based on the aged care home's advertised room price and the current government-set interest rate, known as the Maximum Permissible Interest Rate (MPIR).

Q3: How is the DAP calculated?
The DAP is calculated using this formula:
DAP = (RAD × MPIR) ÷ 365
For example, if the RAD is $500,000 and the MPIR is 8.36%, the DAP would be approximately $114.52 per day.

Q4: Can I pay part RAD and part DAP?
Yes. You can split your accommodation costs by paying part as a RAD and the remaining as a DAP. This is known as a combined payment and allows flexibility to suit your financial situation.

Q5: Is the RAD refundable?
Yes, the RAD is fully refundable unless you have agreed in writing that some of it can be used to pay for care or other fees. The refund is guaranteed by the Australian Government.

Q6: Do I have to pay RAD or DAP?
All residents entering aged care must contribute to accommodation costs, but whether you pay a RAD, a DAP, or a combination depends on:

Your means assessment
The aged care home’s fees
Your personal financial preferences

You can find current and previous MPIRs on the Department of Health and Aged Care website.

Begin your search for residential aged care by clicking on your state below: