Aged Care Refundable Accommodation Deposit (RADs) and Daily Accommodation Payment (DAPs)

How to Pay for Aged Care Accommodation

Helping you navigate the financial choices for aged care in Australia - whether to pay a lump sum (RAD), daily charges (DAP), or a mix - and what government support might apply.

What Are RAD, DAP, and RAC?

Start with the basics:

• Refundable Accommodation Deposit (RAD): A lump sum deposit paid upfront for accommodation. Fully refundable upon exit or death, minus any agreed deductions. 

• Daily Accommodation Payment (DAP): If you choose not to pay the RAD in full, a daily charge is applied instead - calculated as (RAD × MPIR) / 365.

• Combination Option: Pay part as a RAD and the rest as a DAP (reduced daily fee).

How DAP Is Calculated

• The Maximum Permissible Interest Rate (MPIR) - fixed at the resident’s entry date - determines DAP. 
  

• Example: With an MPIR of 8.17% (current as of August 2025) and a room price of $450,000, the DAP is $100.73/day. Paying a $250,000 RAD reduces DAP to $44.77/day.

Choosing the Right Payment Option

• RAD Advantages:

  • Refundable guarantee, even if the provider becomes insolvent.

  • Exempt asset for Age Pension eligibility - can improve entitlements.

• DAP Benefits:

  • No large upfront cost - ideal if cash flow is limited or for temporary stays.

• Factors to Consider:

  • Compare MPIR versus returns on other assets - if you can earn more than the MPIR, paying DAP may cost more over time.

  • Flexibility to adjust payment structure anytime during residence.

Government Support and Low-Means Residents

• Residents with low means may pay nothing or a reduced accommodation contribution, with government subsidies covering the rest. Their status remains while they stay in the same service.

Important Legal and Policy Insights

• MPIR Stability: The MPIR rate is locked in upon entry unless the resident moves rooms or facilities. 

• Refund Rights: RAD must be refunded within 14 days of exit; delays attract interest at the MPIR. The government guarantees unpaid RADs if operators default.

• Upcoming Changes (from Nov 2025): A 2% annual retention fee on RADs/RACs may apply for up to 5 years - these deductions aren’t refundable.

Quick Comparison Table

What You Can Do Next

• Negotiate room price - must be less than the published maximum.

• Use the 28-day window to decide between RAD, DAP, or a combination. Up to 6 months allowed to pay RAD.

• Seek expert advice - Services Australia’s Financial Information Service offers free help to understand the implications.

FAQ's

• Q: Can I change between RAD and DAP later?
  A: Yes, you can pay additional RAD later to lower your DAP.

• Q: Is RAD safe if the provider closes?
  A: Yes - the government guarantees your refund.

• Q: Are there hidden fees in RAD?
  A: Starting Nov 2025, a non-refundable retention fee (up to 2% p.a.) may be deducted.

Search for residential aged care vacancies in:

• Canberra and the Australian Capital Territory
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