Understanding Your Aged Care Options: RAD and DAP Explained

As you start to navigate the realm of retirement and aged care, it’s crucial to make informed decisions about yours or a loved ones financial well-being. In this article, we wanted to explain in detail two terms that often arise in the context of aged care: RAD and DAP. RAD or Refundable Accommodation Deposit, and DAP or Daily Accommodation Payment, are key components when it comes to covering the cost of your accommodation in aged care facilities. 

Daily Accomodation Payment (DAP)

The Daily Accommodation Payment is calculated based on any portion of the Refundable Accommodation Deposit that remains unpaid. This calculation is influenced by a government-set interest rate known as the Maximum Permissible Interest Rate (MPIR).* This mechanism ensures fairness and clarity in determining your accommodation costs.

Refundable Accomodation Payment (RAD)

The RAD is the large lump sum amount which is the deposit of the room. This can range depending on room type, location etc but think around the 500k mark as a starting point. One reassuring aspect is that any amount you pay towards a RAD won’t impact your pension entitlement – it’s considered an exempt asset. However, when it comes to calculating your means-tested care fee, the RAD will be taken into account as part of your assets. It’s also worth knowing that a RAD is backed by the government, providing a sense of security. Typically, once your stay in the facility comes to an end, the RAD will be refunded to you or your estate without undue delay.

How it works?

Picture this: you’re considering a move to an aged care facility, and the question of how to pay for your accommodation arises. You have options – you can choose to pay a lump sum known as a RAD, a daily payment referred to as a DAP, or a mix of both. Now, how does that work? Well, the cost of accommodation isn’t arbitrary; it’s determined by market prices. Aged care facilities are required to transparently publish these accommodation payment prices on their own websites, the MyAgedCare website, and in their brochures. For those considering a RAD that’s higher than $550,000, there’s an extra layer of approval from the Aged Care Pricing Commissioner. Have a look online to see RAD payments and room offerings. EG as of 1st Sept 2023, a premiere plus room at Arcare Brighton has a RAD of $1,000,000, and a superior room in Croydon at Park Lane has a RAD of $870,000.

What next?

As you navigate the intricate landscape of aged care and financial planning, understanding these terms is important, as is receiving sound, thorough financial advice. Understanding your entitlements and how to best work these payments in to your finances is what we do best! We help families navigate aged care every day, if you would like to book in a time to come and see us, you can contact the office here

Comments 1

  1. The maximum accommodation price is $425,000.00.
    The refundable accommodation deposit is $382,500.00.
    I was offered a 10% discount by St. Vincent’s Care Services at Eltham.
    Is this what these figures mean?
    Sincerely, Daphne June Engish

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