Costs and fees

What is a RAD in aged care?

Updated 24 August 2026

A refundable accommodation deposit (RAD) is an upfront lump sum a resident pays for their room in an aged care home. The RAD is set at the room price agreed with the provider, and it is refundable when the resident leaves care. The alternative is a daily accommodation payment (DAP). A DAP is a daily charge for the room that works like rent, and it is not refunded when the resident leaves care. The DAP is not a second price for the room. It is the same agreed room price converted into a daily amount using a government-set rate, the maximum permissible interest rate (MPIR). The MPIR is 8.43% for 1 July to 30 September 2026. A resident can pay the agreed room price as a refundable lump sum, as daily payments, or as any combination of the two, split however they choose. The RAD and the DAP cover accommodation only. Every resident also pays a basic daily fee, and some residents pay a means tested care fee.

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What does RAD stand for in aged care?

RAD stands for refundable accommodation deposit. The deposit is the lump-sum method of paying for a resident's room in an aged care home. Three terms cover how a resident's accommodation is paid for in an aged care home, and each names a different way the cost of the room is met:

• RAD, a refundable accommodation deposit. The RAD is a lump sum equal to the room price the resident and the provider agree on. The provider holds the deposit for the length of the stay. The balance is refunded once the resident leaves care.
• DAP, a daily accommodation payment. The DAP is a non-refundable daily payment covering the same accommodation cost. Daily payments work like rent. Nothing is returned to the resident or the estate at the end of care.
• An accommodation contribution, paid as a RAC or a DAC. An accommodation contribution is what a resident assessed as low means pays towards their room. The RAC is its refundable lump sum form and works as a deposit in the same way a RAD does.

How much is a RAD to stay in an aged care home in Australia?

The RAD equals the room price a resident and a provider agree on. No national RAD amount exists, because the figure is set home by home and room by room. Providers must publish their maximum room prices, and no home can charge above the price it has published for that room. A resident and a provider can negotiate a price below that published maximum. From 1 July 2026 to 30 June 2027, the maximum accommodation payment a provider can charge without approval is $789,686. That ceiling is indexed on 1 July each year in line with the Consumer Price Index. A provider wanting to charge above the maximum must have the higher price approved by IHACPA, the Independent Health and Aged Care Pricing Authority.

Each home sets and publishes its own prices, so what a nursing home costs differs between homes and between rooms inside one home. The Elderberry directory lists 2,590 aged care homes run by 708 providers (pulled August 2026), each publishing its own room prices. Room costs can be compared using the Find a provider tool on My Aged Care.

What is a DAP in aged care, and how is it calculated?

A daily accommodation payment (DAP) is the non-refundable daily payment that covers a resident's agreed room price, the same price a RAD covers as a single lump sum. The DAP comes from one formula: DAP = (agreed room price x MPIR) ÷ 365. The maximum permissible interest rate (MPIR) is a government-set rate that converts an agreed room price into a daily amount, and it is updated quarterly. The MPIR is 8.43% for 1 July to 30 September 2026, as stated in the BIR and MPIR rates table.

Two rules govern how a resident's DAP moves after they enter the home:

• The MPIR is locked at the date the room price is agreed. The rate used to work out a resident's DAP is the rate current on the day the resident agrees a room price with the provider. That rate stays fixed for as long as the resident stays in that room. A later quarterly change to the MPIR does not reprice an existing resident's daily payment.
• The DAP is indexed twice a year for recent entrants. Indexation reaches every resident whose first entry to residential care falls on or after 1 November 2025, where the accommodation cost is met wholly or partly by DAP. For those residents, providers increase the DAP in line with indexation on 20 March and 20 September each year.

Can you pay part RAD and part DAP?

Yes. A resident has three ways to pay the agreed room price: the full refundable lump sum, non-refundable daily payments, or a combination of the two split any way the resident chooses. A combination means paying part of the agreed room price as a lump sum. Daily payments cover the remainder, so a family that can raise some of the room price still has a workable route.

A resident cannot be asked to choose a payment option before moving into an aged care home. Until the resident pays a refundable lump sum, they pay non-refundable daily payments. The daily payment is the starting position for every new resident, and a refundable lump sum can be paid any time after entry once the resident's means assessment is finalised.

A resident who has paid a part RAD can tell the provider to draw the reduced DAP from the paid RAD. Each drawn payment comes out of the refundable balance. Over time the lump sum gets smaller and the daily payment gets larger. Working out how to pay for nursing home care is a decision a family can revisit once the resident has moved in.

Is it better to pay a RAD or a DAP?

Whether a RAD or a DAP is the better choice depends on the resident's assets, the effect each payment has on their other aged care fees, and the effect on their Age Pension. Both options meet the same agreed room price, so the comparison runs across four attributes:

• Refundability. The RAD balance is refunded when the resident leaves care, so the lump sum stays a recoverable asset. The DAP is never refunded, in the same way rent is not returned at the end of a tenancy.
• What each option costs to hold. Providers retain 2% per annum of the deposit balance where the resident first entered care from 1 November 2025 onwards and pays by RAD or RAC. That retention runs for a maximum of 5 years, and the retained amounts are not refunded. The DAP costs the MPIR applied to the agreed room price for as long as the resident stays. For the same group of residents, the DAP rises with indexation on 20 March and 20 September each year.
• Effect on the aged care means assessment. The aged care means assessment counts a refundable lump sum as the resident's asset, even when a family member paid it. Paying a lump sum can therefore increase the other fees a resident pays, including the hotelling contribution, the non-clinical care contribution, the means tested care fee and the accommodation contribution. Paying by DAP leaves no refundable balance for the assessment to count.
• Effect on the Age Pension. The age pension means test treats the same money the opposite way and exempts the refundable lump sum. The two tests are separate, so the same money can raise a resident's aged care fees while sitting outside the Age Pension calculation.

The government recommends independent financial advice before a resident settles on a payment option. Services Australia runs a free Financial Information Service (FIS), open to everyone.

What happens to a RAD when the resident leaves care or dies?

The provider must refund a resident's RAD balance after the resident permanently leaves the aged care home, and after the resident dies. The refund deadline differs between those two events.

• The resident permanently leaves the home. The provider must refund the lump sum balance within 14 days after the day the resident leaves.
• The resident dies. The provider must refund the lump sum balance to the resident's estate, less any amounts the provider was allowed to deduct during the care period. The provider has 14 days from the moment it receives probate of the will, or letters of administration, to pay the estate. The timing therefore depends on how quickly the estate obtains those documents.

Three further rules decide what the balance is worth by the time it reaches the resident or the estate. First, the balance is the deposit less allowable deductions. Those deductions include the 2% per annum retention that applies to residents entering care from 1 November 2025 onwards, and any DAP amounts the resident asked to be drawn down. Second, no interest is earned on the lump sum while the resident is receiving care. During the 14-day refund period, the aged care home pays interest at the base interest rate, which is 3.25% for 1 July to 30 September 2026. A home that takes longer than 14 days must pay interest at the higher MPIR. Third, the Australian Government guarantees to repay the lump sum if the provider becomes bankrupt or insolvent and cannot pay the refund. That guarantee is the Accommodation Payment Guarantee Scheme, described by My Aged Care.

What if you cannot afford the room price?

A resident who cannot fund the agreed room price still has two supported routes to government assistance with aged care costs, and each route sets its own qualifying condition:

• Low means status. A resident assessed as low means pays an accommodation contribution in place of the agreed room price. The Australian Government then pays some or all of that resident's accommodation costs directly to the provider.
• Financial hardship assistance. A resident who cannot afford their aged care home costs for reasons outside their control can apply for financial hardship assistance. If the resident is eligible, the Australian Government pays some or all of their aged care costs.

Low means status comes from the aged care means assessment. For most people that assessment is done by Services Australia. The Department of Veterans' Affairs does it for some people. Completing the assessment is not mandatory, but a resident who does not complete one may be asked for the maximum contribution rate.

Common questions

How much money can you have and still get the full Age Pension?

A single homeowner can have assets up to $333,000 and still receive the full Age Pension. A single non-homeowner can have assets up to $600,000. For couples, the combined limits are $499,000 as homeowners and $766,000 as non-homeowners. Services Australia publishes these limits, on a page last updated 1 July 2026. The Department of Social Services reviews the limits three times a year, in March, July and September.

How much money can you have in the bank for aged care?

The Australian Government pays the full accommodation cost for a resident whose assets sit below $64,500.00 and whose income sits below $35,521.20, and both amounts change with indexation. For couples, half the combined income and assets of both partners is included in the assessment. The halving applies no matter which partner earned the income or holds the asset in their name. A resident who keeps the family home has its value counted at a capped $214,884.00 (the cap as at 20 March 2026). Where the net market value of the house is lower than the cap, the lower figure applies. The home is not counted as an asset at all while a protected person occupies it.

Is the RAD included in the means tested care fee?

No. The RAD pays for accommodation, and the means tested care fee is a separate contribution towards the cost of care. Under the 1 July 2014 fee arrangements, the means tested care fee runs between $0 and $372.03 a day. The fee is capped at $35,910.43 per year and $86,185.23 over a lifetime, and indexation moves those caps each March and September. The connection between the RAD and the fee runs the other way. A refundable lump sum the resident has paid counts as their asset in the aged care means assessment, and paying one can increase the means tested care fee.

What if the resident moved in on or before 31 October 2025?

A resident whose permanent move into an aged care home happened by 31 October 2025 keeps their existing fees and accommodation arrangements for as long as they stay in care. The 2% per annum retention on refundable deposits and the twice-yearly DAP indexation apply to people entering residential aged care from 1 November 2025 onwards. Those two rules do not reach an earlier resident unless that resident opts in to the new arrangements.

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