Frequently Asked Questions

RAD (Refundable Accommodation Deposit) is a lump sum paid upfront. It's mostly refundable when the person leaves care, minus a 2% annual retention fee. DAP (Daily Accommodation Payment) is an ongoing daily fee calculated as interest on the room price. DAP is not refundable. You can also pay a combination of both.

Learn about RAD → | Learn about DAP →

The MPIR (Maximum Permissible Interest Rate) is the rate used to calculate DAP. It's set quarterly by the government. The current MPIR is 7.65% (effective 1 January 2026). Your DAP = Room Price × MPIR ÷ 365.

See MPIR history and details →

You have 28 days from the date of entry to decide how to pay. Until you decide, DAP is charged automatically. You then have 6 months to pay the RAD if that's your choice. Any DAP paid during this period is deducted from the RAD.

For people entering care after 1 November 2025, the provider retains 2% per year (capped at 5 years / 10% total). The remainder is refunded within 14 days of leaving care. For people who entered care before November 2025, the full RAD is still refundable.

Learn about RAD retention →

From 1 November 2025, aged care providers retain 2% of the RAD per year, calculated daily. For a $500,000 RAD with a 3-year stay, the retention is approximately $30,000. It's capped at 5 years (maximum 10% of the RAD).

Full guide to retention →

Yes, since November 2025. DAP is now indexed to CPI twice yearly (March 20 and September 20). This means your daily payment increases roughly in line with inflation (~3-4% per year). Previously, DAP was fixed for the duration of the stay.

Learn about DAP indexation →

Yes. You can increase your RAD at any time, which reduces your DAP accordingly. However, you generally cannot reduce your RAD once paid — you can't withdraw RAD to switch back to more DAP. This is why many advisors suggest starting with a lower RAD and increasing it later if needed.

You are never required to pay a RAD. DAP is always available as an alternative. You can also pay a combination — whatever RAD you can afford, with the rest as DAP. If you can't afford DAP either, a financial hardship assessment is available through the facility and Services Australia.

This is the biggest decision most families face, and there's no universal answer. Key considerations: if a spouse still lives there, the home is exempt — don't sell it. The home has a 2-year exemption from the assets test. Selling has pension implications. Renting may be an alternative.

Read the full family home guide →

RAD is exempt from the Age Pension assets test. This means paying a RAD can increase your pension entitlement. However, RAD is counted in the aged care means test. This distinction is critical and often misunderstood.

Full pension impact guide →

The RAD (minus retention and any unpaid fees) must be refunded to the estate within 14 days. If the provider is late, they must pay interest. The refund is guaranteed by the Australian Government.

Learn about RAD refund on death →

Your RAD is protected by the Australian Government's Accommodation Payment Guarantee Scheme. If a provider becomes insolvent, the government guarantees the refund. You won't lose your money.

Room prices are set by the provider and are generally not negotiable. However, you can shop around — different facilities charge different prices for similar rooms. Prices above $550,000 must be approved by the Health and Aged Care Pricing Authority.

A combination payment means paying part as RAD (lump sum) and the rest as DAP (daily). Your DAP is calculated only on the unpaid portion. Most families choose this option. You can choose any split — e.g., $200,000 RAD on a $500,000 room, with the remaining $300,000 as DAP.

Learn about combination payments →

Yes. The interaction between RAD, DAP, pension, means testing, the family home, and superannuation is genuinely complex. A specialist aged care financial advisor typically charges $2,000–$5,000 and can save $20,000–$100,000+ over the course of a stay. Look for advisors accredited through the Aged Care Steps program.