A Guide for Families
If your parent is entering aged care, here's what you need to know and do — step by step.
You're not alone
If you're reading this, you're probably an adult child — likely in your 40s, 50s, or 60s — dealing with a parent who needs residential aged care. Maybe mum had a fall. Maybe dad's dementia has progressed. Maybe the hospital called and said they can't go home.
You're panicking. You're overwhelmed. You're Googling financial terms you've never seen before at 11pm. That's normal. Almost everyone in this situation feels the same way.
This guide walks you through the process step by step. You have more time than you think.
Understand the timeline
You have 28 days from the date of entry to decide how to pay for accommodation (RAD, DAP, or combination). Until you decide, DAP is charged automatically — and it's deducted from any RAD you later choose to pay.
You then have up to 6 months to actually pay the RAD. So even if you decide on RAD, you have time to arrange the funds.
Don't let anyone pressure you into a same-day decision. The system is designed to give you breathing room.
Get the room pricing
The aged care facility will give you a Room Pricing Agreement. This shows the RAD (lump sum price), the equivalent DAP, and any extra service fees.
Key things to check:
- The RAD amount — is it within the range you expected?
- Whether extra services are mandatory or optional
- Whether prices above $550,000 have been approved by the Pricing Authority
Apply for a means test
Contact Services Australia (Centrelink) to apply for a means-tested assessment. This determines your means-tested care fee — an additional daily fee on top of accommodation.
The means test considers income and assets of the person entering care (and their partner, if applicable). It does not consider the assets of adult children.
You can call Services Australia on 1800 227 475 (Aged Care line).
Understand your options
There are three ways to pay for accommodation:
- RAD — lump sum, mostly refundable (minus 2% annual retention)
- DAP — daily payments, not refundable, increases with CPI
- Combination — part lump sum, part daily. Most popular option.
Consider the family home
If your parent owns a home, this is likely the biggest part of the conversation. Key questions:
- Does a spouse or dependent still live there? (If yes, the home is permanently exempt — don't sell it for the RAD.)
- Could you rent it out to cover DAP costs?
- What's the pension impact of selling vs keeping?
Get specialist advice
Aged care financial advice is a specialised field. General financial advisors and accountants often don't understand the interaction between RAD, pension, means testing, and the family home.
A specialist aged care financial advisor can model your exact situation and recommend the optimal payment structure. This typically costs $2,000–$5,000 and can save $20,000–$100,000+ over the course of a stay.
Look for advisors who are accredited by the Aged Care Steps program or who hold the CFP designation with aged care specialisation.
Red flags to watch for
- "You need to decide today" — you don't. You have 28 days.
- "You must pay the full RAD" — you don't. DAP and combination payments are always an option.
- Room prices above $550,000 without Pricing Authority approval — this is required by law.
- Mandatory "extra services" that seem like basic care — basic care is covered by the government subsidy and your daily care fee. Extra service fees should be for genuinely additional services.
- "You can't change your mind" — you can increase your RAD (and reduce DAP) at any time, though you generally can't reduce your RAD.
Learn more
This guide is for informational purposes only and does not constitute financial, legal, or medical advice. Every family's situation is different. We strongly recommend speaking with a specialist aged care financial advisor.