RADs and DAPs Explained: Making Sense of Aged Care Costs

Refundable Accommodation Deposits. Daily Accommodation Payments. If the financial side of aged care is making you want to cry, start here for a simple translation.

I remember the first time a facility manager handed me a "Schedule of Fees." I looked at the numbers—hundreds of thousands of dollars for a "deposit"—and I genuinely thought they were joking. Or that I’d accidentally walked into a high-end real estate agency instead of a nursing home.

The Australian aged care financial system is designed by people who love spreadsheets and hate clarity. It is confusing, it is overwhelming and it often feels like they are trying to trick you.

But here is the secret: It’s actually just four main fees. Once you understand the "Big Four," the rest of the paperwork starts to make sense.

1. The RAD (Refundable Accommodation Deposit)

Think of the RAD as an interest-free loan to the facility. You pay a large lump sum (often between $400k and $800k in Australian cities) to "buy" the right to the room.

The "Refundable" part is the key. When your parent leaves the facility, the government guarantees that the full amount (minus any agreed deductions) is paid back to the estate. It’s a way for the facility to fund their building works using your parent's capital.

2. The DAP (Daily Accommodation Payment)

If you don't have $500k sitting in the bank, you can choose to pay "rent" instead. This is the DAP.

The DAP is calculated based on a government-set interest rate (the MPIR). It’s essentially the interest you would have earned on that RAD if you’d kept it. You can pay all RAD, all DAP, or a mix of both (e.g., $200k RAD and the rest as a daily DAP).

3. The Basic Daily Fee

This is the "hotel" fee. It covers the meals, the laundry, the heating, and the basic cleaning.

Every single person in Australian aged care pays this. It is set at 85% of the single Age Pension. It’s the "everyone pays it" fee, and it’s indexed twice a year when the pension goes up.

4. The Means-Tested Care Fee

This is the one that causes the most headaches. It’s an extra contribution towards the cost of *care* (nursing, therapy, etc.) if your parent has the assets or income to afford it.

Centrelink calculates this based on the "Income and Assets Assessment" form you lodge. There are annual and lifetime caps on this fee, which is a small mercy, but it’s the one you definitely need an Aged Care Financial Specialist to explain to you.

The "Supported" Resident

If your parent has very low assets (e.g., they don't own a home and have limited savings), the government may pay some or all of their accommodation costs. This is called being a "Supported" resident.

They will still pay the Basic Daily Fee, but the RAD/DAP might be significantly reduced or waived. This is why lodging that Centrelink form is the most important step you'll take.

I know it’s a lot, Bec. I spent weeks staring at these terms before they clicked. Take it slow, get professional advice and remember: the money is there to provide the care. That’s its only job.

I’m here to support you.
Much love,
xBec