RAD vs DAP: Understanding How You Pay for Aged Care Accommodation

Of all the paperwork and decisions that come with an aged care move, the accommodation payment is often the one that causes the most confusion — partly because it's genuinely complex, and partly because it's usually the first time most families have encountered the terms RAD and DAP at all.

What a RAD is

A Refundable Accommodation Deposit (RAD) is a lump-sum payment made for the accommodation component of residential aged care — essentially, the cost of the room. As the name suggests, it's refundable: when the resident leaves care (or passes away), the RAD is repaid, less any agreed deductions.

Facilities publish their RAD price for each room type, and that published amount is the maximum they can charge — it can be negotiated down, and any agreed price should be set out in writing in the Resident Agreement.

What a DAP is

A Daily Accommodation Payment (DAP) is the alternative: instead of a lump sum, accommodation costs are paid as an ongoing daily rental-style payment, which includes an interest component tied to the Maximum Permissible Interest Rate set by the government and indexed quarterly.

Families aren't limited to choosing one or the other — a combination of a partial RAD and a DAP on the remainder is a common approach, particularly where the full lump sum isn't readily available.

The 28-day decision window

After a resident enters aged care, they have 28 days to decide how they'll pay — full RAD, full DAP, or a combination. The provider cannot demand the lump sum during this period. If a RAD (or part-RAD) is chosen, there's then a further period to actually pay the lump sum, during which a daily fee plus interest applies to the unpaid amount.

This is exactly where the timing pressure around selling the family home comes from: many families are counting on the proceeds of the property sale to fund the RAD, which means the property process and the 28-day aged care decision window are often racing each other.

Where the numbers land

•    RAD prices vary significantly by location and room quality — inner Sydney and inner Melbourne facilities tend to sit well above the national median

•    The maximum a provider can charge without special approval is set and indexed annually — currently $750,000, with approval required above that

•    Whatever isn't paid as a RAD attracts interest as a DAP, so understanding the trade-off between the two matters for the family's broader financial plan

Why this connects directly to the property sale

If the plan is to fund a RAD from the sale of the family home, the property timeline and the aged care accommodation decision are no longer separate processes — they're one combined timeline with two sets of deadlines. Knowing the RAD figure early (facilities are required to publish it) makes it much easier to plan the property campaign around it, rather than discovering a mismatch in week three of the 28-day window.

A note on financial advice

This is general information, not financial or legal advice. RAD and DAP arrangements, maximum thresholds and interest rates are subject to change and vary by individual circumstances — for decisions specific to your family, speak with a financial adviser experienced in aged care, or use the government's My Aged Care fee estimator.

Planning around a RAD deadline?

If the family home sale needs to align with an aged care accommodation payment deadline, Scout can help build a property timeline around it from day one.