If you or a loved one are thinking about moving into an aged care facility then, you will know that understanding the costs of aged care can be a challenge and you may find the different acronyms like DAP and RAD a little confusing.

There are two key payments that you will need to consider. Firstly is the Basic Daily Fee. This contribution goes towards day-to-day living costs such as meals, cleaning, laundry, heating and cooling. Second is the Accommodation Payment which is payment for your accommodation space.

The maximum Basic Daily fee is set by the Australian Government and is re-evaluated on a 6-monthly basis. Currently this stands at $47.49 per day.

If you are required to pay an accommodation payment, then there are three options for how you can pay:

  • A lump-sum payment called at Refundable Accommodation Deposit (RAD)
  • A regular rental-type payment called a Daily Accommodation Payment (DAP)
  • A combination of both of the above

RAD (Refundable Accommodation Deposit)

If you choose to pay for your accommodation in one lump-sum, then the deposit is fully refunded when you leave the aged care home less any agreed deductions. It is worth noting that the Australian Government guarantees the repayment of your RAD.

Example: (Note, Superior Care rooms vary from $350,000 to $550,000 price.)

Accommodation Price: $350,000
RAD Payment: $350,000
DAP Payment: not applicable
Basic Daily Fee: $47.49 per day

Costs to you: your lump-sum refundable payment of $350,000 on moving into the facility plus a basic daily fee of $47.49

DAP (Daily Accommodation Payment)

Rather than paying an upfront lump-sum, you can choose to pay a daily rental-like fee to the facility. However, this fee is not refundable should you leave the aged care home.

Example:

Accommodation Price: $350,000
RAD Payment: not applicable
DAP Payment: $60.98 per day. The daily accommodation payment is calculated based on the unpaid RAD amount multiplied by the Maximum Permissible Interest Rate (currently 6.36%).
Basic Daily Fee: $47.49 per day

Costs to you: no lump-sum payment. Daily DAP payment of $60.98 + $47.49 Basic Daily Fee totalling $108.47 per day.

Combination Payment

Since 1 July 2014, customers can split their accommodation payment between a deposit and a daily payment. You can make a partial RAD payment and supplement the difference between the accommodation cost and your deposit by making reduced DAP payments.

Example:

Accommodation Price: $350,000
RAD Payment: $100,000
DAP Payment: $43.56 per day
Basic Daily Fee: $47.49 per day

Costs to you: your lump-sum refundable payment of $100,000 on moving into the facility plus your Daily DAP payment of $43.56 + $47.49 Basic Daily Fee totalling $91.05 per day. Alternatively, rather than making regular cash out-of-pocket payments for your DAP, the DAP payments can be drawn down from your refundable RAD payment. In essence, reducing your refundable deposit when you move out of the facility.

The payment method which is most suitable to you and your family will depend on your personal and financial situation and you may like to seek financial advice. If you would like more information regarding the costs of Aged Care, please visit www.myagedcare.gov.au.

Alternatively, please get in touch with us and we would be delighted you work with you in putting together a tailored financial package.