What Is a Refundable Accommodation Deposit? RAD Explained (2026 Guide)
Aged Care | Fees | Family Guidance
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Quick Answer
A Refundable Accommodation Deposit (RAD) is a one-off, lump-sum payment some residents pay to cover the accommodation, or “room”, component of residential aged care. It is fully refundable under the Aged Care Act 2024, meaning the facility must return it, minus any agreed deductions, within 14 days of the resident permanently leaving care. RAD is different to daily care fees, which cover personal and clinical care, not accommodation.
Moving a loved one into residential aged care is one of the biggest decisions a family will ever make. Beyond the emotional weight, there’s also the practical challenge of understanding aged care costs, and the Refundable Accommodation Deposit (RAD) is often the most misunderstood part of it, despite playing a central role in how aged care homes are funded and how families budget for long-term care.
This guide gives a simple, straightforward explanation of the Refundable Accommodation Deposit, who pays it, how it works, why it exists, and how it compares to the Daily Accommodation Payment (DAP) and Refundable Accommodation Contribution (RAC).
What Does RAD Stand For and What Is It?
RAD stands for Refundable Accommodation Deposit. It’s a one-off, lump-sum amount some residents pay when they enter a residential aged care home in Australia. It covers the accommodation component of aged care, essentially the “room cost”, rather than daily care services, which are covered by other fees.
Think of the RAD as a bond, similar in concept to a rental security deposit, but governed by far stricter federal protections. The aged care home uses the RAD funds to maintain and improve accommodation, but the full amount, minus any agreed-upon deductions, must be refunded when the resident leaves.
Key Characteristics of a RAD
- Regulated under the Aged Care Act 2024 and Aged Care Rules 2025
- Optional, residents can choose other payment methods instead
- Refundable, families are protected from losing the lump sum
- Applies only to residents not assessed as supported or partially supported
- The amount is set by each facility but must be published publicly
- Facilities cannot access RAD funds without ongoing reporting to government
Why Does RAD Exist?
The RAD was created to ensure aged care providers have stable funding for accommodation infrastructure, give families flexibility in how they pay, protect residents’ money through legally structured refunds, allow transparency and comparability between homes, and share part of the accommodation funding responsibility with those who are financially able to pay.
Many families assume the RAD is a fee that disappears once paid. This isn’t correct, the RAD is not a cost, it’s a fully refundable amount, similar to a deposit that’s temporarily allocated for aged care use.
Who Has to Pay a RAD? Eligibility Explained
Not everyone entering aged care is asked to pay a RAD. Before entering a residential aged care home, all residents complete a means assessment through Services Australia or the Department of Veterans’ Affairs, which determines whether they’re a supported resident, a partially supported resident, or a non-supported resident.
Supported Residents
Lower income and assets. Do not pay a RAD. Instead pay a Daily Accommodation Contribution (DAC) or Refundable Accommodation Contribution (RAC), with government assistance covering part or all of accommodation costs.
Partially Supported Residents
Moderate assets. Pay a portion of accommodation costs through a combination of RAC and DAC, but still cannot be charged a RAD.
Non-Supported Residents
Sufficient assets or income. Full flexibility to choose RAD, DAP, or a combination, often choosing RAD for its financial structure and family benefits.
How Is the RAD Amount Determined?
Each aged care home sets its own RAD amounts, based on room size, shared versus private bathrooms, amenities, location and demand, and facility quality and reputation. Facilities must publish their prices on their website, My Aged Care, and in admission documents, so families can compare accommodation costs before making a decision. No facility can set RAD prices arbitrarily, published prices must be reasonable and transparent, preventing unfair pricing across the sector.
While prices vary widely, RAD amounts in Australia typically range from around $300,000 to over $1 million, depending on location and room quality. Regional homes often sit toward the lower end of that range, while major metropolitan facilities in Sydney, Melbourne, and Brisbane can be considerably higher, particularly for premium accommodation and additional amenities.
Is the RAD Means Tested?
No, the RAD itself isn’t means tested, whether you’re eligible to be charged a RAD at all depends on your means assessment outcome (supported, partially supported, or non-supported), but the RAD amount you’re quoted for a specific room is the same published price for any non-supported resident choosing that room. What the means assessment does affect separately is your ongoing means-tested care contribution, which is a different fee entirely, covered in our guide to the maximum means tested fee.
Payment Options: RAD, DAP, or a Combination?
One advantage of the Australian aged care system is that non-supported residents have real flexibility in how they pay accommodation costs.
Option 1: Pay the Full RAD
A lump sum paid upfront, fully refundable. Avoids DAP fees entirely, no ongoing accommodation payments, protects the estate since the RAD is returned, and provides high financial certainty. Requires access to liquid assets, and some families prefer not to sell a home immediately.
Option 2: Pay the Daily Accommodation Payment (DAP)
Instead of a lump sum, residents pay a daily fee calculated using the Maximum Permissible Interest Rate (MPIR), currently 8.43% as at 1 July 2026, applied to the agreed room price. DAP is not refundable.
Example: RAD equivalent $500,000, MPIR 8.43%, DAP = $500,000 × 0.0843 ÷ 365 = approximately $115.48 per day.
Option 3: A Combination (Partial RAD + DAP)
The most popular choice for Australian families. Part of the RAD is paid upfront, and DAP is calculated only on the unpaid remaining portion, allowing families to enter care sooner while reducing daily financial pressure.
Example: Room price $600,000, family pays $300,000 upfront, DAP is calculated only on the remaining $300,000.
How the RAD Refund Actually Works
One of the core strengths of the Australian aged care system is the legislated refund guarantee, protected under the Aged Care Act 2024 and the Aged Care Rules 2025.
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Refund Rules
- The RAD must be refunded in full, minus any agreed deductions
- Refund must occur within 14 days of the resident leaving (discharge or passing), or within 14 days of probate being granted where applicable
- Facilities cannot delay refunds unnecessarily
- Facilities cannot deduct money unless the resident specifically agreed to extra service charges or other allowed deductions
- If the refund is late, interest applies using the current government rates
Does the RAD earn interest? No, the RAD itself is not an investment and residents don’t earn interest on the amount paid. However, by reducing or eliminating DAP costs, paying a RAD can save families a genuine amount over the length of a stay.
What can be deducted? Facilities cannot deduct daily care fees, means-tested care fees, service fees, or DAP amounts from a RAD refund. The only allowable deductions are extra service fees, additional service charges, or other optional fees explicitly agreed in writing. Facilities must provide a full statement outlining any charges before deducting anything.
Is a RAD Protected If a Provider Goes Bankrupt?
Yes. RADs are protected under a government-backed guarantee scheme regulated through the Aged Care Act 2024, so families remain protected even if a provider collapses financially.
When Paying a Full RAD Makes Sense, and When It Might Not
Paying the Full RAD May Suit You If
- The family wants certainty over costs
- The resident owns property and selling or renting it out is comfortable
- The goal is to minimise daily out-of-pocket payments
- The estate will eventually receive the RAD refund
- DAP costs would otherwise be significant over the length of stay
A Full RAD May Not Suit You If
- Assets are tied up and difficult to liquidate quickly
- The family prefers to keep the home for rental income
- There are specific tax or estate planning considerations
- The stay is expected to be short-term
- A financial adviser has recommended another approach for your situation
Many financial advisers recommend a partial RAD as a middle path, it reduces DAP, allows partial asset retention, and provides estate planning flexibility. Every family’s situation is different, and professional financial advice is genuinely worth seeking before deciding.
How the RAD Fits Into Overall Aged Care Costs
One of the biggest misconceptions about aged care in Australia is that the RAD is the main cost. In reality, it’s only one part of a broader financial structure covering three categories.
How Do Aged Care Providers Make Money on a RAD?
This is a genuinely reasonable question families ask. Providers don’t profit from RAD in the way a fee is profited from, since the full amount must eventually be refunded. Instead, providers use RAD funds (subject to prudential and reporting requirements) to help fund accommodation infrastructure and facility improvements, effectively acting as an interest-free capital pool while the resident remains in care. This is precisely why RAD exists as a funding mechanism, and why it’s tightly regulated with public reporting obligations.
RAD vs DAP vs RAC vs DAC: Quick Comparison
How to Avoid Problems With an Aged Care Deposit Refund
Most RAD refund problems are avoidable with the right information upfront. Get every RAD amount, refund terms, and any potential deductions in writing before signing an accommodation agreement. Confirm in writing exactly which optional extra services you’re agreeing to, since these are the only legitimate deductions a facility can take from your refund. Keep a copy of every statement the facility provides. If a refund is delayed beyond 14 days without a clear, lawful reason, the Aged Care Quality and Safety Commission can be contacted on 1800 951 822 to raise a formal complaint.
Common Mistakes Families Make
“The RAD is a non-refundable fee.”
Incorrect. The RAD is fully refundable under federal law, minus only agreed extra service deductions.
Paying DAP long-term without comparing alternatives
DAP may seem simpler short-term, but it often results in significantly higher lifetime payments than a RAD, since none of it is ever refunded.
Rushing into an asset sale under pressure
Selling a home too quickly can mean a lower sale price and avoidable stress. A partial RAD or temporary DAP can buy time to make a more considered decision.
Not comparing published pricing across facilities
Every facility must publish its RAD, equivalent DAP, and combination options. Comparing multiple homes properly, not just the first one recommended, is worth the time.
Frequently Asked Questions
What is a Refundable Accommodation Deposit (RAD)?
A one-off lump-sum payment covering the accommodation portion of residential aged care, fully refundable under the Aged Care Act 2024 within 14 days of a resident permanently leaving care.
Is the RAD fully refundable?
Yes, minus any agreed extra service deductions made in writing. Standard care fees, means-tested fees, and DAP amounts can never be deducted from a RAD refund.
Can family members pay the RAD on behalf of a resident?
Yes. Third-party payments from family members are allowed and common.
What happens to the RAD after you pay it?
The facility holds the funds, subject to government reporting and prudential requirements, and uses them to help fund accommodation infrastructure. The full amount remains owed back to the resident or their estate.
Can you draw down from a RAD?
In limited circumstances, some facilities allow drawing down a portion of a RAD balance to cover other approved fees, subject to agreement. This isn’t automatic and should be discussed directly with the provider.
When do residents have to pay the RAD by?
Residents generally have 28 days from receiving their accommodation agreement to decide on and pay their chosen payment method, with DAP applying automatically on the unpaid balance in the meantime.
Making a Confident, Informed Decision
Understanding the Refundable Accommodation Deposit is one of the most important steps in planning residential aged care in Australia. A RAD isn’t just a payment, it represents choice, flexibility, and security, allowing families to eliminate unpredictable DAP charges, stabilise future expenses, and maintain peace of mind knowing the amount is fully refundable.
Whether paying a full RAD, a partial RAD, or using a combination strategy, the right choice depends entirely on your family’s financial circumstances and priorities, and it’s always worth discussing your specific situation with a financial adviser before committing.
At Superior Care Group, we believe families deserve full transparency on pricing from the very first conversation. Our team can walk you through exactly what your RAD, DAP, or combination options would look like for Wellington Park or Merrimac Park, with no pressure and no jargon. You can learn more at superiorcare.com.au.
Have Questions About Accommodation Costs?
Wellington Park 16 Balmoral Street, Wellington Point, Brisbane (07) 3822 1876
Merrimac Park 50 Macadie Way, Merrimac, Gold Coast (07) 5618 1111
