Refundable accommodation deposits (RADs)
On 1 July 2014, the Government introduced refundable accommodation deposits (RAD) and daily accommodation payments (DAP), as part of the Living Longer Living Better reforms:
- Refundable accommodation deposits — Residents can pay a lump sum for their accommodation in the form of a RAD, which provides a significant source of funding for capital investment and acts as an interest free loan to providers. The RAD is fully refundable to the resident when they leave the provider or is returned to the resident’s estate if they pass away.
- Daily accommodation payments — Instead of a lump-sum RAD, residents can pay a rental-style DAP. This DAP is calculated by applying the maximum permissible interest rate, set by the Government, to the RAD associated with the accommodation.
- RAD and DAP —The resident can elect to pay a combination of a RAD and DAP.
Accommodation payments are means-tested and individuals with income below certain thresholds are not required to make an accommodation contribution. For these individuals, the Government contributes the full accommodation cost on behalf of the resident through an accommodation supplement. Other residents may pay a means tested contribution that is supplemented by Government funding. A range of Government accommodation supplements are based on ministerially determined rates.
What is a RAD?
A refundable accommodation deposit (RAD) is the lump-sum payment for a room (or part of a room) in an aged care home. The price is for residents who are not eligible for Australian Government assistance.
Each residential aged care provider sets their own price for different kinds of rooms. You must publish the prices as:
- a lump-sum RAD amount
- an equivalent daily accommodation payment (DAP)
- an equivalent combination of both.
The resident chooses the payment option they prefer.
If a resident is eligible for Government assistance, they may need to pay accommodation contributions. We do not regulate accommodation contribution amounts.
When RADs need approval
The Minister for Aged Care has decided that the maximum a provider can charge a person without approval is $550,000 as a RAD (or equivalent daily amount).
You must apply for RAD approval if you want to charge a RAD amount (or equivalent daily amount) that is:
- more than the maximum allowed without approval
- higher than your current approved amount
You must also apply for approval if a person entered aged care before 1 July 2014 and seeks to enter a new aged care home under the fee arrangements that apply from 1 July 2014. You can only charge them a price greater than $550,000 if the price has been approved and published for that room type.
It does not matter if that person paid the same amount for accommodation before 1 July 2014 under their old arrangement. The room price will need to have been approved and published if they are entering under the new fee arrangements.
Apply for RAD approval
The form and process to apply for a RAD is the same whether you have applied for RAD approval before or not.
You may be able to skip some questions if you are re-applying for an expiring RAD price and seeking approval for a similar amount. Find out more about expiring RAD approvals.
Apply for RAD approval
Learn more about the application and approval process.
Why RADs need approval
You must apply for approval so we can check:
- if the proposed price represents value to the resident through the quality of the accommodation
- how you decided on the proposed price
Who can apply
Approved providers of residential aged care can apply for RAD approval.
Legislation
The relevant sections of the Aged Care Act 1997 are: