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.
Legislation
The relevant sections of the Aged Care Act 1997 are:
- Section 52G-3 — Minister may determine maximum amount of accommodation payment
- Section 52G-4 — ACPC may approve higher maximum amount of accommodation payment.
- Division 3 – Approval of higher maximum accommodation payment amount of the Fees and Payments Principles 2014 (no 2)