Our role in aged care accommodation
IHACPA plays a key role in ensuring aged care accommodation prices represent value to residents through an assessment of the proposed price in relation to the quality, condition, features and amenities of a service.
As part of our role, we assess and approve or not approve refundable accommodation deposits (RADs) that exceed the maximum threshold prescribed by the Aged Care Rules 2025.
The current maximum RAD price is advertised on the Department of Health, Disability and Ageing’s website. This amount is indexed to the consumer price index from 1 July each year.
What is a RAD?
A RAD is a lump-sum payment made by a resident for a room (or part of a room) in an approved residential care home. The price is for residents who are not eligible for Australian Government assistance.
Each approved residential care home sets their own price for different kinds of rooms.
Providers must publish the prices on My Aged Care, their website and in published materials for residents as:
- a lump-sum RAD amount
- an equivalent daily accommodation payment (DAP)
- an example of a combination of both payment types.
Residents must agree on a room price and enter into an accommodation agreement before moving into a residential care home.
RADs provide a significant source of funding for capital investment and act as an interest-free loan to providers. It is refundable when the resident leaves care, minus any agreed deductions and/or applicable retention amounts.
New fee arrangements were introduced on 1 November 2025. See the Department of Health, Disability and Ageing’s website for more information.
Why are RAD approvals needed?
To protect residents from excessive accommodation charges, the Australian Government sets a maximum RAD amount that providers can charge without needing approval. If a provider wishes to charge more than the maximum amount, they must apply to IHACPA for approval.
Approvals are valid for 4 years, after which providers must reapply if they want to continue charging above the maximum accommodation payment amount.
What does IHACPA assess?
IHACPA operates under section 290 of the Aged Care Act 2024 and Division 2, subdivision B of the Aged Care Rules 2025. These laws ensure that accommodation pricing remains fair, transparent and aligned with the value provided to residents.
We evaluate:
- whether the proposed RAD price represents value to the resident through the quality and amenities of the accommodation
- the factors a provider considered in their proposed price.
We also monitor My Aged Care to ensure providers accurately publish their approved RAD prices, including the correct calculation of annual indexation amounts.
Under previous law, IHACPA approved extra service fees (ESFs) charged by residential aged care providers. From 1 November 2025, higher everyday living fees replace ESFs under the Aged Care Act 2024.
Any ESF agreements entered into prior to 1 November 2025 will cease on 31 October 2026. As ESF agreements are being phased out and cannot be altered during this period, we no longer assess these fees. Providers can increase fees in line with existing contracts and do not require IHACPA’s approval.
How we share information
To support shared functions to promote access to safe and high-quality aged care services, we may share relevant information about potential provider non-compliance with the Department of Health, Disability and Ageing (the Department) and the Aged Care Quality and Safety Commission (the Commission).
If through our assessment of your application, we find information that tells us you may have advertised or charged a RAD above the maximum accommodation payment amount without a valid approval in place, we may share that information with the Department as the system operator and the Commission as the national regulator.
More information about how we share information can be found in our Exchange of Letters.