26 March 2023
Daily Accommodation Payment guide
5 min read
In order to understand aged care residential home accommodation costs, you first need to understand that there are several ways of paying when you wish to move into an aged care residence. This blog explains the daily accommodation payments, (DAP) option. You can also think of a DAP as a rental type of contribution.
It also explains how DAP fits in with the other two payment methods, Refundable Accommodation Payments (RAD) and a combination of the two. Additionally, you can be means tested by the government to see if you are eligible for a reduction in payments.
What is the daily accommodation payment?
Up until a few years ago, anyone entering aged care would pay a bond for their accommodation, as tenants do when renting a home. Today, there are multiple ways of paying when you enter a residence.
One such payment is the daily accommodation payment. On its own, this can be difficult to get the full picture, so it is easier to put in context with the other forms of payment.
Firstly, the aged care provider will set a price for accommodation.
You (after speaking with your financial advisor) will then have a choice of how you pay.
The DAP is not a refundable payment, it is calculated based on the refundable deposit multiplied by the maximum permissible interest rate and divided by 365 days.
Payment options in greater detail.
Examining the three options:
1. Refundable Accommodation Deposit
There are two types of lump sum, depending on the outcome of your means assessment:
• Refundable accommodation deposit (RAD): This is when you pay the full amount yourself. It is the accommodation price you agreed on with your provider (the owners of the aged care residence).
• Refundable accommodation contribution (RAC): This is when the government helps with the costs. It is worked out by your provider based on the daily accommodation contribution (DAC) determined by Services Australia (which means it is means tested).
If you choose to pay an amount as a lump sum, the balance is refunded when you leave the aged care home. Any amounts that you have drawn down from the lump sum to pay other aged care costs will not be refunded.
Read more about aged care home accommodation refunds.
2. Daily payments
There are two types of daily payments, depending on the outcome of your means assessment:
• Daily accommodation payment (DAP): This is when you pay the full amount yourself. It is the accommodation price you agreed on with your provider.
• Daily accommodation contribution (DAC): This is when the government helps with the costs. The amount is determined by Services Australia based on your means assessment.
Daily payments work like rent payments – they are not refunded when you leave care.
3. A combination of refundable lump sum and daily payments
A refundable lump sum payment is known as a Refundable Accommodation Deposit.
You can combine the two types of payments to meet your costs. You can split the combination any way you choose.
For example, for an agreed room price of $400,000, you could choose to pay $100,000 as a refundable lump sum, and also pay a reduced non-refundable daily payment.
If you should pass away, or leave the home, the refundable accommodation deposit is then required to be refunded to your estate or yourself within 14 days from the receipt of the Grant of Probate. The aged care home is required to pay interest on the bond from the date of death to the date of refund.
Whichever way you decided to pay, Estia Health is always here to help you, however, we strongly suggest that you get independent financial advice before beginning this process, so that you are fully aware of all of your assets and how you feel comfortable proceeding. You can also visit My Aged Care website here for financial advice.
To learn more about the different fee’s residents may be required to pay whilst living in an aged care home visit our page on understanding costs.