What is a Refundable Accommodation Deposit?

A Refundable Accommodation Deposit (RAD) is a lump sum payments made by residents entering permanent residential aged care. It’s one of the ways you can pay for your accommodation. The RAD is returned to you or your estate when you leave the aged care home or pass away, with repayment guaranteed by the Australian Government. However, if agreed in your resident agreement, the provider may retain up to 2% of the RAD each year for a maximum of five years. This means up to 10% of the RAD may be deducted before the refund is made.

You can choose to pay the accommodation price in full as a  RAD or you can pay a combination of a part RAD and Daily Accommodation Payment (DAP), or you can pay entirely via a Daily Accommodation Payment (DAP), which is non-refundable.

If you and your aged care home agree, you can ask the provider to deduct certain amounts from the RAD you’ve already paid, such as the DAP or care expenses. The remaining RAD, after any agreed deductions and retention, is refunded when you leave the aged care home.

Are there any other costs?

 aged care involves several types of fees beyond the Refundable Accommodation Deposit (RAD). What you pay depends on your income, assets, and the services you choose. If your assessed assets exceed the government threshold (currently around $238,000), the government may subsidise part or all of your accommodation costs.  

If you have no assets at all, there is a safety net in place to support you. More information is available at My Aged Care | Aged care home cost and fees

If you or a loved one is moving into residential aged care you may be asked to pay:

• A basic daily fee: This is a standard fee that all residents pay. The fee is set at 85% of the single basic Age Pension and is updated twice a year. This fee covers everyday services such as meals, cleaning, laundry, and general care. For some people, this may be the only fee you need to pay.
• A care contribution: this is an extra contribution towards the cost of care that you may need to pay - on top of the basic daily fee - depending on your income and assets. It covers non-clinical care services such as bathing, mobility support, and lifestyle activities. The contribution is means-tested, capped at a daily rate and a lifetime limit (currently around $130,000 or four years of payments).
• Accommodation costs: this is a payment for accommodation in an aged care home. You may have your accommodation costs paid in full or in part by the Australian Government or you will be required to pay the accommodation price you negotiate with your aged care home.
• Additional service fees: Additional services fees are optional payments for enhanced amenities or lifestyle offerings that go beyond the standard care and services covered by government subsidies.  These fees may apply if you choose extra amenities, such as Barista-style coffee, Pay TV or streaming services. 

If you permanently leave an aged care home or pass away, the remaining balance of your Refundable Accommodation Deposit (RAD)—after any agreed deductions—is refunded to you or your estate. The aged care provider must refund the RAD within 14 days of receiving either a Grant of Probate (if there is a Will), or Letter of Administration (if there is no Will).

How does a refundable accommodation deposit work?

If you would like further information on how the refundable accommodation deposit works, our Understanding Costs guide will help you gain a further understanding of how our costs work with examples.

However, we strongly suggest that you get independent financial advice before beginning this process so that you are fully aware of all your assets and what you feel comfortable proceeding with. You can also visit My Aged Care website for financial advice.

If you are interested in our respite or long-term care, you can visit our site by clicking on the links.

*Figures were correct at the time of publishing but are subject to change.