Refundable accommodation deposit guide

This blog explains the refundable accommodation deposit and how it is used.

What is a Refundable Accommodation Deposit (RAD)? It is called a refundable accommodation deposit because, as the name suggests, the deposit is fully refundable when you leave the aged care residence. In effect, it’s like making a loan down payment to the facility which is refunded when you leave. Choosing to pay a RAD is not lost money as it is refunded to your estate when you pass away or if you move out and repayment from an approved provider is guaranteed by the federal government.

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 you pay a Refundable Accommodation Deposit instead, at a price set by the residence. This is the price of a room, in lump sum form that you have agreed with your aged care home to pay. You can pay the accommodation price in full by RAD or you can pay a combination of a part RAD and Daily Accommodation Payment (DAP) or you can pay in full by DAP. The DAP is nonrefundable.

If you and your aged care home agree, you can ask your provider to deduct certain amounts from the lump sum you’ve already paid – for example the DAP and /or care fees. The RAD (minus any amounts deducted, as agreed) is refunded when you leave the aged care home.

What is a refundable accommodation deposit?

If you have assets over $55,000* you will need to pay an accommodation payment (a refundable accommodation deposit) of some sort. If your assets are valued at over $186,331.20* you will need to make a full accommodation payment. Don’t worry if you have no assets at all, because there is a safety net in place to look after you.

You may be asked to contribute costs if you are financially able to do so, however there is help available if you are unable to pay for care and accommodation costs.

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 fee paid by everyone who receives residential care. For some people, this may be the only fee you need to pay.

A means tested care fee: this is an extra contribution towards the cost of care that you may need to pay - on top of the basic fee - depending on your income and assets.

An accommodation payment: 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 need to pay the accommodation price you negotiate with your aged care home.

Extra service fees: this is an extra payment you can pay if a higher standard of accommodation is chosen or additional services such as hairdressing or pay TV in rooms is elected.

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.

How does a refundable accommodation deposit work?

If you would like further information on how the refundable accommodation deposit works then please visit our site here where you will 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 of your assets and what you feel comfortable proceeding. You can also visit My Aged Care website here for financial advice.

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

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