Refundable Accommodation Deposit (RAD) Guide 2026

A Refundable Accommodation Deposit (RAD) is the lump sum way to pay for a room in an aged care home. This guide covers what a RAD is, how the daily alternative is worked out, what changed on 1 November 2025, and how the refund works.

The Aged Care Act 2024 started on 1 November 2025. Two accommodation rules apply to people who first enter residential care on or after that date: providers retain 2% a year of the RAD, and daily payments are indexed twice a year. People already in care before that date keep their earlier arrangements. Each section below says which group a rule applies to.

For the other fees you pay in an aged care home, read how much a nursing home costs in Australia.

What is a Refundable Accommodation Deposit (RAD)?

A Refundable Accommodation Deposit is a lump sum you pay to an aged care home for your room. The provider holds it while you live there and refunds the balance when you leave or die.

The main points:

• The provider sets the price. Each aged care home must publish its maximum price for each room on My Aged Care. You can negotiate a lower price, but you cannot be charged more than the published price.
• There is a ceiling. A provider can charge up to $789,686 in 2026-27 without approval. Above that, it needs approval from the Independent Health and Aged Care Pricing Authority. The ceiling is indexed on 1 July each year.
• You choose how to pay. You can pay a RAD, a non-refundable Daily Accommodation Payment (DAP), or a combination.
• The balance is refunded. The refund is the amount you paid, less any deductions you agreed to and any retention amounts.
• Retention applies to new entrants. If you first enter care on or after 1 November 2025, the provider must retain 2% a year of your RAD balance for up to 5 years.
• The refund is guaranteed. If a provider becomes insolvent, the Australian Government repays your lump sum through the Accommodation Payment Guarantee Scheme.

A RAD applies only if your means assessment finds you are not eligible for government help with accommodation. If you are eligible (low means), you pay an accommodation contribution instead, as a Refundable Accommodation Contribution (RAC), a Daily Accommodation Contribution (DAC), or both. If your income is below $36,454.60 a year and your assets are below $66,500, the government pays your accommodation costs in full (My Aged Care, rates from 20 September 2026).

How the RAD works in practice

You agree a room price first, move in, then choose how to pay. Here is the order.

Step 1: Get assessed. An aged care assessment arranged through My Aged Care confirms you are eligible for residential care. Services Australia does a separate means assessment of your income and assets. Its fee advice letter is valid for 120 days.

Step 2: Compare rooms. Every room has a published maximum price. Compare them with the My Aged Care Find a provider tool.

Step 3: Agree a room price in writing. You must agree a price before you enter care. From 1 November 2025 this is done in an accommodation agreement. The MPIR on the day you agree the price is the rate used for your daily payments.

Step 4: Choose your payment method after you move in. You cannot be asked to choose before you enter care. Until you pay a lump sum, you pay by daily payments.

Step 5: Pay a lump sum if you want to. You can pay a RAD in full or in part at any time after you enter care, once your means assessment is finalised. If you pay a lump sum, you must be left with at least $66,500 in assets.

Step 6: Receive your refund. When you leave, the provider must refund the balance within 14 days.

RAD amounts by state and territory

The government does not publish an average RAD for each state and territory in its annual sector report. It publishes national averages and averages by location type. Room prices for every home, in every state, are on the My Aged Care Find a provider tool.

The Department of Health, Disability and Ageing reports these averages for 2024-25:

Source: Department of Health, Disability and Ageing, Financial Report on the Australian Aged Care Sector 2024-25, Table 1.19. Prices are lump sum equivalents for new residents.

Two things stand out. Metropolitan rooms cost more than regional rooms. And the average agreed price is below the average published price, which shows that many residents negotiate.

The same report puts the average RAD held by providers at $417,444 at 30 June 2025. That figure covers all current residents, including people who entered years ago at lower prices.

To check prices where you live, search your suburb on My Aged Care Find a provider. Each listing shows the maximum RAD and the equivalent DAP for each room type.

The Daily Accommodation Payment (DAP) alternative

A Daily Accommodation Payment is the same room price paid as a daily amount instead of a lump sum. It works like rent and is not refunded.

How the DAP is calculated

The DAP is the room price multiplied by the Maximum Permissible Interest Rate (MPIR), divided by 365.

Formula:

(Room price, minus any lump sum paid) x MPIR / 365 = DAP per day

Example: A room has an agreed price of $400,000. The MPIR is 8.51%, the rate from 1 October 2026. You pay no lump sum.

$400,000 x 0.0851 / 365 = $93.26 per day ($34,040 per year)

The department sets a new MPIR each quarter, on 1 January, 1 April, 1 July and 1 October. The rate that applies to you is the one in force on the day you agree your room price. It then stays fixed for you. Later increases or decreases do not change it (My Aged Care, 2026).

Our current MPIR page lists the rate for each quarter. You can model RAD and DAP splits with the RAD Calculator.

DAP key points

• The DAP is not refundable.
• You pay it on top of the basic daily fee and any means tested contributions.
• Your MPIR is locked in. A new quarterly MPIR applies only to people who agree a room price in that quarter.
• Your DAP is indexed if you are a new entrant. If you first enter residential care on or after 1 November 2025, your provider increases your DAP on 20 March and 20 September each year in line with the Consumer Price Index. The DAP index number was 1.00 at 20 September 2025, 1.02 at 20 March 2026 and 1.04 at 20 September 2026 (Department of Health, Disability and Ageing).
• Indexation does not apply to earlier arrangements. People paying a DAP under the 1 July 2014 accommodation arrangements are not indexed. Daily Accommodation Contributions are not indexed either.
• You can reduce or stop the DAP at any time by paying a full or partial RAD.

Combination payments: part RAD, part DAP

A combination payment is part lump sum and part daily payment. You can split it any way you choose.

Example from My Aged Care: The agreed room price is $500,000. You pay $200,000 as a RAD. Your DAP is worked out on the remaining $300,000. At the 8.51% MPIR that applies to room prices agreed from 1 October to 31 December 2026:

($500,000 less $200,000) x 8.51% / 365 = $69.95 per day

You can pay more towards the lump sum later, which lowers the daily payment.

Combination payment benefits

• You keep some cash. Money stays available for other costs.
• Your daily payment is lower. A part RAD reduces the DAP.
• You can add to the RAD later. Extra lump sum payments are allowed at any time.
• You can draw the DAP from the RAD. Your provider must allow this if you ask. The lump sum then shrinks and the daily payment grows over time.

A provider is not obliged to refund part of your lump sum while you are still in care, so do not assume you can take money back out. Get independent financial advice before choosing a split.

RAD vs DAP: comparison table

The right choice depends on your assets, income, pension and how long you expect to be in care. Services Australia’s Financial Information Service is free. Call 132 300.

How a RAD affects your Age Pension

A refundable lump sum is exempt from the Age Pension means test (My Aged Care, 2026). The aged care means assessment treats it differently, and that is where people get caught.

Assets test

A RAD you have paid is not counted as an asset for the Age Pension. Money left in a bank account is counted. So moving savings into a RAD can raise a part pension.

For example, if you have $500,000 in savings and pay a $400,000 RAD, $100,000 of that money counts towards the Age Pension assets test.

Income test

The exemption covers the pension means test, so the lump sum is not deemed to earn income for the Age Pension. Deeming still applies to your other financial assets, such as bank accounts and shares.

The aged care means assessment is a separate test. It counts the balance of a refundable lump sum as an asset, even if a family member paid it. That means paying a RAD can change your hotelling contribution, non-clinical care contribution or means tested care fee.

Net pension effect

Paying a RAD often leaves a part pensioner with more Age Pension than holding the same money in the bank, because the money moves out of the assets test. The size of the effect depends on your other assets, whether you still own a home, and whether you have a partner. Ask the Financial Information Service or a licensed financial adviser to run the numbers before you pay.

Selling the family home to pay a RAD

You do not have to sell your home to pay for a room. A DAP or a combination payment are both available.

When the home is protected

Your home is not counted in the aged care means assessment if a protected person lives in it. A protected person is:

• your partner or dependent child
• a carer eligible for an Australian Government income support payment who has lived in the home with you for at least 2 years
• a close relative eligible for an Australian Government income support payment who has lived in the home with you for at least 5 years.

When the home is included

If no protected person lives there, the home is counted, but only up to the home exemption cap of $219,858.40 from 20 September 2026. If the net market value is lower, the lower figure is used. For a couple, each partner is treated as owning half, and the cap applies to each half.

If the home is counted, you still have choices other than selling:

• Pay a DAP. Daily payments need no lump sum.
• Use a combination. Pay part from savings and the rest daily.
• Rent the home out. Net rental income is assessable income, so check the effect on your fees and pension first.
• Look at the Home Equity Access Scheme. Services Australia runs this government loan against home equity.

Read more in how to avoid selling your home for aged care.

Financial hardship assistance

Financial hardship assistance is for people who cannot afford their aged care costs for reasons beyond their control. If you are eligible, the Australian Government pays some or all of your fees and accommodation costs.

Who qualifies for hardship assistance

To apply, you must (My Aged Care, 2026):

• have had a means assessment for residential aged care
• have assets of no more than $48,270.30, not counting unrealisable assets
• not have gifted more than $10,000 in the current or any of the previous 4 financial years, or more than $30,000 across those 5 years.

A home that has been on the market for six months or more can count as an unrealisable asset. A lump sum you have paid for accommodation cannot.

How to apply

1. Complete the Aged Care Claim for financial hardship assistance form (SA462).
2. Lodge it with Services Australia, with evidence of your expenses for the previous 3 months.
3. Services Australia assesses the claim within 28 days of receiving everything it needs, and tells you the result by letter.
4. If you have questions, call the Services Australia aged care line on 1800 227 475.

Hardship assistance does not cover higher everyday living fees. More detail is on the My Aged Care financial hardship page.

RAD refund rules

The provider must refund your lump sum balance when you leave. The timing and the deductions are set by law.

Timing of refunds

• Leaving care: the balance must be refunded within 14 days after the day you leave.
• Moving to another home: if you give more than 14 days’ notice, the refund is due on the day you leave. With less notice, it is due within 14 days of the notice.
• After death: the balance must be refunded within 14 days of the provider receiving probate or letters of administration.

What can be deducted from the RAD

Three kinds of amounts can come out of a RAD:

• Retention amounts. These apply if you first entered residential care on or after 1 November 2025, or re-entered after a break of more than 28 days after 31 October 2025. The provider must deduct 2% a year, calculated daily on the balance, for up to 5 years from the day you first paid. On a $200,000 balance that is $10.96 a day (Department of Health, Disability and Ageing). A provider cannot ask you to top the RAD back up for retention amounts.
• Daily payments you asked to have drawn from the RAD.
• Other aged care fees that you and the provider agreed to deduct.

Retention does not apply to people who stay on the 1 July 2014 accommodation arrangements.

Government guarantee

The Accommodation Payment Guarantee Scheme covers every resident of a government-subsidised aged care home who has paid a lump sum. If the provider becomes bankrupt or insolvent and cannot refund you, the Australian Government pays the refund, including any interest due since you left.

Earning interest on your RAD

You earn no interest on a RAD while you are in care. During the 14-day refund period the provider pays interest at the base interest rate. If the refund is late, the provider pays interest at the higher MPIR.

Practical tips for making the RAD decision

1. Get your means assessment first. It tells you whether you pay the agreed room price or a lower accommodation contribution.
2. Compare several homes. Use the same room type in each comparison.
3. Negotiate. The published price is a maximum. In 2024-25 the average agreed price was $69,000 below the average published price.
4. Check which arrangements apply to you. Retention and DAP indexation apply to people who first enter care on or after 1 November 2025.
5. Note the MPIR on the day you agree. That rate is fixed for you, so a rate change next quarter is not a reason to delay or rush on its own.
6. Think about how long the stay may be. The median stay for people leaving permanent residential care in 2024-25 was 20.1 months (Australian Institute of Health and Welfare). Retention on a RAD stops after 5 years. A DAP continues for the whole stay.
7. Keep the minimum. You must be left with at least $66,500 after paying a lump sum.
8. Use the free government service. The Financial Information Service on 132 300 explains how each option affects your pension and fees.
9. Read the accommodation agreement. Check every deduction you are agreeing to.
10. Tell Services Australia when you pay. Paying or topping up a lump sum changes your means assessment. You must report changes within 28 days.
11. Keep records. Keep the agreement, receipts and fee advice letters for the refund.

Premium and extra service fees: what to check

Optional extras are now charged as a higher everyday living fee. It started on 1 November 2025 and replaced the earlier extra service and additional service fees. It is separate from your RAD or DAP.

The rules protect you in four ways (Department of Health, Disability and Ageing, 2026):

• A provider cannot agree or charge a higher everyday living fee before you enter care, and cannot make it a condition of entry or use it to secure a room.
• The agreement must list each service, its cost, its standard and how often it is delivered.
• You have a 28-day cooling off period. After that you can cancel or vary with 28 days’ notice.
• The agreement must be reviewed at least once a year.

If you entered care before 1 November 2025, your existing extra or additional service agreement lapses after 31 October 2026 unless you move to a higher everyday living fee agreement.

If you think you are being charged for something that should already be included, call the Aged Care Quality and Safety Commission on 1800 951 822.

Frequently asked questions

Is a Refundable Accommodation Deposit fully refundable?

The balance is refunded, less any deductions you agreed to. If you first entered residential care on or after 1 November 2025, the provider must also retain 2% a year of the balance for up to 5 years, and those amounts are not refunded. The refund is due within 14 days of leaving, or within 14 days of the provider receiving probate. The Accommodation Payment Guarantee Scheme protects the refund if the provider becomes insolvent.

How much is a typical RAD in Australia?

The average agreed room price for new residents was $470,000 in 2024-25, and the average published price was $539,000 (Department of Health, Disability and Ageing). Metropolitan homes averaged $504,000 agreed and regional homes $386,000. A provider can charge up to $789,686 without approval.

Do I have to sell my home to pay a RAD?

No. You can pay a DAP, or part RAD and part DAP. If you cannot afford your costs for reasons beyond your control, you can apply for financial hardship assistance. Read avoiding the sale of your home for aged care.

What is the difference between a RAD and a DAP?

A RAD is a refundable lump sum. A DAP is a non-refundable daily payment, worked out as the room price multiplied by the MPIR and divided by 365. The MPIR is 8.51% from 1 October 2026. You can pay a combination.

How does paying a RAD affect my Age Pension?

A refundable lump sum is exempt from the Age Pension means test. It is counted as an asset in the aged care means assessment, so it can change your aged care fees. Results differ from person to person, so ask the Financial Information Service on 132 300.

Can I change from DAP to RAD after I move in?

Yes. You can pay a lump sum in full or in part at any time after you enter care, once your means assessment is finalised. Each payment lowers your daily payment.

What happens to the RAD when someone passes away?

The balance is paid to the estate. The provider must refund it within 14 days of receiving probate or letters of administration. A provider may refund sooner if it is confident it has identified the correct beneficiary.

Can the aged care home increase the RAD after I move in?

No. A change to the published price does not affect a resident who already lives in the home and stays in the same room. Your daily payment can still rise through DAP indexation if you first entered care on or after 1 November 2025, and it rises if you draw your DAP from your RAD.

Getting help with aged care decisions

Start with the two free government services. My Aged Care is on 1800 200 422. The Services Australia Financial Information Service is on 132 300.

Carevo is a connection platform. It does not provide residential care or financial advice, and it does not recommend one provider over another. You can use it to find aged care providers and compare what they offer.

Call 1800 953 253 or visit the aged care page.