Moving into aged care can feel overwhelming enough even without thinking about finances. But when it comes to understanding the different costs of care and aged care accommodation in Australia, a little knowledge goes a long way. 

Let’s get to know two of the most important payment types to know about: RAD and DAP .

Understanding RAD and DAP

RAD and DAP will be relevant to you if your Aged Care Assessment requires you to contribute towards your aged care costs.

RAD, or refundable accommodation deposit

The RAD relates to the room price that you agree to with a residential aged care provider. You can choose to pay for your accommodation with a lump sum (RAD), a daily payment (DAP), or a combination of the two as you prefer. If you pay any lump sum, the balance of that RAD will be returned to you when you permanently leave the aged care home.

If the Australian Government helps with the cost of your care, your room rate will be referred to as a refundable accommodation contribution (RAC) instead.

The price you pay for accommodation can depend on aspects like room size and features, aged care location and provider.

DAP, or daily accommodation payment

What is DAP in aged care? If you choose to pay your RAD with a daily payment, you’ll either pay:

  • An aged care daily accommodation payment (DAP) if paying yourself, or 
  • A daily accommodation contribution (DAC) if the Government contributes to your care costs.


Because these payments are calculated on a per-day basis, they’re not refunded when you leave care. DAPs are typically paid fortnightly or monthly.

Choosing how to pay

You can take 28 days after you move into a residential aged care home to decide how you want to structure your accommodation payments. Until you’ve decided, you’ll pay via daily payments.

Calculating DAP, and DAP with RAD paid

To calculate DAP, and DAP with RAD paid, you’ll first need to know your room rate (RAD) and the relevant MPIR.

What is MPIR?

The maximum permissible interest rate (MPIR) is a government-set interest rate used to create fairness and flexibility in how you pay your accommodation costs in aged care. The MPIR is not something you are charged for.

For the following calculations, you’ll need to know the MPIR on the day you agreed to your room rate. You can find current and past MPIRs on the Department of Health and Aged Care website

Calculating DAP

If you choose to pay for your room with a daily accommodation payment in aged care, this amount is worked out by multiplying the RAD x MPIR, then dividing that amount by 365 for days of the year. So:

     DAP = (RAD × MPIR) / 365

Calculating DAP with RAD paid

If you choose to pay some of your RAD with a lump sum and the rest with daily payments, you can calculate your reduced DAP as follows:

Reduced DAP = [(full RAD − RAD paid) × MPIR] / 365

Frequently asked questions

Now, let’s discuss some of the frequently asked questions around RAD and DAP in Australia.

What if I can’t pay the RAD in aged care?

If your income and assets are deemed above the threshold for government support and you don’t want to or can’t pay the room rate you’ve agreed to as a lump sum, you can instead choose to pay a DAP.

Lots of people have questions about how they’ll fund their care and accommodation, including whether they will need to sell their home to pay for aged care. It’s a wise idea for everyone to get financial advice when planning ahead. Services Australia’s Financial Information Service (FIS) is a free service that may help.

Can I pay my daily accommodation payment (DAP) from my RAD?

Yes, if your provider enables this option. You can speak to your provider and ask them to draw your DAC from your RAD in addition to other aged care fees, if they choose to allow this.

Is RAD counted towards Centrelink?

No, RAD is considered an exempt asset so it does not count towards your age pension asset test. 

What is the maximum DAP in aged care?

RADs are set by individual providers, though a provider needs to get approval if charging more than $550,000 for a RAD or equivalent DAP.

There are also annual and lifetime caps on aged care fees, and these are indexed twice a year. You can visit My Aged Care to see more on maximum limits

What happens to RAD if someone dies?

If a loved one passes, the balance of the RAD will be refunded to their estate within 14 days of receipt of a certified copy of Grant of Probate.

Do you get all your RAD back?

Yes. Your RAD has a government guarantee to be returned as long as your aged care provider is government accredited, like Aurrum. If you’ve paid any DAP or other costs out of your RAD, you will receive the balance. 

Finding clarity with aged care

If you find RAD, DAP and aged care finances a little confusing, you’re not alone. At Aurrum Aged Care we’re here to support you with clear information so you can understand your care and costs at every step. 

If you’d like to book a tour at any of our NSW or Victorian aged care homes, or would simply like to go through some questions with our team, you can contact us on 1800 287 786.