Refundable Deposit (RAD)

Residents have a number of payment options when paying their accommodation payment or accommodation contribution including lump sums (RADs or RACs), periodic payments (DAPs or DACs) or combinations of the two.

An aged care facility is permitted to accept an accommodation payment from a resident where the resident has a means tested amount at the date of entry equalto or exceeding the maximum accommodation supplement.

Refundable Accommodation Deposits (RADs)
A Refundable Accommodation Deposit (RAD) is like an interest free loan to the aged care facility. The aged care facility is limited as to how they utilise the RAD, as the balance of the bond must be refunded to the resident or their estate when they leave.

RADs are government guaranteed. If the aged care provider becomes insolvent and is unable to refund the RAD the Government will refund the RAD balance.

The permitted uses for a RAD are to provide a capital source of funding for investment in aged care infrastructure, for prudent financial investments and for refunding bonds.

Daily Accommodation Payments (DAPs)
DAPs are calculated by multiplying the RAD by the maximum permissible interest rate and dividing by 365 to determine the daily amount.

DAP = (RAD x maximum permissible interest rate)/365

The maximum permissible interest rate is set by the Government. The interest rate is set at commencement of the accommodation agreement and does not change during the term of the agreement.

As you can no doubt see this is a very complex area, it is highly recommended that you talk with us about any move to Aged Care

Please Note:
The amount of accommodation payment paid as a lump sum, either Refundable Accommodation Deposit (RAD) or Refundable Accommodation Contribution (RAC), is included as an assessable asset when calculating the asset tested amount. This differs from the assets assessment for Centrelink/DVA income support payments where a lump sum RAD or RAC is an exempt asset.