You may pay for your Aged Care room. The Aged Care home sets the pricing for accommodation payment. Some people will have their accommodation costs paid in full or in part by the Australian Government. This depends on their means assessment. Following a means assessment, if you are to pay the full accommodation cost yourself, you will be subject to pay either a Refundable Accommodation Deposit (RAD) and/or Daily Accommodation Payment (DAP). If you are eligible for government support, you will be subject to pay a Refundable Accommodation Contribution (RAC) and/or Daily Accommodation Contribution (DAC).
The room prices are all published on www.myagedcare.gov.au.
The provider cannot charge more than this amount. You have options on how to pay for your Aged Care Accommodation Payment.
You can pay via
- Lump-sum (RAD/RAC)
- Daily payments (DAP/DAC)
- A combination of a lump-sum payment and daily payments
An individual entering Aged Care may also be subject to pay a means-tested care fee, a basic daily care fee and an extra service fee. Read more in our Aged Care Guide.
Paying your Accommodation Payment via Lump Sum
You can pay for your accommodation in the Aged Care home lump sum. You can pay through a Refundable Accommodation Deposit (RAD) or Refundable Accommodation Contribution (RAC), depending on your means assessment.
- Refundable Accommodation Contribution (RAC): Lump Sum payment of the Aged Care accommodation cost with help from the government
- Refundable Accommodation Deposit (RAD): Lump Sum payment of the Aged Care accommodation cost with the full amount paid yourself.
Any RAD/RAC paid is fully refundable to you or your estate when you leave the facility. It is only reduced if you have agreed to have fees (including Daily Payments) deducted from the balance of the lump sum. The Federal Government guarantees repayment if the Aged Care facility is an approved service provider.
Paying your Accommodation Payment via Daily Payments
You can pay for your accommodation in the Aged Care home with daily payments. The aged care facility will work out the daily payments based on a legislated formula that converts the lump sum to a daily payment price. This is called the MPIR. This payment is made regularly, up to a month in advance, similar to paying rent. If you pay through daily payments, you will need cash flow or cash reserves to make payments. You can make daily payments through a Daily Accommodation Contribution (DAC) or Daily Accommodation Payment (DAP). Whether you pay through a DAC or DAP depends on your means assessment.
- Daily Accommodation Contribution (DAC): Daily payment of the Aged Care accommodation cost with help from the government
- Daily Accommodation Payment (DAP): Daily payment of the Aged Care accommodation cost with the full amount paid yourself.
These daily payments (DAC/DAP) are not refundable to you or your estate when you leave the facility.
Paying your Accommodation Payment via a Combination of a Lump Sum and Daily Payments
You can pay for your accommodation in the Aged Care home with a lump sum payment and daily payments. The lump-sum payment will help to lower the daily payments you will make.
For example, your outstanding Accommodation Payment (RAD or RAC) of $550,000 can convert to a Daily Payment (DAP or DAC) of $125.97 per day ($45,980 pa) using an interest rate of 8.36% per annum.
Suppose you are to pay a Lump Sum payment of $300,000. In that case, the outstanding Accommodation Payment of $250,000 can convert to a Daily Payment of $57.26 per day ($20,900 pa).
Alternatively, you could pay a part Lump Sum (RAD or RAC) and ask the provider to deduct the Daily Payments (DAP or DAC) from this lump sum. You should note that this strategy will see your daily payments increase slightly each month, which is in line with the reductions in your accommodation payment balance.
How much does the Government contribute to my Aged Care Accommodation Payment?
The amount the government will contribute to your accommodation payment is determined by a means test assessment.
- If your assets are below $61,500 and your income is below $33,735 p.a., the Australian Government will pay your accommodation costs.
- If your assets are above $206,039.20 and your income is above $82,018.15 p.a., you will need to pay for the full cost of your accommodation. Your aged care facility can negotiate and agree to your accommodation price.
- Any amount between these thresholds means you pay for part of your accommodation. Services Australia or the Department of Veterans’ Affairs (DVA) will determine your contribution amount based on your means assessment. The Australian Government will pay the rest.
At Progressive Financial Solutions, our goal in the Aged Care space is to remove the added financial challenges you will face when placing a loved one into an Aged Care facility, allowing you to focus on the care of your loved ones. You can read more about our Aged Care advice services here.