A RAD and a DAP are not two different rooms. They are two different ways of paying for the agreed accommodation price in a residential aged care home.
Families are often asked to discuss a room price while they are also dealing with hospital discharge, care decisions and paperwork. Understanding the payment language first makes the conversation much easier.
Start with the agreed room price
Every person entering permanent residential aged care agrees on a room price with the provider. The provider publishes a maximum price for each room type, but a lower price can be negotiated. The amount a person is actually required to pay also depends on the outcome of the means assessment.
What is a RAD?
A Refundable Accommodation Deposit is a lump sum paid towards the full agreed room price when the resident is not receiving government accommodation assistance.
- It can be paid in full or in part.
- The remaining refundable balance is returned when the resident leaves care, after permitted deductions.
- For people first entering care on or after 1 November 2025, providers retain 2% per year from the daily RAD balance for up to five years.
- The RAD balance is counted as an asset for the aged care means assessment, but is exempt from the Age Pension means test.
What is a DAP?
A Daily Accommodation Payment is the non-refundable daily amount paid instead of the unpaid portion of the RAD. It is worked out using the agreed room price and the government-set maximum permissible interest rate.
For residents entering under the post-1 November 2025 accommodation arrangements, DAPs are indexed on 20 March and 20 September. Daily payments are like rent: they are not refunded.
Can you pay a combination?
Yes. A resident can pay part of the room price as a RAD and pay a reduced DAP on the remaining amount. A larger lump sum generally reduces the daily accommodation payment.
Full RAD
No DAP on the room price once the full RAD is paid, but retention may reduce the refundable balance under the newer arrangements.
Full DAP
Preserves cash initially, but the daily accommodation payment is ongoing and non-refundable.
Combination
Can balance available cash and ongoing cash flow, but the figures should be modelled clearly.
Low-means arrangements
Equivalent lump-sum and daily contribution terms apply when the government assists with accommodation costs.
Can fees be deducted from the RAD?
A resident can ask the provider to deduct the remaining DAP from a part RAD. Over time, that reduces the lump sum and increases the daily payment. A provider may also agree to deduct other aged care fees from the lump sum. This affects the remaining balance and should be tracked carefully.
Can a family member pay the RAD?
Yes, but a family-funded lump sum is still treated as the resident’s asset for aged care means-assessment purposes. Families should also document whether the payment is a gift or loan and obtain legal advice before entering a private loan arrangement.
What should a proper comparison show?
- The agreed room price.
- The applicable MPIR and the calculated DAP.
- Full RAD, full DAP and realistic combination scenarios.
- Expected retention deductions under the newer arrangements.
- The resident’s available cash flow and other ongoing fees.
- The effect of using savings, selling assets or retaining the family home.
Need help understanding your figures?
Aged Care Fee Experts provides plain-English fee calculations, accommodation comparisons and practical Services Australia support without recommending financial products or telling families what decision to make.
Book a Complimentary Initial ConsultationOfficial sources used
- My Aged Care – Understanding aged care home accommodation costs
- My Aged Care – Aged care home costs and fees
Government rates and thresholds change. The source pages should be checked again when a calculation is completed.
General information only: This guide does not provide financial, legal or tax advice. Outcomes depend on individual circumstances, provider agreements and the rules, rates and thresholds applying at the relevant time.