What are the Aged Care RAD and DAP?

There seems to be so many acronyms and Forms to deal with in navigating the Aged Care system!
RAD and DAP, RAC and DAC , RAS vs ACAT, ITF.. the list is long.

Let’s dive into two that are important.

What is the difference between the Aged Care RAD and DAP?

For the purpose of this article, both of these acronyms are (only) applicable to residents moving into an Aged Care Facility ( aka a Nursing Home).

Refundable accommodation deposit (RAD)
The RAD is the lump sum room price that the resident agrees to. The Facility must refund the balance of the RAD when the resident permanently leaves their care.

Daily accommodation payment (DAP)
The DAP is a daily accommodation rate, which varies from person to person.  The facility will need to calculate the resident’s DAP based on their RAD.
They do this by:
Noting the Maximum Permissible Interest Rate (MPIR) that was current on the day the resident agreed to the room price; 
and they use this formula:
DAP = (RAD × MPIR) / 365.

Combination option
If a resident chooses to pay a part RAD, a reduced DAP will be calculated as follows:
Reduced DAP = (agreed full RAD − RAD paid) × MPIR / 365

Providers must advertise their accommodation prices in both RAD and DAP figures prior to charging their prospective clients.
From the day of entering care, the new aged care facility resident has 28 days to work out whether they want to pay their particular facility a lump sum, daily payment or some combination of the two.

The Dept Of Health explains it this way:
“All residents negotiate and agree to a room price before moving in to an aged care home, but not all residents will need to pay this price.
Services Australia conducts a means assessment to see if the resident qualifies for ‘low means’ status.
A resident without low means status, or with means not disclosed status, is not eligible for assistance with their accommodation costs. They will pay the agreed room price as an accommodation payment.”

Note: The RAD and DAP are determined on the location, features and quality of the aged care accommodation and can vary from bed to bed.

Something else to remember, the RAD IS refunded to you-  unlike the the interest you pay on the DAP which is gone forever
Either way you get the same accommodation.
However, there are some people that cannot sell their home /don’t wish to sell their home, or perhaps the person going into care may be palliative (so may not be in aged care for a long time) & so wishes to retain their assets as they are, for their family. This all needs to be considered.

Of course, it will come down to what is important to you personally, your priorities, & what are your expectations
e.g. are you prepared to let your savings drop, or are you prepared to lose your pension or part thereof, how important is it for you & your Family to keep the home.. the outcome is different for everyone.

Have you signed up and downloaded our free eBook yet? It has a lot of informative information!

Need help navigating the Aged Care System for you & your Loved Ones?
Contact Susan now!