What is a RAD?
A Refundable Accommodation Deposit (RAD) is the lump sum price of a room in a residential aged care facility. Despite its size — often $300,000 to $800,000 — it is not a fee. It is a deposit that is refunded in full when the resident leaves or passes away, minus any outstanding charges.
Think of it like a very large, interest-free security bond. You pay it when your parent moves in, the facility uses the capital to fund its operations, and the full amount is returned to the family or estate when the stay ends. The facility cannot keep any of it beyond what is owed for unpaid care fees.
Every aged care facility sets its own RAD price for each room type. Prices vary enormously — from around $100,000 in rural areas to over $1,000,000 in premium metropolitan locations. The RAD is the single largest financial variable in aged care and the one that families have the most control over, because you choose the facility.
You are never required to pay a RAD. If you do not have the capital (or choose not to tie it up), you can pay a Daily Accommodation Payment (DAP) instead — the daily rental equivalent. The choice between RAD and DAP is one of the most important financial decisions families face when a parent enters care.
How much is the RAD?
RAD prices are set by individual facilities, not by the government. They vary based on location, room type (single vs shared, ensuite vs standard), and the facility's quality and amenities. Here are typical ranges:
| Region | Typical RAD range |
|---|---|
| Metropolitan Sydney / Melbourne | $400,000 – $900,000+ |
| Metropolitan Brisbane / Adelaide / Perth | $350,000 – $650,000 |
| Regional cities | $200,000 – $450,000 |
| Rural / remote | $100,000 – $300,000 |
Facilities must give you a written accommodation agreement specifying the RAD before you sign. You then have 28 days after moving in to pay. During this 28-day window, you are charged the DAP on a daily basis — once the RAD is paid, the DAP stops. This gives families time to arrange funding, such as waiting for a property settlement.
What is a DAP?
The Daily Accommodation Payment (DAP) is the rental alternative to paying the RAD as a lump sum. Instead of handing over hundreds of thousands of dollars upfront, you pay a daily charge calculated from the RAD price using the government-set Maximum Permissible Interest Rate (MPIR).
Example: $550,000 × 8.38% ÷ 365 = $126.24 per day ($46,078 per year)
The MPIR is set quarterly by the government (on 1 January, 1 April, 1 July, and 1 October). As of January 2026, the MPIR is 8.38%. When the MPIR changes, the DAP for existing residents adjusts automatically.
Unlike the RAD, DAP payments are not refunded. They are a genuine ongoing cost — money spent, not deposited. Over a typical 2.7-year stay, a DAP of $126.24 per day adds up to roughly $124,400 in non-recoverable accommodation costs. This is the central trade-off in the RAD-vs-DAP decision.
RAD vs DAP: which is better financially?
The answer depends on one key comparison: the MPIR versus what your money could earn if invested elsewhere. If the MPIR is higher than your expected investment return, the DAP costs more than the opportunity cost of tying up the RAD — so the RAD is the better financial choice.
| Scenario | Better choice | Why |
|---|---|---|
| MPIR (8.38%) > investment return (~5%) | Pay the RAD | DAP costs more than the interest you would earn |
| MPIR < investment return | Pay the DAP | Your investments earn more than the DAP costs |
| Capital not available | Pay the DAP | No choice — DAP requires no upfront capital |
| Uncertain stay length | Consider combination | Reduces DAP while preserving some liquidity |
However, the decision is not purely mathematical. Families also need to consider liquidity (will you need the capital for Helen's care later?), the home sale timeline, and whether the capital is accessible at all. See the worked example below for a full comparison.
The true cost of the RAD
Because the RAD is refunded, its real cost is not the deposit itself — it is the opportunity cost: the investment income you forgo by tying up the capital in the facility instead of keeping it invested.
Example: $550,000 × 5% = $27,500 per year in forgone investment income
Compare that to the DAP on the same room: $46,078 per year. The RAD saves you $46,078 − $27,500 = $18,578 per year in net terms. Over an average 2.7-year stay, that is roughly $50,000 in savings — which is why the RAD is usually the better choice when the MPIR exceeds investment returns.
This framing is important because many families see the RAD as “losing” $550,000. In reality, you are choosing between two costs: the opportunity cost of the RAD ($27,500/year) or the DAP ($46,078/year). The RAD is refunded; the DAP is not. Understanding this reframes the decision from “can we afford the RAD?” to “which option costs less over the stay?”
The combination option
You do not have to choose all-RAD or all-DAP. Many families pay a partial RAD and a DAP on the remaining balance. This is a practical middle ground when you have some capital but not enough for the full RAD, or when you want to keep some cash in reserve.
| Component | Amount |
|---|---|
| Partial RAD paid | $200,000 |
| Remaining balance | $350,000 |
| DAP on remainder | $350,000 × 8.38% ÷ 365 = $80.34/day |
| Annual DAP cost | $29,324 |
The $200,000 partial RAD is refunded on exit — only the DAP payments are non-recoverable. Compared to a full DAP of $126.24/day, the combination reduces the daily cost by $45.90 while keeping $350,000 of capital accessible (assuming the original assets were $550,000+).
You can change the RAD/DAP split at any time during the stay. If you later sell the family home and want to pay off more of the RAD to reduce the DAP, you can do so. The facility must accept additional RAD payments.
Worked example
Let's compare all three payment options side by side for a realistic scenario to see the total cost over an average stay.
Option A: Full RAD
- Upfront payment: $450,000
- Daily accommodation cost: $0
- Opportunity cost: $450,000 × 5% = $22,500/year × 2.7 years = $60,750
- Refund on exit: $450,000
- True cost over 2.7 years: $60,750 (forgone investment income)
Option B: Full DAP
- Upfront payment: $0
- Daily accommodation cost: $450,000 × 8.38% ÷ 365 = $103.33/day
- Total DAP over 2.7 years: $103.33 × 986 days = $101,883
- Investment income earned (capital stays invested): $450,000 × 5% × 2.7 = $60,750
- True cost over 2.7 years: $101,883 − $60,750 = $41,133
Option C: Combination ($200,000 RAD + DAP on $250,000)
- Upfront payment: $200,000
- Daily accommodation cost: $250,000 × 8.38% ÷ 365 = $57.40/day
- Total DAP over 2.7 years: $57.40 × 986 days = $56,598
- Opportunity cost on RAD portion: $200,000 × 5% × 2.7 = $27,000
- Investment income on retained $250,000: $250,000 × 5% × 2.7 = $33,750
- Refund on exit: $200,000
- True cost over 2.7 years: $56,598 + $27,000 − $33,750 = $49,848
| Option | True cost over 2.7 years | Capital tied up |
|---|---|---|
| A: Full RAD | $60,750 | $450,000 |
| B: Full DAP | $41,133 | $0 |
| C: Combination | $49,848 | $200,000 |
How the refund works
When the resident leaves the facility — whether to return home, move to another facility, or on passing — the RAD must be refunded within 14 calendar days. This is a legal requirement under the Aged Care Act.
The facility may deduct the following from the refund:
- Any outstanding DAP amounts (if a combination was being paid)
- Any unpaid basic daily fees or means-tested care fees
- Any other deductions agreed in writing in the resident agreement
The facility cannot withhold the RAD for any other reason. In practice, most refunds are straightforward — the full RAD is returned minus any final invoices. The refund is paid to the resident, their estate, or their nominated representative.
RAD decisions for couples
When one partner enters care and the other remains at home, the RAD decision becomes more complex. The key considerations are:
- Liquidity for the partner at home. Paying a large RAD from shared assets can leave the partner at home with insufficient capital. If the couple has $600,000 in assets and pays a $450,000 RAD, only $150,000 remains for Helen — which may not be enough if she also needs care later.
- The family home. If the partner remains in the family home, it is exempt from the aged care asset test indefinitely. Selling the home to fund the RAD may provide the capital, but also removes the exemption and the partner's residence. See our Family Home guide.
- What if both partners need care? If the second partner later enters care, a second RAD may be needed. Paying the first RAD in full may leave nothing for the second. A combination option (partial RAD + DAP) can preserve flexibility.
Finding a facility's RAD price
All aged care facilities in Australia are legally required to publish their RAD prices. You can find them in two ways:
- My Aged Care website (myagedcare.gov.au) — search for facilities in your area and view their published room prices, including RAD and DAP for each room type.
- Ask the facility directly — during a tour or inquiry, the facility must provide a written accommodation agreement specifying the RAD price before you commit.
When comparing facilities, remember that RAD prices vary enormously — even between facilities in the same suburb. Comparing two or three options can save hundreds of thousands of dollars. Look at both the RAD and the room quality, care reputation, and distance from family.
Next steps
The RAD-vs-DAP decision is one of the most significant financial choices in aged care. Here is how to move forward:
- Model your options — use our free aged care cost calculator to see the RAD, DAP, and combination options side by side for your specific situation.
- Compare facilities — search RAD prices on myagedcare.gov.au for facilities in your preferred area. Shortlist 2–3 options.
- Understand the full fee picture — the RAD/DAP is only one of three cost components. Read our How Aged Care Fees Work guide for the complete breakdown.
- Consider professional advice — an accredited aged care financial adviser can model the RAD-vs-DAP decision against your investment portfolio, tax position, and estate plans. This is especially valuable for couples and families with significant assets.