Aged care fees and charges - accommodation payments 065-05020020

The type of accommodation payment a care recipient will pay depends on the rules in place:

• on the care recipient’s date of admission to permanent residential aged care, and
• the scheme their means assessment is assessed under

Note: this section also covers:

• existing (continuing) care recipients who move to a different aged care provider on or after 1 July 2014
• those who elect to opt in to the new arrangements

The assessment of income and assets determines if a care recipient is required to pay any accommodation costs. This assessment may result in the care recipient being required to pay:

• no accommodation costs, or
• an accommodation contribution, or
• an agreed accommodation payment where the care recipient is liable to pay the full cost of their accommodation

Paying a combination of a lump sum payment and daily payment gives care recipients the option to have their daily payments deducted from their lump sum. This results in the total balance of a lump sum reducing over time as daily payments are deducted. Other amounts such as care fees or the costs of additional services can be deducted if agreed between the care recipient and the provider.

Accommodation contribution

A care recipient is assessed as a low means care recipient if the care recipient’s daily means tested amount on the day they enter care is less than the maximum accommodation supplement amount for that day. Care recipients assessed as low means may need to pay a contribution towards their accommodation costs. They can pay this as a:

• Lump sum - Refundable Accommodation Contribution (RAC), or
• Daily Accommodation Contribution (DAC), or
• a combination of both the RAC and DAC

The amount of accommodation contribution varies depending on:

• changes to care recipient’s income and assets
• if the services meets the 40% Supported Resident Ratio
• if a service is significantly refurbished or newly built

Care recipients have 28 days from the date (or proposed date) of entry to care to choose how the accommodation contribution is paid.

Payments must be made daily if a care recipient does not choose how to pay the accommodation payment within 28 days.

Interest may be charged on contributions that have been outstanding for more than one month. The rate of interest cannot exceed the maximum permissible interest rate (MPIR) effective on the day of entry.

The Resources page contains examples of means tested accommodation costs from 1 July 2014 and information on how a service calculates a RAC.

Accommodation payment

An accommodation payment is assessed on a care recipient’s daily means tested amount on the day they enter residential care.

If the means tested amount is equal to or more than the maximum accommodation supplement amount for that day the care recipient is assessed as not low means. Care recipients assessed as not low means, or with a means not disclosed (MND) status, are not eligible for assistance with their accommodation costs. They can pay the agreed accommodation cost as one of the following:

• Lump sum - Refundable Accommodation Deposit (RAD), or
• Daily Accommodation Payment (DAP), or
• a combination of both the RAD and the DAP

The amount of accommodation payment is negotiated directly with the aged care provider. Care recipients have 28 days from the date (or proposed date) of entry to care to choose how the accommodation payment is paid:

• in full by a Refundable Accommodation Deposit (RAD), or
• a combination of a smaller RAD and a Daily Accommodation Payment (DAP), or
• pay in full by DAP

Note:

• where a choice is not made within 28 days, the care recipient will have to pay by non-refundable daily payments
• if a choice is made to pay a RAD within 28 days, the care recipient will not be required to pay the RAD until 6 months after the date of entry, and will be charged daily payment until the RAD is paid
• a care recipient cannot be required to pay any accommodation payment before they enter a service

Interest may be charged on daily accommodation payments that have been outstanding for more than one month. The rate of interest cannot exceed the MPIR effective on the date of entry.

The Resources page contains examples of means tested care accommodation costs from 1 July 2014. It also contains instructions on calculating the equivalent daily accommodation payment (DAP).

An amendment to the Aged Care Subsidy Principles in 2016 changed the calculation of an accommodation payment balance if there is an outstanding charge or encumbrance over the payment. For example, a Refundable Accommodation Deposit (RAD) paid after funds were obtained from a loan from a family member. This change ensures that the value of any accommodation payment included for means testing purposes is the total value regardless of the source of the funds such as a loan.

Care recipients who entered permanent residential aged care for the first time prior to 1 July 2014 can pay either an:

• Accommodation Bond, or
• Accommodation Charge

Care recipients who entered care prior to 1 July 2014 pay Accommodation Bonds in low level care and in extra service places. Accommodation Bonds are paid:

• in a lump sum, or
• by periodical payments, or
• by a combination of part lump sum and part periodical payments

Note: some care recipients may choose to pay only the interest on the unpaid bond amount.

Care recipients who entered care before 1 July 2014 pay an Accommodation Charge in high level care that is not in an extra service place. Accommodation Charges are only paid as a daily amount.

RAD/RAC Retention and DAP Indexing (Effective 1 November 2025)

From 1 November 2025, Refundable Accommodation Deposit (RAD) retention, Refundable Accommodation Contribution (RAC) retention, and indexation of the Daily Accommodation Payment (DAP) will apply to certain care recipients entering or transferring to a different residential aged care service.

The RAD/RAC retention and DAP indexation changes will apply to care recipients who enter care or re-enter care where:

• their first entry is on or after 1 November 2025, or
• they were in permanent residential aged care on 1 November 2025 with a post 1 July 2014 assessment scheme and depart that service for a period greater than 28 days prior to re-entering permanent residential aged carethey were in permanent residential aged care before 1 November 2025 with a post 1 July 2014 assessment scheme and departed that service for a period greater than 28 days, and re-entered permanent residential aged care after 1 November 2025
• they were in permanent residential aged care before 1 July 2014 and ‘opted in’ to the 1 November 2025 assessment scheme and moved to a new residential aged care service provider. In these circumstances only DAP indexation will apply

The RAD/RAC retention and DAP indexation changes do not apply to care recipients:

remaining in the same residential aged care service they were residing in on 1 November 2025

• who were in permanent residential aged care prior to 1 November 2025 and move to a new service (with less than 28 days break in care) and they have not ‘opted in’ to the Post 1 November 2025 fee arrangements
• were in permanent residential aged care prior to 1 July 2014 unless they have ‘opted in’ to the Post 1 November 2025 fee arrangements and moved to a new aged care service. In these cases, DAP indexation only will apply.
• who have grandparenting arrangements that apply for their accommodation costs.

Note: there are separate grandparenting arrangements that apply for means tested fees and accommodation costs.

Please refer to the information under the heading, Care recipient enters permanent care on or after 1 July 2014 for details about accommodation costs, the Accommodation Contribution and Accommodation Payments as this remains current.

The Resources page contains Accommodation payments frequently asked questions and examples.

Exempt assets for income support payment purposes include the following lump sum payments:

• Refundable Accommodation Deposits (RAD)
• Refundable Accommodation Contributions (RAC)
• Accommodation Bonds

The current refundable balance of the lump sum payment (if any) is recorded in Process Direct. Payments can be made in multiple lump sum amounts on different dates or may be reduced by daily payments and fees being deducted.

Note: lump sum accommodation payments are not exempt for aged care means assessment purposes. They are included as an assessable asset in an aged care cost of care calculation.

Care recipients can pay accommodation payments as a daily payment via:

• Daily Accommodation Payments (DAP)
• Daily Accommodation Contributions (DAC)
• Accommodation Charges (pre 1 July 2014)

These daily accommodation payments are not recorded in Customer First or Process Direct.

A care recipient and registered provider sign an agreement. The agreement sets out the amount and type of accommodation payment and how it is paid. Lump sum accommodation payments are not the same as entry contributions paid to retirement villages. A lump sum accommodation payment amount is not used to determine home ownership status for social security purposes. See Retirement villages for more information.

From 1 November 2025, RAD/RAC information will also be reported in the aged care providers monthly claim through the Aged Care Provider Portal (ACPP) or through the Business to Government (B2G) channel. The reported information is the lump sum amount that has been paid and is currently held by the registered provider at the date of reporting. This amount may change over time as a result of care recipients drawing down from their RAD/RAC, topping up their lump sum payments, changes in balance due to retention rate reductions or where a registered provider has refunded a RAD/RAC to a care recipient who remains in care within the service. This requirement doesn’t change the financial reporting providers directly make to DHDA.

The provider reported RAD/RAC balance is compared to the balance held on the care recipient record.

Where a discrepancy in the amounts is identified, outside of set tolerances and exclusion criteria, care recipients will be asked via a letter to verify the RAD/RAC balance information, this will ensure their means testing information is correct and up to date.

For further information, see Aged Care – Reported Accommodation Payments and Reviews

Where a care recipient enters care before a means assessment has been completed, the accommodation agreement may include details of an agreed interim accommodation payment/cost. If the care recipient’s means assessment determines the resident status is low means, the care recipient will need to discuss potential refund of the interim accommodation payments made with their aged care provider.