If you or someone you love is moving into residential aged care, there’s a fair chance one question is keeping you up at night: “Do I really have to hand over a huge lump sum?” For most families, the Refundable Accommodation Deposit — or RAD — is the part of aged care that causes the most worry.
The good news is that RADs are far less scary once you understand how they work, what protections are in place, and what changed under the new aged care rules that started on 1 November 2025. Here’s the plain-English version.
What is a RAD?
A Refundable Accommodation Deposit is, in simple terms, an interest-free loan to a residential aged care service. It pays for your room and entitles you to live in the service. Because it’s refundable, the bulk of it comes back to you (or your estate) when you leave care.
Think of it less like a fee you’ve spent, and more like a bond you’ve parked — one the government keeps a close eye on.
Do I have to pay the whole lump sum?
No — and this is the bit that surprises a lot of people. When you look at a provider’s room prices, you’ll see the lump-sum RAD and what it converts to as a Daily Accommodation Payment (DAP). You can choose to:
- pay the full lump sum (RAD), or
- pay the daily payment (DAP), or
- pay a combination of both.
You don’t have to lock this in straight away. Many people start out paying the daily payment and then choose to pay all or part of the RAD later, once they’ve sorted out the sale of a home or had a chance to get advice. If you moved into care from 1 November 2025 and choose the daily payment, that amount is indexed by CPI in March and September each year.
How much should I expect to pay?
RAD prices vary between city and regional areas, and providers set them based on things like local property prices and the quality of the room. It’s not uncommon to see RADs anywhere from around $400,000 up to $758,627. Providers need government approval to charge more than $758,627 (a figure that’s indexed over time).
One tip worth knowing: the published price isn’t always the final price. In some cases you may be able to negotiate a lower rate. You can check published RADs on a provider’s website or via the government’s Find a provider tool.
What changed on 1 November 2025?
This is the update worth paying attention to. For anyone who moved into care from 1 November 2025, providers can now deduct a retention amount of up to 2% per year from the RAD. It’s taken out monthly for up to five years, which means the most you could lose is 10% of the amount you paid.
If you also agree to let the provider deduct other daily fees from your RAD, that would reduce the refundable amount further — so it pays to understand exactly what you’re signing up to before you tick that box.
Is my money safe?
Yes. There are strict regulations covering RADs, and the deposits are government guaranteed where the service is funded by the Federal Government. If a provider were to go into liquidation and couldn’t return your RAD, the government steps in and pays it to you. That’s a genuinely strong safety net — stronger than most people assume.
Will a RAD affect my age pension?
Here’s a piece of good news for many families: RADs are treated as an exempt asset by Centrelink and the Department of Veterans’ Affairs. That means the money tied up in your RAD won’t reduce your age pension.
There’s a catch to keep in mind, though — your RAD does count as an assessable asset when your ongoing care fees are worked out. And because the money is locked away, you’ll want to make sure you’ve still got enough accessible cashflow to comfortably cover your fees and day-to-day living. This is exactly the kind of balancing act where a quick chat with an adviser can save a lot of stress.
When do I get my money back?
When you leave care, your RAD (less any deductions) is refunded to you or your estate. If a resident has passed away, once the executor provides probate to the provider, they have 14 days to refund the RAD. The provider also pays interest from the date care ended until the refund is made, at the lowest deeming rate plus 2% — and if they’re late, a higher penalty rate applies.
Should I let someone else pay my RAD?
Tread carefully here. If a family member pays your RAD, that money is generally considered your money — which can increase other fees and means it flows back into your estate, not theirs. It’s a common area for misunderstandings, so always seek advice before going down this path.
Get the full guide
We’ve pulled together a clear, easy-to-read guide that answers the most common questions about Refundable Accommodation Deposits — what they are, how they’re set, what’s changed, and how the refund process works.
Download our free guide: Refundable Accommodation Deposits (RADs) Explained →
Talk it through with someone local
Aged care decisions are some of the biggest financial calls a family makes — and they usually arrive at an emotional, time-poor moment. You don’t have to work it out on your own. If you’re weighing up a RAD, a daily payment, or the right mix of both, the team at Insight Wealth Planning can help you understand your options and protect your cashflow along the way.
Get in touch with our Newcastle team or book an appointment online — we’ll help you make a well-informed decision with confidence.
This article is general information only and doesn’t take into account your personal objectives, financial situation or needs. The guide referenced is based on Aged Care Steps Pty Ltd’s understanding of the relevant legislation and is used with permission. Before making any decisions, please speak with a financial adviser, registered tax agent or legal adviser about your individual circumstances.