RADs: 5 facts you need to know

Navigating the complexities of residential aged care can be a daunting task, especially when it comes to understanding the finances involved. One crucial aspect of this process revolves around Refundable Accommodation Deposits (RADs), which play an important role in determining the cost of a residential care room. This article outlines five facts you need to know about paying accommodation costs as a RAD.

1. Undertsanding RADs

The cost of a residential care room is presented as a lump sum called a RAD. Whether or not a resident pays a RAD depends on a means assessment at the time of permanent entry care. RAD prices are set by the aged care facility and can vary according to the room type and the area in which the facility is located, with amounts over $550,000 needing government approval.

2. Fully refundable RADs

As of 1 July 2014, RADs are completely refundable when a resident leaves or passes away. The refundable amount only decreases if the care provider was authorised to deduct other fees from the RAD. When paying a RAD, it’s essential to ensure that any estate planning is in order, as RADs are refunded to the estate on death.

3. Government-backed Guarantee

If you’ve paid the RAD to an approved provider, it is fully refundable and is guaranteed by the Federal Government. So, if the facility is government accredited and something goes wrong, you won’t lose your money.

4. Flexible payment timing

RADs can be paid at any point in time. In addition to the option to paying a RAD, residents have the choice to pay the accommodation amount as a non-refundable Daily Accommodation Payment (DAP), or a combination of a RAD and DAP. Residents also have 28 days after moving into care to decide and inform the provider of their chosen payment method. For example, if the resident initially selected DAP only, they can pay some or all as a RAD later.

5. Impact on Age Pension

The money paid as a RAD does not count towards the age pension assets test or income test. Consequently, this payment might help retain or increase the amount of age pension received, particularly if the former home is sold.

We’re here to help

At Alteris, we understand that the transition to residential aged care can be emotionally taxing and riddled with uncertainties. Our Lifestyle and Care team is here to provide guidance to improve your circumstances. We can help manage the financial details, empowering you to make the right decisions. Call us today.

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