Paying for residential aged care
Moving into aged care is a big step, and how you pay for the room is one of the largest financial decisions attached to it.
There is a great deal happening when a family makes this move, and it is easy to feel rushed. The legislation sets out clear options and clear timeframes — understanding both is what keeps the decision from being made under pressure.
The cost of the room is separate from the daily care fees, and it can be met in one of three ways.
Three ways to pay for the room
Refundable Accommodation Deposit
A lump sum payment, refunded when you leave or pass away, less any deductions that have been agreed.
Daily Accommodation Payment
An ongoing daily fee, calculated using the government-set interest rate rather than paid up front.
A combination
Part lump sum and part daily payment, in whatever mix suits your circumstances.
Whichever option you choose, unless the full lump sum is paid, the remaining balance is covered as a daily accommodation payment.
The rules from 1 July 2025
The three options remain. The deadline for choosing between them does not.
Before 1 July 2025
A resident had 28 days from the date of permanent entry to decide how to pay for their room. Providers could not require the decision before the move.
From 1 July 2025
The same three options apply, but the 28-day deadline no longer does. The daily accommodation payment becomes the default, and a lump sum can be paid later if it suits. The intent is to take some of the financial pressure off families at a difficult moment.
Questions families ask
- What is the 28-day rule in aged care?
- Under the rules that applied before 1 July 2025, a resident had 28 days from the date of permanent entry to decide how to pay for their room. That decision was separate from the daily care fees, and providers were not permitted to require the choice before the resident moved in.
- What changed from 1 July 2025?
- New contribution rules apply to people moving into residential care. The same three payment options remain, but the decision no longer has to be made within 28 days. The daily accommodation payment becomes the default, and a lump sum can be paid later if and when it suits.
- What is the difference between a RAD and a DAP?
- A refundable accommodation deposit is a lump sum that is refunded when you leave, less agreed deductions. A daily accommodation payment is an ongoing daily fee based on the government-set interest rate. Unless the full lump sum is paid, any remaining balance is covered as a daily payment.
- Do I have to decide immediately?
- No. If you are unsure or need more time, you can tell the provider you will pay the daily accommodation payment. That lets you move in without committing to a lump sum, and you can change to a lump sum later.
Making the right choice
This is a significant financial decision, and it is worth weighing your savings, assets and longer-term needs before committing. Speaking to an adviser accredited in aged care advice will help you understand the options and the consequences of each.
If you or a family member is moving into aged care, start planning as early as you can. Call Oxley Partners on 02 4868 6100 to arrange a time with Trevor Fair.