Moving into residential aged care is a significant step, and one of the most important financial decisions attached to it is how to pay for the room. The legislation sets out the payment options clearly, along with the timeframe for choosing between them.
With so much happening at once, it is easy for families to feel rushed. Understanding the decision period is what stops the choice being made under pressure.
What the 28-day rule meant
Once a resident moved into residential aged care, they had 28 days from the date of permanent entry to decide how to pay for the room. That cost sits separately from the daily care fees, and it can be met in one of three ways.
- Refundable Accommodation Deposit (RAD) — a lump sum, refunded when the resident leaves or passes away, less any agreed deductions.
- Daily Accommodation Payment (DAP) — an ongoing daily fee, based on the government-set interest rate.
- A combination of RAD and DAP — a mix of both, offering flexibility depending on the family’s circumstances.
The decision period exists to give families time to consider the options and seek advice. Aged care providers should not require the choice to be made before the resident moves in.
Whichever option is chosen, unless the full lump sum is paid, the remaining balance is covered as a daily accommodation payment.
What changed from 1 July 2025
New contribution rules apply to people moving into residential care from 1 July 2025. The same three payment options remain available, but the decision no longer has to be made within 28 days.
Instead, the daily accommodation payment became the default method, and a lump sum can be paid later if and when it suits. The change is intended to reduce the financial pressure on families and allow more time to decide properly.
Making the right choice
This is a substantial financial decision, and it is worth weighing savings, assets and longer-term needs before committing. An adviser accredited in aged care advice can set out the options and the consequences of each.
If you or someone in your family is moving into aged care, start planning as early as you can. The right advice makes the decision easier to feel confident about.