Calculator
Aged Care Fee Estimator (RAD/DAP)
Aged Care Fee Estimator (RAD / DAP)
$275,000 paid upfront · $275,000 retained (accrues as DAP)
Daily Accommodation Payment
$63.14
$883.92 per fortnight · $1,920.42 per month
RAD vs DAP Analysis
At 8.38% MPIR, the DAP of $63.14 per day quietly costs $69,135 over 3 years — roughly $25,788.12 more than the earnings your capital would realistically keep. Unless you strongly value liquidity, shifting more of the room price into a refundable RAD (which costs nothing beyond inflation and comes home when you leave) is usually the cheaper path.
*Indicative only. Room prices, MPIR, care-fee thresholds, deeming rates and the basic daily fee are set by the government, your provider and Services Australia and change over time — confirm all figures with the provider's key features sheet, Services Australia and a licensed adviser before deciding. Educational only, not financial advice.
Understanding Aged Care Accommodation Costs
Moving into residential aged care in Australia triggers a set of costs that catch most families off guard. The largest is accommodation. Every government-approved home publishes a room price — commonly $400,000 to $900,000 in metropolitan areas — and residents who can afford to pay for their room in full have two main choices: a Refundable Accommodation Deposit (RAD), a lump sum paid to the provider and refunded when you leave or your estate is settled, or a Daily Accommodation Payment (DAP), which accrues daily on whatever portion of the room price you do not pay upfront. The DAP is not a mystery fee — it is simply the unpaid balance multiplied by the Maximum Permissible Interest Rate (MPIR), a government-set rate, divided by 365. At an MPIR of 8.38%, leaving $300,000 unpaid costs about $68.88 every day, or more than $25,000 a year, for as long as you remain. You can also combine the two: pay part of the room as a RAD and let the rest accrue as a DAP, which is exactly the trade-off this calculator lets you model. On top of accommodation sit the ongoing care fees. Every resident pays the basic daily care fee, set at 85% of the single Age Pension. Many residents also pay a means-tested care fee, calculated by Services Australia from your income and assets — and here the RAD decision matters enormously: a paid RAD is exempt from the assets test for both aged care fees and the Age Pension, while money kept in the bank stays assessable and is deemed. That interaction means the cheapest accommodation route on paper is not always the cheapest after Centrelink does its sums. This estimator puts the daily cost, the multi-year totals, and the keep-the-capital-versus-pay-the-lump-sum trade-off in one place.
How the RAD/DAP Numbers Are Built
The accommodation maths starts with your published room price and the share you choose to pay upfront. The lump-sum portion is your RAD — refundable in full, and exempt from the Centrelink and aged-care asset tests while you reside. Whatever you do not pay upfront becomes the DAP base: DAP per day = unpaid amount × MPIR ÷ 365. The MPIR is set by the government (it has moved above 8% in recent years, so check the current figure); providers may charge less but not more. The tool annualises the daily figure to fortnightly and monthly amounts and multiplies out your expected stay to show the true multi-year total. The keep-versus-pay comparison then treats the decision as an investment choice. Money you keep back stays invested at your assumed return, so the tool compounds the unpaid amount at your rate over the stay and subtracts the DAP actually paid. If the earnings kept exceed the DAP, holding capital wins; if not, paying the RAD is cheaper. Two real-world wrinkles push the answer toward the RAD: investment earnings are taxable, while the DAP is not deductible; and the unpaid balance is deemed at the aged-care deeming rate for means-testing regardless of what it actually earns. Finally the tool estimates the means-tested care fee using the legislated structure: half of annual income above the single threshold, plus deemed income (assets above the threshold × the deeming rate), converted to a daily figure over 364 days. It adds the basic daily care fee to show your combined daily cost. The estimate uses single-resident thresholds by default — couples are assessed differently — and the fee is capped at the cost of your care, so treat it as a planning figure to confirm with Services Australia.
Expert Insights
A Paid RAD Is Centrelink-Exempt — Retained Cash Is Not
This is the single most misunderstood rule in aged care. A RAD you have paid to the provider is exempt from the assets test for both the Age Pension and the means-tested care fee for as long as you live in care. The same money sitting in a term deposit remains assessable and is deemed at the government rate. For many full-rate homeowners, paying the RAD therefore lifts the Age Pension and cuts the means-tested fee — a double saving that pure interest-rate comparisons miss entirely.
The DAP Compounds Against You Every Single Day
Because the DAP accrues on the full unpaid balance for your entire stay, a short stay barely dents it while a long stay is punishing: at 8.38% MPIR, every $100,000 left unpaid costs about $8,380 a year. Families often focus on preserving capital for inheritance and accept a DAP 'for now', then watch the unpaid balance quietly consume tens of thousands over a four or five-year stay. Model the expected stay honestly — median stays run around two to three years, but one in three residents exceeds five.
You Usually Have 28 Days to Decide — Use Them
After entry, providers must give residents at least 28 days to choose how to pay for accommodation. Interest as DAP generally only accrues from the end of that window. That month is a genuine planning window: sell the family home, restructure term deposits, or arrange a RAD-backed loan (several lenders let you fund a RAD against the former home, with interest capped at the MPIR so it stays Centrelink-neutral). Rushing the decision in a crisis is where families lose the most.
Actionable Tips
- 1
Compare Your Real After-Tax Return Against the MPIR
The break-even between paying a RAD and accruing a DAP is your genuine after-tax return versus the MPIR. If your term deposit pays 5% and the MPIR is 8.38%, the DAP costs nearly 3.4 percentage points a year on every unpaid dollar — before the deeming and Age Pension effects. Only keep capital unpaid when it is earning more than the MPIR after tax, or when you specifically need the liquidity.
- 2
Check Whether a Low-Means Route Applies
Residents with assets below the low-means threshold (roughly $61,500, indexed) may qualify for government-supported accommodation — paying a small Refundable Accommodation Contribution instead of the full room price, with the gap subsidised. Before assuming you must fund a $600,000 room, complete the Services Australia assessment; part-pensioners and modest-asset families are sometimes pleasantly surprised.
- 3
Stress the Family Home Question Separately
The former home is exempt from the aged-care assets test for the first two years and, if a protected person (such as a spouse or carer) still lives there, indefinitely — but unpaid DAPs and RADs interact with its status in ways that differ between Centrelink tests. Before selling the house to fund a RAD, model both paths: a house sale converts an exempt asset into assessable cash unless it goes straight into a RAD, and a RAD-backed loan can keep the house while still capping your cost at the MPIR.
Real-World Examples
Margaret's Half-and-Half Won Twice
Margaret, 84, entered care in Geelong with a $580,000 room price. Her adviser split the payment: $290,000 RAD, $290,000 DAP while her unit sold. The paid RAD lifted her Age Pension under the assets test, and when the sale settled eight months later she converted the remaining DAP into a second RAD. Her combined daily cost fell by $34 a day, and the full deposit came home to the estate three years later.
The Chen Family Kept the Cash — and Paid for It
The Chens left their father's $400,000 room fully on DAP 'to protect the inheritance', keeping his savings in a 4.8% term deposit. At 8.38% MPIR the DAP cost $33,520 a year against $19,200 of interest — a $14,000 annual bleed, and his assessable assets still reduced his pension. After two years they paid a RAD from the term deposit; his fee position improved immediately and the refundable deposit remained his family's money.
A RAD Loan Kept the Farm Intact
When Tom, a wheat farmer, needed care at 81, selling land mid-season would have been costly. Instead he funded his $500,000 RAD with a specialist aged-care loan secured against the farm, with interest capped at the MPIR and capitalised against the refundable deposit. The RAD was Centrelink-exempt, his pension rose, and the family repaid the loan from the refunded deposit when he passed away five years later — the farm never changed hands.
Glossary of Terms
- RAD (Refundable Accommodation Deposit)
- A lump sum paid to an aged-care provider for your room, refundable in full when you leave or via your estate; exempt from the assets test while you reside in care.
- DAP (Daily Accommodation Payment)
- The daily amount accruing on any part of the room price not paid as a RAD, calculated as the unpaid balance × MPIR ÷ 365.
- MPIR (Maximum Permissible Interest Rate)
- The government-set maximum rate providers may apply when converting a RAD into a DAP; it also caps interest on RAD-backed loans.
- Means-Tested Care Fee
- An extra contribution toward care costs, assessed by Services Australia from your income and assets; half of income above the threshold plus deemed income above the asset threshold.
Frequently Asked Questions
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Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the Australian tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.