The squeeze
After a hospital call, the room price can look like a wall of cash. Many families are asset-rich and cash-poor. Your parent may own a home. They may not have a large income. That is the squeeze this guide is for.
The room can be paid as a Refundable Accommodation Deposit (RAD), a Daily Accommodation Payment (DAP), or a combination of both. You are never required to pay a RAD. The RAD is a deposit, not a fee.
The money in a RAD remains yours, with one caveat for new entrants. From 1 November 2025, providers may retain 2% a year, capped at 10% over five years. Pre-November 2025 RADs stay fully refundable. Those two groups are different. A RAD paid before 1 November 2025 is still fully refundable.
The official daily amount uses this room's advertised maximum, not another room's price:
This page does not publish a typical Australian RAD. Room prices vary by home and by room. Use the advertised maximum for the room in front of you.
How families have funded it
These are ways people have paid. They are not ranked, and they do not choose a path for your parent.
Pay the daily amount from pension or other income
You are never required to pay a RAD. Some families pay the Daily Accommodation Payment from the Age Pension, super income, or other cash coming in. The daily amount is not refunded. It is a cost, not a deposit.
A mix: some cash now, daily on the rest
A mix is common. Part of this room's advertised maximum is paid as a deposit. The daily amount applies only to the unpaid remainder, using the same official formula. This is how some people have done it. It is not a recommendation.
Sell the home (there is a timing gap)
Sales take months. You then have 28 days after moving in to pay a deposit if you choose that path. Families often pay the daily amount in the gap, then pay a deposit after settlement. Selling includes the proceeds in the means test. Do not rush this decision.
Rent the home, and put rent toward the daily amount
Some families rent the home and use the rent toward the daily amount. Rent may cover some or all of that daily amount. Once the home is rented, it is usually included in the assets test, and the rent is treated as income. That can change the pension and the care contribution.
Leave the home vacant
Partner at home: the home is typically exempt. Vacant and not rented: exempt for up to two years from entering care. Rent or sell: included. Leaving it vacant generates no rent. It can give the family time to decide.
Specialist RAD loan against the home
Some lenders offer a loan secured against the home, paid to the facility as a deposit, and repaid when the home later sells. Interest is charged. This is a private product. It is one way people have bridged a sale. It is not a recommendation.
Reverse mortgage or equity release (private)
A private reverse mortgage or equity release borrows against the home. Interest compounds. The debt can grow while your parent is in care. ASIC MoneySmart explains that this can affect the Age Pension, living costs, and whether someone else can stay in the home. This page explains the instrument. It does not recommend it.
Home Equity Access Scheme (government)
This is a voluntary government loan against Australian real estate. Services Australia can pay it as a fortnightly amount, a capped lump-sum advance, or both. The advance is limited to a share of the maximum pension rate in a 26-fortnight window. That is usually an income top-up. It is usually not a full RAD lump sum. Interest compounds. Check the live rules on Services Australia.
Super, savings, or family help
Some families use savings, a super withdrawal, or help from adult children for part of a deposit or for the daily amount. Super timing and tax treatment need a qualified adviser. A deposit paid by family can still count in the resident's aged care means assessment.
How the home is treated
The family home can be sold, rented, or left vacant, and each is treated differently. There are two tests: the Age Pension assets test, and the aged care means assessment used for care contributions. They can move together.
| Situation | Usual treatment |
|---|---|
| Partner (or other protected person) at home | Typically exempt while they remain. |
| Vacant and not rented | Exempt for up to 2 years from entering care. |
| Rented or sold | Included. Rent is treated as income. Sale proceeds become cash assets. |
Official starting points: Services Australia, real estate assets, My Aged Care, means assessments, and the Department of Health means assessment overview.
Why people see an adviser
The home, the pension, and the fees move together. A calculator can convert this room's RAD into a daily amount. It cannot tell you which mix, sale, rent, or loan fits your parent.
Services Australia sends a fee advice letter after the means assessment. Get that letter before you sign. An accredited aged care financial adviser is often needed for the numbers that sit around the letter: the home, the pension, and the estate.
Sources
- Department of Health, Disability and Ageing, Accommodation payments and contributions: the room can be a RAD, a DAP, or a combination. Official formula DAP = agreed room price × MPIR ÷ 365.
- Department of Health, Disability and Ageing, BIR and MPIR for residential aged care (publication date 1 July 2026). Quarter 1 July to 30 September 2026: 8.43%.
- Department of Health, Disability and Ageing, RAD and RAC retention: from 1 November 2025, 2% a year, limited to five years.
- Services Australia, Real estate assets: illness-related care exemption for up to two years; partner still living there; rent treated as income.
- My Aged Care, Means assessments for residential aged care, and Understanding aged care home accommodation costs.
- Services Australia, Home Equity Access Scheme and HEAS advance payments. DSS Social Security Guide 1.2.3.50: fortnightly loan and capped advances.
- ASIC MoneySmart, Reverse mortgage and home equity release.