This article explains the Aged Care Bond (also known as the Refundable Accommodation Deposit), how it works, and who needs to pay it.
What is an Aged Care Bond?
Also known as a Refundable Accommodation Deposit (RAD), an Aged Care Bond is one of two ways a senior can finance entering an aged care facility on a permanent basis.
The RAD is a lump sum payment (or part-payment) made by a new resident, that covers the cost of the room they’re moving into.
The RAD is negotiated between the facility and the new resident. The average RAD in Australia is $470,000 but prices vary based on location and facility.
As the name suggests, the RAD is refundable when the resident moves out of the facility.
Here is a summary of aged care fees and what they pay for: All about fees and charges for residential aged care (agedcarereviews.com.au)
Who needs to pay an Aged Care Bond/RAD?
Not everyone will have to pay a RAD to enter residential aged care, as this payment is means tested on the assets and income of the individual new resident.
A resident with annual income over $76,096.50 and more than $197,735.20 in assets will be asked to pay the full RAD for their accommodation. If a resident has income below $32,331.00 and assets below $58,500, the Australian Government will pay the RAD for their accommodation.
To find out whether you need to pay a RAD, you must complete an aged care assessment, and an income and assets test. This can be organised via My Aged Care: Apply for an aged care assessment | My Aged Care
To get a general idea of what you are likely to pay for residential aged care, you can use My Aged Care’s Fee Estimator: Fee estimator: How much will I pay? | My Aged Care
What if I can’t afford to pay the RAD in full?
If your income and assets are above the threshold for government support, but you cannot, or do not wish to pay the RAD applicable to your chosen aged care facility, you can choose to instead pay a Daily Accommodation Payment (DAP).
The Daily Accommodation Payment covers the cost of your room that you have not paid up-front as a RAD. The DAP is paid periodically (usually fortnightly or monthly) and is not refundable.
The DAP is calculated using the amount of the RAD for your chosen room x 365 days x a Maximum Permissible Interest Rate (MPIR) set by the Australian Government. The current MPIR is 8.38%
You can choose to pay for your room using a combination of a RAD and DAP.
Do I need to sell my home to pay an aged care RAD?
In some cases, families opt to sell the family home to pay the RAD in full. However, it is wise to seek professional financial advice when considering the transition into residential aged care, as everyone’s situation is different.
Services Australia offers a free service that can help you explore your options and make informed decisions about your finances: Financial Information Service – Services Australia
When do I need to pay a RAD?
A new resident has 30 days to decide how they will pay for their accommodation – whether via a RAD, a DAP, or a combination of the two.
If a resident chooses to pay a RAD, they have 6 months to complete the payment to the provider. In the interim they will be charged the non-refundable DAP.
What happens to my deposit when I move out.
If you decide to move out of your aged care facility and return to your home, the RAD must be refunded to you within 14 days.
If your care needs change and you need to move to different accommodation, the RAD will be refunded within 14 days, and you will then pay the amount to the new facility.
In the event you pass away, the RAD is refunded to your estate within 14 days of receipt of a certified copy of Grant of Probate.
How do I find a residential aged care room in my price range?
This is where Aged Care Decisions can help. As Australia’s leading aged care placement service, we are passionate about helping families through the aged care journey.
We use our custom-built software to match you with current residential aged care vacancies that suit your budget, location, care needs and personal preferences. We can create a custom residential aged care Options Report for you, with no fuss, no stress and at no cost to you.
It’s easy to compare nursing home options when you have all the information you need in one place.
Our service is 100% free for families because providers pay us a set fee on placement – so we are 100% independent and completely unbiased. Connect with us today and we will assist you in your aged care journey.
