The Cost of Aged Care and the Refundable Accommodation Deposit (RAD)

May 7th 2019 by Sebastian Markart

Financing Your Home Aged Care

Cover: article > The Cost of Aged Care and the Refundable Accommodation Deposit (RAD)

In Australia, the number of people aged 65 and over is predicted to double in the next 40 years. While it’s often hard to think about becoming frail and needing more care in your twilight years, it’s a reality you’re likely to face. Depending on your care needs, you may choose to move into a retirement village, continue to live at home with assistance, or go into a residential aged care facility (also known as a nursing home).

What are the types of aged care facilities in Australia?

Retirement villages, home care, and residential aged care are the three main types of aged care in Australia. In general, they are quite different from each other because they’re designed for different stages of life and levels of care. However, it’s worth noting that sometimes the distinctions between the types of aged care facilities aren’t always that clear cut. For example, some retirement villages are located on the same site as residential aged care facilities.

Retirement villages are often a lifestyle choice for senior Australians who want to live in a community with other older like-minded people. Many retirement villages will have social clubs, organised activities and visiting health care professionals, and the residents are usually able-bodied and not dependent on staff for support. This style of living is fully funded by the resident themselves.

The Commonwealth Home Support Program (CHSP) is a government funded program that subsidises home care services such as meal delivery, personal care, home maintenance or any other service that supports an elderly person’s health and well-being. People accessing CHSP need to be assessed by an Aged Care Assessment Team (ACAT) to determine the level of care required. While much of the costs will be covered by the government, people still have to pay some fees themselves.

Residential aged care or nursing homes provide supported living for elderly people who need daily personal assistance and can’t live alone. Entry into a nursing home is restricted by need and requires an assessment by an Aged Care Assessment Team to determine the level of support required. Depending on someone’s personal circumstances, government financial support may cover all or some of the costs of residential care.

How is eligibility for residential aged care assessed?

To find out if you’re eligible to move into a nursing home, you need to be assessed by a government-appointed Aged Care Assessment Team. Usually a nurse, social worker or qualified healthcare professional will talk to you (and your relatives if you choose) about how you’re coping with daily life and what kind of support you need. This assessment will determine your eligibility for residential aged care, and which level of care you need (since different facilities offer different levels of care). For more about this process please visit My Aged Care.

What government support is available to pay for aged care costs and fees?

Depending on your financial circumstances, you may be eligible for all or some of your residential aged care fees to be paid by the government. To work this out, an income and assets assessment must be completed. This is an in-depth and complex process that we would recommend getting financial advice on. More information about the process can be found at the Department of Human Services.

While some people do qualify for government support, many have to fund all or a significant portion of residential aged care costs themselves.

How do I pay for residential care costs?

The accommodation payment — the amount required to stay in a nursing home — is one of the biggest financial burdens of residential aged care. Depending on your eligibility for government support, you may be asked to contribute to this cost or pay it in full.

If you’ve been asked to contribute to this cost, you’ll be advised of the amount by the government and asked to pay a refundable accommodation contribution (RAC).

If you’re not eligible for any government support, you will have to cover this accommodation cost in full and pay it in a lump sum called a refundable accommodation deposit (RAD), rental-style payments called a ‘daily accommodation payment’ or combination of both. You have 28 days from moving into a nursing home to decide how you’d like to pay for these fees, and you must make the rental-style payments during this period.

For some nursing homes the RAD can be high as $550,000, and being able to make this payment as a lump sum can help you secure a place in your chosen home.

How can Sellable help free up equity in a family home to pay for aged care?

Moving into a residential aged care facility is often a sad and emotional time for the individual or family involved. And finding the money to pay for residential aged care can make an already stressful situation even worse. In many cases, selling the family home is the best option. However, we would strongly recommend seeking financial advice before doing so to ensure this is the best decision for you and your family’s personal circumstances.

If selling the family home is the right thing to do, then Sellable can help by giving you an upfront guaranteed price, based on an independent valuation, that can be paid as soon as you move out. This means you can free up equity in a family home to pay the refundable accommodation deposit (RAD). Once you accept our offer, we’ll then work to make improvements to the family home to optimise the final sale price. And if it sells for more than the guaranteed price you will receive 75 percent of any upside. All of this means that you can focus on a big life transition and getting the best care possible quickly.

If you’d like more information, or to talk about your situation, give one of the Sellable team a call on 1300 722 910, visit or send us a message.

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