Aged care rad calculator

Moving a parent or loved one into residential aged care in Australia involves one of the more complex financial decisions many families will ever face. The accommodation payment — the amount the aged care facility charges for the room itself — can be paid in three ways: as a lump sum (the RAD), as an ongoing daily payment (the DAP), or as a combination of both. The relationship between these options is governed by a single interest rate set by the Australian Government called the Maximum Permissible Interest Rate, or MPIR.

Understanding this connection before you sign anything is genuinely important. A RAD of $550,000 doesn’t disappear — it’s held by the facility and returned when the resident leaves or passes away. But if you can’t or don’t want to pay the full lump sum, the daily payment that covers the unpaid balance can add up significantly over months and years. This calculator lets you run every scenario before you commit.

How the RAD, DAP, and MPIR Relationship Works

The formula the aged care system runs on

The RAD and DAP are two ways of paying for the same thing — the room. They’re linked by the MPIR, which is an annual interest rate set quarterly by the Australian Government. The formula is:

Daily DAP = RAD amount × (MPIR ÷ 100) ÷ 365

So if the facility’s full RAD is $550,000 and the MPIR is 8.38%:

1. Daily rate = 8.38 ÷ 100 ÷ 365 = 0.02296% per day
2. Daily DAP = $550,000 × 0.0002296 = $126.27 per day
3. Monthly equivalent = $126.27 × 30.4375 ≈ $3,843 per month

That $3,843 per month is the cost of choosing the daily payment option instead of paying the $550,000 lump sum. Over a two-year stay, the total DAP cost would be approximately $92,230 — and unlike the RAD, DAP payments are not refunded when the resident leaves.

Partial RAD — the third option most people don’t know about

Many families don’t realise they can pay a partial lump sum — say $300,000 of a $550,000 RAD — and then pay a DAP only on the remaining $250,000 balance. This is often the most practical option when the family home sale is pending or assets are tied up. In the example above, paying $300,000 upfront means the DAP applies to $250,000:

1. DAP on unpaid balance = $250,000 × 0.0002296 = $57.40 per day
2. Monthly = $57.40 × 30.4375 ≈ $1,747 per month

The partial RAD option reduces the ongoing daily cost significantly compared to paying nothing upfront, while preserving cash for other needs during the transition period.

What the MPIR is and why it matters so much

The Maximum Permissible Interest Rate is set by the Australian Government and published by the My Aged Care website. It’s reviewed quarterly. The rate applies to DAP calculations at the rate that was current on the day the resident entered care — so if the rate changes after entry, it doesn’t retroactively affect existing DAP calculations. This is an important protection for families who locked in a rate when it was lower.

Always check the current MPIR before making any calculations for real planning purposes. The rate pre-filled in this calculator is for illustrative purposes — confirm the live rate at My Aged Care before signing any accommodation agreement.

Australian Aged Care Fees — the Bigger Financial Picture

RAD is just one component of the total cost

The accommodation payment (RAD or DAP) covers the room only. Residential aged care residents also pay:

• Basic daily fee — a standard daily amount set by the government, currently linked to a percentage of the single pension rate
• Means-tested care fee — an additional daily fee based on an assessment of your income and assets conducted by Services Australia. Not everyone pays this — it depends on your financial position
• Extra service fees — optional additional services such as premium meals, hairdressing, or special activities, which vary by facility

The aged care means assessment — conducted by Services Australia — determines how much of your income and assets are counted toward fees. It’s worth completing this assessment before committing to a facility, because the outcome significantly affects the total cost of care.

My Aged Care fees calculator — what exists and what doesn’t

The My Aged Care website has a fee estimator that gives a rough guide to the means-tested fee based on self-reported financial information. It’s a starting point, not a definitive figure — the official assessment is what counts for actual fee purposes. For the RAD/DAP conversion specifically, this calculator gives you the precise arithmetic that the My Aged Care estimator doesn’t always make transparent.

Planning decisions that genuinely change the numbers

One thing that experienced aged care financial advisers notice, and that families often discover too late: the timing of the home sale relative to the entry date can affect the means-tested fee assessment significantly. Assets are counted as of the entry date. If the family home is sold and the proceeds are in the bank at the time of the assessment, they count as assessable assets. If the home is still unsold and the resident intends to return to it (or a spouse still lives there), different rules apply. This is a specialist area where an accredited aged care financial adviser adds genuine value — the Commonwealth’s My Aged Care service can help you find one.

FAQs

What is a Refundable Accommodation Deposit in Australian aged care?

A Refundable Accommodation Deposit (RAD) is a lump sum payment made to a residential aged care facility to cover the cost of the room. Unlike most fees, the RAD is refundable — the full amount is returned to the resident or their estate when they leave the facility or pass away. It functions similarly to a bond, and the facility holds the money interest-free from the resident’s perspective.

How is the Daily Accommodation Payment calculated?

The DAP is calculated as the full RAD amount multiplied by the MPIR (Maximum Permissible Interest Rate), divided by 365 to get the daily figure. For example, a $500,000 RAD at an MPIR of 8.38% gives a daily DAP of $500,000 × 0.0838 ÷ 365 = $114.79 per day. Unlike the RAD, DAP payments are not refunded.

Can I pay part of the RAD and part as a daily payment?

Yes. This is called a combination payment or partial RAD. You pay a lump sum for part of the accommodation cost, and then pay a daily DAP only on the remaining unpaid balance. The daily payment is calculated using the same MPIR formula but applied to the unpaid portion of the RAD only. This is a common option for families waiting on a property sale.

Is the RAD returned when a resident leaves aged care?

Yes. The full RAD — minus any agreed deductions — is returned to the resident or their estate when they leave the facility, transfer to another facility, or pass away. The facility must return the RAD within 14 days of the resident’s departure under the aged care legislation. This is a legal obligation, not a discretionary facility policy.

What is the MPIR and where do I find the current rate?

The Maximum Permissible Interest Rate (MPIR) is an annual interest rate set by the Australian Government and reviewed quarterly. It determines how DAPs are calculated in relation to RAD amounts. The current rate is published on the My Aged Care website. The rate that applies to a resident is the one in force on the day they entered residential aged care — subsequent rate changes don’t affect their existing DAP calculation.

Does the RAD affect the means-tested care fee?

Yes, indirectly. The RAD is treated as an asset for means-testing purposes. However, the way it interacts with the overall asset and income assessment is complex. If you’re paying a large RAD, the corresponding reduction in your liquid assets may reduce the means-tested care fee you’re assessed. This is one of the more counterintuitive aspects of aged care financial planning and a key reason why specialist advice is valuable before making large accommodation payment decisions.

What happens to the DAP payments if the resident passes away?

DAP payments already made are not refunded — they’re the equivalent of rent for the time the resident lived at the facility. The RAD (or any unpaid portion of the RAD balance) is returned to the estate within 14 days. Any DAP payments deducted from a partial RAD balance will have reduced the refundable amount accordingly.