Blog #02 Fact #01 What is a Refundable Accommodation Deposit (RAD)?

  What is a A RAD?

Short name for ‘Refundable Accommodation Deposit” 

What is it? – An amount of money that someone may be asked to pay for a room in an aged care facility

How much is it? – Depending on the aged care facility – it can be up to $550,000 or more

How does someone find out if they will have to pay a Refundable Accommodation Deposit? – Once Centrelink have assessed a person’s assets and income, the outcome will determine if they are likely to be asked to pay a Refundable Accommodation Deposit

What are these income and asset limits that mean a person pays a Refundable Accommodation Deposit? – For assets over $206,039.20 (as of September 2024) or income greater than $84,323.72 per annum – a person will be asked to pay for a room

What are some of the options available to a person if they do not have the money or choose not to pay this amount in one payment?  They can pay monthly - like renting and are charged interest (as of October 2024 – the rate charged is 8.38%) The following is an example:

[ $550,000 x 8.38% = $46,090.00 or $3,840.83 per month]

Or

Pay part of the amount as a lump sum and the balance charged interest and paid monthly

Pay part as a lump sum and have any balance deducted (at the appropriate interest rate equivalent) from that lump sum on a monthly basis

Sell the family home to raise the money

Have another family member or someone else pay for the room

Cash in other assets or investments if no home to pay for the room

Don’t move into aged and pay for full time care at home

 If a person pays a lump sum -When is it returned? – Normally when a person leaves the facility or passes away

When a person passes away – how long till the money is paid to the estate? – Normally after probate and this may take 12 months or longer in some cases

Does a person receive the whole amount lot back or are there exit fees? – Normally the full amount is paid, however, if the option of having deductions had been chosen – this would be subtracted from the lump sum before returned

Does a person receive any interest on the funds paid to an aged care facility? No

· Does a person receive any capital gains/losses on funds handed over to an aged care facility? No

· If the aged care facility went into liquidation- are there any guarantees that a person will get their money back? Yes – currently (as of January 2021) there is a government guarantee to have funds returned

·  Is it possible not to have pay a Refundable Accommodation Deposit at all ? Yes