When an older Australian moves into permanent Commonwealth regulated Residential Aged Care — such as a nursing home — they may be asked to pay an Accommodation Payment. This payment covers the cost of your room, including your share of the building and maintenance costs, not your day-to-day care and living expenses.
These payments are separate from the Basic Daily Fee and any Means Tested Care Fee you may pay for your personal and clinical care.
Residential aged care facilities must provide safe, comfortable, and modern accommodation for older Australians. The Australian Government subsidises part of the cost of aged care services, but residents with sufficient means are expected to contribute to the cost of their accommodation.
By contributing an Accommodation Payment, residents help ensure aged care providers can build, renovate, and maintain facilities — offering better living environments for everyone.
Whether you pay an Accommodation Payment — and how much — depends on your income and assets. This is determined through the Residential Aged Care Combined Assets and Income Assessment you complete (using the SA457 and SA485 forms) when you move into permanent residential care.
The maximum price for each room must be published and approved by the Aged Care Pricing Commissioner if it is above the threshold. Providers cannot charge you more than this published price.
You can choose to pay for your accommodation in three ways:
The Refundable Accommodation Deposit is a lump sum paid upfront to cover your accommodation costs. It is fully refundable when you leave residential care or pass away, minus any amounts you’ve agreed to have deducted for other fees or charges.
Key features:
If you choose not to pay some or all of the RAD as a lump sum, you will pay a Daily Accommodation Payment instead. The DAP is like paying rent for your room. The DAP amount is calculated using the unpaid RAD balance and the Maximum Permissible Interest Rate (MPIR).
The DAP is not refundable — it is a regular payment to your provider for the cost of your accommodation.
The formula for calculating the DAP is:
DAP = (Unpaid RAD balance) x (MPIR) / 365
For example, if the RAD for your room is $500,000 and you choose not to pay any lump sum:
This means you would pay $109.04 per day for your accommodation component of the fees and charges.
The MPIR is set by the government and used to calculate the DAP. It reflects the cost to the aged care provider of not having the lump sum amount available to invest in maintaining or developing facilities.
The MPIR changes quarterly — it is the maximum rate that can be used to calculate your DAP. Your provider must use the MPIR that applies on the date you enter care — the MPIR is now indexed to the CPI. The current MPIR is 7.96 % pa (as at 20th March 2026.
Latest MPIR figures are available on My Aged Care - Understanding Aged Care Accommodation Costs..
Yes! Many residents choose to pay part of their accommodation payment as a RAD and pay the rest as a DAP.
For example:
This combination approach allows you to keep access to some funds while reducing your daily payment amount.
Each aged care facility sets prices for each room type, within government guidelines. The maximum price must be published on the provider’s website, in their written materials, and on the My Aged Care website. Providers cannot charge more than this maximum published price for that room.
For RADs above $ 758,627 (current threshold), the price must be approved by the Aged Care Pricing Commissioner.
If your income and assets are below certain thresholds (single persons assets below $214,884 - the government may subsidise your accommodation costs fully or partially.
This means you may not need to pay a RAD or DAP at all. Your provider will receive accommodation supplements from the government instead.
When you leave care or pass away, your provider must refund the RAD (minus any agreed retention amounts) within:
Government rules strictly protect these deposits. If your provider goes out of business, your RAD Lump Sum paid is guaranteed by the government.
The RAD is counted as an asset after the first 28 days but is not deemed for income purposes. This means it can impact your Age Pension eligibility, so it’s wise to get independent financial advice before deciding how much to pay as a lump sum.
If you don’t have enough assets to pay a lump sum, you can pay the full amount as a DAP instead. If you can’t afford either, you may be eligible for government help through the means test.
Example 1: Paying the full RAD
Robert sells his home and pays a full RAD of (say) $750,000 for his room. He does not pay any DAP because he has paid the entire amount upfront. This lump sum is fully refunded to his estate when he passes away.
Example 2: Paying a full DAP
Margaret wants to keep her home and does not pay any lump sum. Her RAD for her room is $500,000. Using an MPIR of 7.96%: DAP = ($500,000 x 7.96%) / 365 = $109.04 per day. Margaret pays this daily amount from her pension or savings and does not pay a lump sum RAD.
Example 3: Combination
Norma decides to pay $250,000 as a RAD and the rest as a DAP. Norma's unpaid RAD balance is $250,000. Using an MPIR of 7.96%: DAP = ($250,000 x 7.96%) / 365 = $54.52 per day.
You have the right to:
Accommodation Payments can be complicated — don’t make decisions alone:
Remember, the best choice depends on your personal circumstances — there is no one-size-fits-all answer.