When you begin your research into residential aged care it can be quite daunting, especially when there is a whole new set of lingo to understand! Below we have broken down five important acronyms relating to the price of residential aged care that you will need to become familiar with:
- RAD – The Refundable Accommodation Deposit, is a standard room price set by the respective aged care facility. If a lump sum is paid, this sum will be refunded when you leave the aged care home.
- DAP – The Daily Accommodation Payment is equivalent to a RAD but calculated as a daily amount. You make this payment on a regular basis, up to a month in advance, and it is similar to paying rent. This payment is not refundable.
- DAC – The Daily Accommodation Contribution is a daily contribution charge for accommodation that is advised by Services Australia to the aged care facility to charge the individual, based on the residents means tested outcome. Like a DAP, you make this payment on a regular basis, up to a month in advance, and it is similar to paying rent. This payment is not refundable.
- RAC – The Refundable Accommodation Contribution (RAC) is a lump-sum contribution that is equivalent to the DAC, for accommodation costs in an aged care home. If a lump sum is paid, this sum will be refunded when you leave the aged care home.
- MPIR – The Maximum Permissible Interest Rate is the current interest rate (as at admission date) used to calculate the DAP on a specific RAD value, or the RAC equivalent on a specific DAC.
The RAD and DAP is determined on the quality, location and features of the accommodation and can vary from bed to bed in the same aged care home. The DAP is calculated by multiplying the determined RAD by the current government interest rate (MPIR) and divided by the number of days in that year. The RAC is calculated by dividing the DAC by the MPIR and times by the number of days in that year.
The MPIR was trending lower for many years, however the recent uplift in Interest Rates by the Reserve Bank in Australia has seen the MPIR continue to increase. This increase can have a major impact on residents as they enter an aged care home and also means that the equivalent RAC will decrease.
Aged Care Providers are required to display their accommodation prices in both RAD and DAP figures to prospective residents.
