Aged Care Accommodation Payments – Key Terms
The Refundable Accommodation Deposit (RAD), is a standard room price set by the respective aged care facility. It is a lump sum payment that is reflective of the price of the room and is returned in full to the resident (less any agreed deductions) when they depart the facility.
The Daily Accommodation Payment (DAP) is the RAD equivalent paid on a daily basis. The DAP is calculated using the maximum permissible interest rate (MPIR) as published by the Commonwealth Government.
The RAD and DAP is determined on the quality, location, and features of the accommodation and can vary from bed to bed.
If a facility wants to charge more than $550,000 per room for their RAD, they need to seek approval from the Aged Care Pricing Commissioner (ACPC).
The DAP is calculated by multiplying the determined RAD by the current government maximum permissible interest rate and divided by the number of days in a year (365).
Providers must advertise their accommodation prices in both RAD and DAP amounts prior to charging their clients. This must be on the myagedcare.gov.au website, the providers website, and any marketing material provided to prospective residents.
Aged Care Accommodation Payments – Key Terms
The Refundable Accommodation Deposit (RAD), is a standard room price set by the respective aged care facility. It is a lump sum payment that is reflective of the price of the room and is returned in full to the resident (less any agreed deductions) when they depart the facility.
The Daily Accommodation Payment (DAP) is the RAD equivalent paid on a daily basis. The DAP is calculated using the maximum permissible interest rate (MPIR) as published by the Commonwealth Government.
The RAD and DAP is determined on the quality, location, and features of the accommodation and can vary from bed to bed.
If a facility wants to charge more than $550,000 per room for their RAD, they need to seek approval from the Aged Care Pricing Commissioner (ACPC).
The DAP is calculated by multiplying the determined RAD by the current government maximum permissible interest rate and divided by the number of days in a year (365).
Providers must advertise their accommodation prices in both RAD and DAP amounts prior to charging their clients. This must be on the myagedcare.gov.au website, the providers website, and any marketing material provided to prospective residents.
Are You Getting Refunded Correctly?
Historically, residents, their families, and probate solicitors have relied on an Aged Care Provider to provide the correct refund calculation for a RAD or bond refund. The calculations are very complex and on most occasions the values are taken by families as to be correct. We know with our experience that this is not always the case; the provider could be refunding the incorrect amount to a resident. Providers can incorrectly calculate RAD or bond refunds in the following situations:
1. Incorrect calculation of drawdowns of DAP payments when the resident elects to make a payment as a combination RAD/DAP – approximately 25% of residents pay for their accommodation as a combination RAD/DAP payment.
2. When deducting amounts for daily accommodation payments (DAP’s), fees, and other agreed deductions from lump sum payments (RAD/bonds).
3. Incorrect calculation of the interest payable to the estate whilst probate is being granted, this includes the application of the incorrect interest rate that the provider pays to the estate whilst holding their funds during probate.
4. Items deducted from refunds for outstanding payments
The refund amount of a refundable accommodation deposit (RAD) is generally a large proportion of a resident’s or their estates net worth. We can ensure that this amount has been calculated correctly per the complex guidelines set by the Commonwealth Government.
Are You Getting Refunded Correctly?
Historically, residents, their families, and probate solicitors have relied on an Aged Care Provider to provide the correct refund calculation for a RAD or bond refund. The calculations are very complex and on most occasions the values are taken by families as to be correct. We know with our experience that this is not always the case; the provider could be refunding the incorrect amount to a resident. Providers can incorrectly calculate RAD or bond refunds in the following situations:
1. Incorrect calculation of drawdowns of DAP payments when the resident elects to make a payment as a combination RAD/DAP – approximately 25% of residents pay for their accommodation as a combination RAD/DAP payment.
2. When deducting amounts for daily accommodation payments (DAP’s), fees, and other agreed deductions from lump sum payments (RAD/bonds).
3. Incorrect calculation of the interest payable to the estate whilst probate is being granted, this includes the application of the incorrect interest rate that the provider pays to the estate whilst holding their funds during probate.
4. Items deducted from refunds for outstanding payments
The refund amount of a refundable accommodation deposit (RAD) is generally a large proportion of a resident’s or their estates net worth. We can ensure that this amount has been calculated correctly per the complex guidelines set by the Commonwealth Government.
We can review and verify the following components of a RAD (RAC or Bond) refund:
- Confirmation of amount paid by the resident to the aged care provider.
- Confirmation of deductions, including daily accommodation payments (DAP), other agreed items that can be deducted from a lump sum payment, and retentions (if a bond was paid – pre 1 July 2014).
- The calculation of the DAP drawdown amounts from a lump sum payment and the subsequent grossing up of the drawdown on a monthly basis.
- That the correct interest rate charges (ie Base Interest rate (BIR) and Maximum Permissible Interest Rate(MPIR)) have been applied.
- That the refund has been completed in the timeline required under the Aged Care Act and related Principles.
We can review and verify the following components of a RAD (RAC or Bond) refund:
- Confirmation of amount paid by the resident to the aged care provider.
- Confirmation of deductions, including daily accommodation payments (DAP), other agreed items that can be deducted from a lump sum payment, and retentions (if a bond was paid – pre 1 July 2014).
- The calculation of the DAP drawdown amounts from a lump sum payment and the subsequent grossing up of the drawdown on a monthly basis.
- That the correct interest rate charges (ie Base Interest rate (BIR) and Maximum Permissible Interest Rate(MPIR)) have been applied.
- That the refund has been completed in the timeline required under the Aged Care Act and related Principles.
Frequently Asked Questions About Aged Care Billing Dispute Resolution
We understand the RAD process is complicated and confusing, but we hope to help you understand it further. Below are the answers to our most frequently asked questions. Should you have questions that aren’t answered below, don’t be afraid to get in touch, we are here to help.
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Please note: CareCFO / RADCheck can only provide information on the Aged Care system. We do not provide financial advice. For financial advice we can refer you to one of our financial planning partners.
Do you have an aged care billing dispute? Book a call with our friendly dispute resolution team here.
