For a general explanation of how accommodation costs are determined, available payment options and changes effective from 1 November 2025, refer to accommodation costs for residential aged care.
About accommodation payments and contributions
Accommodation payments and contributions are ways residents can pay for their room in an aged care home.
These options apply only to residents who are on the 1 July 2014 or 1 November 2025 accommodation arrangements.
Residents who entered care before 1 July 2014 and still are on the pre-1 July 2014 accommodation arrangements may pay their accommodation costs through a bond or charge.
Accommodation payments
If a resident is assessed as not eligible for government support with their accommodation costs, they will pay the agreed room price. They can pay this as a:
- lump sum – called a refundable accommodation deposit (RAD)
- daily payment – called a daily accommodation payment (DAP)
- combination of both.
Aged care providers must calculate the maximum RAD, DAP and combination amount based on a resident’s entry date and include this information in the accommodation agreement. These amounts may change over time.
Refundable accommodation deposit (RAD)
What a RAD is
A RAD is an upfront lump sum that a resident may pay to cover their accommodation costs. It is refundable when they leave care.
A resident’s RAD cannot be more than their agreed room price.
A RAD is treated as a realisable asset and is included in a resident’s means assessment.
RAD retention
From 1 November 2025, RAD and RAC retention may apply for eligible residents. These amounts are non-refundable and reduce the maximum RAD a provider can hold.
Refunding a resident’s RAD
A provider must refund the balance of a resident’s RAD when they permanently leave their care.
Reporting RAD balances
Under the new Aged Care Act, providers are required to report RAD balances monthly as part of their subsidy claim.
Daily accommodation payment (DAP)
What a DAP is
A DAP is a non-refundable daily payment that a resident may pay to cover their accommodation costs.
Calculating a resident’s DAP
To start, a provider needs to work out the maximum DAP based on the agreed price of the room. This is the highest amount a resident would pay each day before any changes are made due to indexation or other adjustments.
To calculate the maximum DAP for a resident:
- note the maximum permissible interest rate (MPIR) that was current on the day the resident agreed to the room price
- use this formula:
DAP = (Agreed room price × MPIR) ÷ 365
Note: This is the base calculation, before applying RAD and RAC retention deductions or DAP indexation.
The MPIR used in the calculation stays the same while the resident remains in the same room. If the resident voluntarily moves rooms, a new room price and the current MPIR will apply.
Combination option
When a resident chooses to pay part of the room cost upfront as a RAD, the rest of the cost is paid as a DAP.
To work out the DAP component, use this formula:
DAP component = (Agreed room price as a full RAD − RAD paid) × MPIR ÷ 365
Note: This is the base calculation, before applying RAD and RAC retention deductions or DAP indexation.
Example – Calculating a resident's DAP component
Note: the amounts and rates used in this example are for illustration only.
Let’s say the:
- agreed room price is $450,000
- RAD paid is $250,000
- MPIR is 8.38%
DAP = ($450,000 -$250,000) × 8.38% ÷ 365
DAP = $45.92 per day
Drawing the DAP from a resident’s RAD
If a resident chooses to have their DAP taken out of their RAD, their RAD balance will go down over time.
Because of this, their provider must recalculate their DAP regularly, since it’s based on the remaining RAD amount.
When a resident’s DAP and RAD amounts can change
Once a resident agrees to a room price, that price stays the same for as long as the stay in that room. It doesn’t change, even if the way they pay for it does.
However, the amount a resident pays as a DAP or the amount a provider can hold as a RAD may change while the resident is in care.
| Scenario | Impact on a resident’s DAP | Impact on a resident’s RAD |
| DAP indexation | DAP increases from 1 November 2025 for eligible residents who pay some or all accommodation costs as a DAP. | RAD is not indexed. No change to RAD amount or the maximum RAD that can be held. |
| RAD top-ups | DAP is recalculated when a resident pays more of the agreed room price as a RAD. The total agreed price stays the same. | Maximum RAD doesn’t change. Top-up limits depend on previous payments and any deductions already made. |
| RAD retention deductions | No change to DAP. The provider cannot ask the resident to maintain amounts deducted for retention purposes. | RAD balance decreases. The provider cannot ask a resident to top up for retention deductions. The maximum RAD is the agreed price minus retention deductions. |
| RAD deductions (other than retention) | DAP is recalculated to maintain the agreed room price when RAD is used to pay DAP or other fees. | RAD balance decreases. The resident may choose to top up the RAD, pay more DAP or increase their DAP. |
Accommodation contributions
If a resident qualifies for low means status and is eligible for government support with their accommodation costs, they pay an accommodation contribution.
If a resident pays an accommodation contribution, the government covers the difference between the maximum accommodation supplement rate the provider is eligible for and the resident’s means tested contribution.
The resident can pay their contribution as a:
- lump sum – called a refundable accommodation contribution (RAC)
- daily amount – called a daily accommodation contribution (DAC)
- combination of both.
Providers must calculate the maximum RAC, DAC and combination amount based on a resident’s entry date and include this information in the accommodation agreement. These amounts may change over time.
Services Australia sets contribution amounts based on a resident’s income and assets. The contribution amounts can change over time and do not depend on the agreed room price.
Daily accommodation contribution (DAC)
What a DAC is
A DAC is a non-refundable daily payment that a resident may pay towards their accommodation costs.
Maximum DAC that applies to a resident
Services Australia will assess a resident’s income and assets and advise their provider of the maximum DAC that applies to them. This amount may be higher than what the provider is allowed to charge.
How much DAC a provider can charge
The DAC a provider can charge must be no more than the lowest of the following 3 amounts:
- maximum DAC advised by Services Australia based on the resident’s means assessment
- maximum accommodation supplement rate the provider is eligible for on that day
- agreed room price, expressed as a daily rate (DAP)
In regards to amount 3:
- this limit applies to residents who enter an aged care home on or after 1 November 2025
- the agreed room price itself doesn’t change over time, however, the DAP equivalent for that price may increase due to indexation
- for residents assessed as low means, the DAC payable is limited to either the agreed DAP or indexed DAP, depending on which one applies.
See section 298 of the Aged Care Act 2024 for full requirements and section 298-5 of the Rules for exceptions.
Accommodation supplement and its impact on DAC
The maximum accommodation supplement rate a provider is eligible for depends on:
- whether their aged care home is newly built or significantly refurbished, or meets relevant building requirements
- the ratio of supported residents in their aged care home over a calendar month as a whole (see the Schedule of Subsidies and Supplements for Aged Care).
When calculating a resident’s DAC, Services Australia will consider the refurbishment status and building requirements of the aged care home.
They will not consider whether the aged care home meets the 40% supported resident ratio. That’s the provider’s responsibility when charging residents.
Impact of supported resident ratio
If an aged care home has fewer than 40% supported residents over a calendar month as a whole (excluding respite care and residents in extra service places), the maximum accommodation supplement rate the provider is eligible for is reduced by 25% for every day in that month.
This means:
- the maximum DAC a provider can charge will also reduce in calendar months where the aged care home does not meet the 40% supported resident ratio
- a provider may need to adjust DAC amounts for some residents if their supported resident ratio changes.
It is a provider’s responsibility to ensure residents are not overcharged.
Example – Change to the supported resident ratio
Note: the amounts and rates used in this example are for illustration only.
Let’s say:
- Services Australia advises that a resident is eligible to pay a DAC of $55 per day
- the resident chooses to pay this amount daily
- the provider is eligible for the higher accommodation supplement rate that applied at the time of $70.94.
If the aged care home meets the 40% supported resident ratio in a calendar month as a whole, for each day in that month:
- the provider can charge the resident a DAC of $55 per day
- the provider will receive $15.94 in accommodation supplement for the resident ($55 + $15.94 = $70.94).
If the aged care home does not meet the 40% supported resident ratio in a calendar month as a whole:
- the maximum accommodation supplement rate the provider is eligible for is reduced by 25% to $53.21 for each day in that month
- the provider can only charge the resident $53.21 per day
- the provider will receive $0 per day in accommodation supplement for the resident.
For residents who enter care on or after 1 November 2025, the DAC must also be compared to the agreed room price expressed as a daily rate.
The provider must charge the lowest of:
- the DAC advised by Services Australia
- the maximum accommodation supplement rate the provider is eligible for
- the agreed room price (expressed as a daily rate).
Note: If the agreed room price is the lowest amount, it becomes the DAC payable. The accommodation supplement rate the provider is eligible for will not increase to make up the difference.
Example – DAC limited by agreed room price
Note: the amounts and rates used in this example are for illustration only.
Let’s say:
- a resident enters care after 1 November 2025
- Services Australia advises that a resident is eligible to pay a DAC of $65 per day
- the provider is eligible for the higher accommodation supplement rate that applied at the time of $70.94 per day
- the resident agreed to a room price with an equivalent DAP of $60 per day.
The DAC payable is $60 per day, as it is the lowest of the 3 values.
The provider will receive $5.94 in accommodation supplement for the resident ($65 + $5.94 = $70.94). The government will pay an amount of accommodation supplement to the provider that is the difference between the maximum accommodation supplement rate the provider is eligible for on that day and the resident’s means tested contribution. This applies even if the resident pays a lower amount because of the agreed room price.
Note: the agreed room price may not always be the lowest. DAC amounts can change over time.
Refundable accommodation contribution (RAC)
What a RAC is
A RAC is an upfront lump sum a resident may pay towards their accommodation costs. It is refundable when they leave care.
RAC retention
From 1 November 2025, RAD and RAC retention may apply for eligible residents. These amounts are non-refundable and reduce the maximum RAC a provider can hold.
You can’t ask a resident to maintain or “top up” a RAC for retention amounts deducted. This includes asking for a new or higher DAC, or to top up their RAC balance.
Refunding a resident’s RAC
A provider must refund the balance of a resident’s RAC when they permanently leave their care.
Link between RAC and DAC
A resident’s RAC must not be more than the DAC that applies to them at the time. That means a provider cannot charge a resident more upfront (as a RAC) than what they would pay at that time as a daily DAC payment. To ensure this, a provider must calculate the DAC equivalent – this is the lump sum that matches the DAC amount. It’s worked out using the MPIR and it sets the highest RAC a provider can accept.
Because a resident’s DAC may change during their time in care, the DAC equivalent – and therefore the maximum RAC – may also change.
Any amounts of retention previously deducted reduces the maximum RAC that can be paid. Retention deductions do not increase the DAC payable. You can’t ask a resident to maintain or “top up” a RAC for retention amounts deducted.
Calculating a resident’s RAC
If a resident chooses to pay their accommodation contribution as a lump sum, their provider must calculate the DAC equivalent of their RAC. The DAC equivalent is the maximum RAC the resident can be asked to pay.
To calculate a resident’s maximum RAC:
- note the MPIR that was current on the day the resident entered care
- use this formula:
Maximum RAC = ((DAC amount payable × 365) ÷ MPIR ) less any previous retention deductions
Example – Calculating a RAC
Note: the amounts and rates used in this example are for illustration only.
Let’s say:
- Services Australia advises that a new resident is eligible to pay a DAC of $16 per day
- the resident chooses to pay this as a RAC
- the MPIR is 8.17% when the resident enters the aged care home
- there have been no previous retention deductions.
The RAC component is calculated as follows:
- RAC = ($16.00 × 365) ÷ 8.17%
- RAC = $71,481.03
Any amounts of retention previously deducted reduce the maximum RAC that can be paid.
Let’s say in the example above, the provider had previously deducted $1,000 of retention deductions. The RAC payable is reduced to $70,481.03 ($71,481.03-$1,000).
A provider must refund the balance of the RAC when a resident permanently leaves their care.
The applicable MPIR will not change while the resident receives care in an aged care home, even if they move rooms within the home.
Combination option
When a resident chooses to pay part of the room cost upfront as a RAC, the rest of the cost is paid as a DAC.
To work out the DAC component, use this formula:
DAC component = DAC amount – ((RAC balance + retention deductions) × MPIR) ÷ 365
The MPIR used in this calculation is the rate that applied on the day the resident entered care.
Before agreeing to a combination payment arrangement, check that the DAC component is not more than:
- the agreed price for the accommodation
- the maximum accommodation supplement rate the provider is eligible for.
Example – Calculating a DAC in a combination payment
Note: the amounts and rates used in this example are for illustration only.
Let’s say:
- Services Australia advises that a new resident is eligible to pay a DAC of $16 per day
- the resident chooses to pay a part RAC, the RAC paid was $20,000 but the current RAC balance is $19,000 as $1,000 of retention deductions have previously been taken
- the MPIR is 8.38% when the resident enters the aged care home.
The provider must calculate a reduced DAC amount for the resident.
The DAC component is calculated as follows:
- DAC component = $16.00 – (($19,000+$1,000) × 8.38%) ÷ 365)
DAC component = $16.00 - ($20,000 x 8.38% ÷ 365)
- DAC component = $11.41 per day.
Drawing the DAC from the RAC
If a resident chooses to have their DAC taken out of their RAC, the RAC balance will go down over time.
Because of this, their provider must recalculate the DAC regularly, since it’s based on the remaining RAC amount.
When DAC and RAC amounts can change
The amount a resident pays as a DAC or the amount a provider can hold as a RAC may change while the resident is in care. This can happen due to:
- a change in the resident’s personal or financial circumstances
- indexation of aged care fees and thresholds
- a change to the accommodation supplement rate the provider is eligible for.
Services Australia will notify providers if the maximum DAC changes due to a resident’s circumstances or indexation of aged care fees and thresholds.
Services Australia will not consider:
- whether the aged care home meets the 40% supported resident ratio
- the agreed room price
- if the resident has paid any amount of their contribution as a RAC.
It is the provider’s responsibility to take these factors into account when charging residents. This may mean the provider can only charge less than the maximum DAC advised by Services Australia.
| Scenario | Impact on resident’s DAC | Impact on resident’s RAC |
| DAP indexation | DACs are not subject to DAP indexation. However, if the DAC is limited by the agreed price, the indexed DAP may affect how the DAC is calculated. | RACs are not indexed. DAP indexation does not affect the RAC amount or the maximum RAC that can be held. |
| RAC top-ups | If a resident pays more of their accommodation contribution as a RAC after entering care, the DAC is recalculated. The total accommodation cost remains unchanged. | RAC top-ups do not affect the maximum RAC the provider can hold. However, changes in RAC balance may affect how much additional top-up is possible without exceeding the maximum. |
| RAC retention deductions | No impact. The provider cannot ask the resident to maintain amounts deducted for retention purposes by paying a new or increased DAC.
| RAC balance decreases. The provider cannot ask the resident to maintain amounts deducted for retention. Maximum RAC = agreed price minus retention deductions.
|
| RAC deductions (other than retention) | The DAC is recalculated when RAC is drawn down to pay DAC or other fees. The resident may choose to maintain the agreed amount by topping up the RAC, paying more DAC, or increasing the DAC. | RAC balance decreases. The resident may choose to top up the RAC, but drawdowns do not affect the maximum RAC the provider can hold. |
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