Understanding Daily Accommodation Payments (DAP) in Aged Care

What is the Daily Accommodation Payment (DAP) in Aged Care?

In aged care, your accommodation cost is separate from daily care fees. The DAP is a payment option that allows you to cover your room costs through ongoing daily payments, rather than an upfront lump sum.

Think of the DAP like rent—you pay a set amount each day for the duration of your stay. Unlike a refundable deposit, DAP payments are not reimbursed when you leave the aged care home. Instead, they contribute to the cost of maintaining your accommodation.

How is the Cost of Aged Care Accommodation Determined?

Each aged care home sets its own accommodation prices, which are approved by the Australian Government. These prices are based on factors such as:

• The size and quality of the room
• The location of the aged care facility
• Additional amenities and services offered

Once the accommodation price is set, you have flexibility in how you choose to pay for it.

Payment Options for Aged Care Accommodation

There are three ways to cover your accommodation costs in aged care:

1. Refundable Accommodation Deposit (RAD)

A RAD is a lump sum payment that secures your place in the aged care home. It’s fully refundable when you leave (minus any agreed deductions for care services). This option can be ideal if you have available assets and want to minimise ongoing costs. 

Learn more here: What is RAD in Aged Care

2. Daily Accommodation Payment (DAP)

If you prefer not to pay a large sum upfront, you can opt for the DAP, which allows you to pay your accommodation fee in daily instalments. The amount you pay is calculated using the Maximum Permissible Interest Rate (MPIR) set by the government.

DAP Calculation Example

Let’s say the accommodation price for a room is $550,000, and the MPIR is 4.5%.

• Convert the MPIR to a decimal: 4.5% / 100 = 0.045
• Apply the formula: DAP = (Room price × MPIR) / 365
• Calculate: DAP = ($550,000 × 0.045) / 365 = $67.81 per day

This means you would pay approximately $67.81 per day for your accommodation. Since MPIR rates change periodically, it’s important to check the current rate when making financial decisions.

3. Combination of RAD and DAP

Many people choose a mix of a partial RAD and a reduced DAP to balance their cash flow while preserving financial flexibility. By making a partial lump sum payment, you can lower the daily payment amount.

Government Contributions: Are You Eligible?

Depending on your income and assets, you may qualify for government assistance to help cover your accommodation costs. The Daily Accommodation Contribution (DAC) and Refundable Accommodation Contribution (RAC) work similarly to DAP and RAD but involve government support.

Making the Right Financial Choice

Choosing how to pay for aged care accommodation is a significant financial decision. The right option depends on your cash flow, assets, and long-term financial goals.

At Roccaforte Financial, we specialise in aged care financial planning. As experienced advisors we help you explore your payment options, optimise your financial strategy, and ensure you make informed decisions that protect your wealth and provide peace of mind.

Need Expert Financial Advice?

Navigating aged care costs can be overwhelming, but you don’t have to do it alone. Roccaforte Financial provides personalised aged care financial planning to help you make confident choices. Let’s find the best financial path for your aged care journey. Call us at +61 2 9894 1844 or email us at michael@roccaforte.com.au