This can benefit people who:

  • are liable to pay an accommodation payment for aged care
  • are receiving a social security/DVA means tested payment

Potential Benefits:

  • Paying a RAD saves the person DAP on the outstanding accommodation payment balance at the government interest rate (currently 5.96%pa)
  • Amounts invested in a RAD are exempt under income and assets tests for social security purposes
  • RAD paid is an assessable asset for the aged care means test assessment however they are not deemed
  • Choosing a more expensive room and paying a higher RAD may result in an increased social security entitlement and reduced aged care fees.
  • Choosing a room or facility with a higher accommodation payment may provide a higher standard of accommodation

Things to be aware of:

  • RADs are government guaranteed in the event the aged care facility becomes bankrupt
  • Once a RAD is paid the aged care facility does not have to refund the RAD until the person leaves the aged care facility
  • Costs involved in selling existing investments to pay the RAD
  • Consider person’s estate planning wishes as RAD is returned to the estate of the person upon their passing

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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.