Blog #02 Fact #01 What is a Refundable Accommodation Deposit (RAD)?

  What is a A RAD?

· Short name for ‘Refundable Accommodation Deposit” 

·  What is it? – An amount of money that someone may be asked to pay for a room in an aged care facility

·  How much is it? – Depending on the aged care facility – it can be up to $550,000 or more

·  How does someone find out if they will have to pay a Refundable Accommodation Deposit? – Once Centrelink have assessed a person’s assets and income, the outcome will determine if they are likely to be asked to pay a Refundable Accommodation Deposit

·  What are these income and asset limits that mean a person pays a Refundable Accommodation Deposit? – For assets over $175,239.20 (as of September 2021) or income greater than $71,781.32 per annum – a person will be asked to pay for a room

· What are some of the options available to a person if they do not have the money or choose not to pay this amount in one payment?  They can pay monthly - like renting and are charged interest (as of October 2021 – the rate charged is 4.01%) The following is an example:

[ $550,000 x 4.01% = $22055 or $1,837.91 per month]

Or

· Pay part of the amount as a lump sum and the balance charged interest and paid monthly

· Pay part as a lump sum and have any balance deducted (at the appropriate interest rate equivalent) from that lump sum on a monthly basis

·  Sell the family home to raise the money

·  Have another family member or someone else pay for the room

· Cash in other assets or investments if no home to pay for the room

· Don’t move into aged and pay for full time care at home

 · If a person pays a lump sum -When is it returned? – Normally when a person leaves the facility or passes away

· When a person passes away – how long till the money is paid to the estate? – Normally after probate and this may take 12 months or longer in some cases

· Does a person receive the whole amount lot back or are there exit fees? – Normally the full amount is paid, however, if the option of having deductions had been chosen – this would be subtracted from the lump sum before returned

· Does a person receive any interest on the funds paid to an aged care facility? No

· Does a person receive any capital gains/losses on funds handed over to an aged care facility? No

· If the aged care facility went into liquidation- are there any guarantees that a person will get their money back? Yes – currently (as of January 2021) there is a government guarantee to have funds returned

·  Is it possible not to have pay a Refundable Accommodation Deposit at all ? Yes