One option to pay for your accommodation is to pay the requested lump sum. This is called a Refundable Accommodation Deposit, or a RAD for short.
You can check the service provider's website to see the maximum RAD you may be asked to pay if you accept an offer of a place.
But paying the lump sum is only one choice. You can choose to pay the RAD in full or pay a daily accommodation payment (DAP) on any amount not paid. The DAP is like paying rent or interest on an outstanding loan. You could also choose to pay a part RAD and part DAP.
Paying for advice from a qualified financial planner may help you to make this choice.
If you choose to pay a RAD, the service provider will hold this money on trust for you. The full amount is refunded when you leave or pass away.
If I pay a RAD how secure is my money?
The Federal Government guarantees the repayment of refundable accommodation deposits (RADs) which have been paid to an approved residential aged care service. This means if the service provider goes into liquidation or faces bankruptcy and cannot afford to repay your RAD, the Government will pay you back the full amount owing. This makes your money very secure.
You should always check that the service provider is approved to ensure your deposit is covered by the guarantee.
If I pay a RAD, when is it refunded and how much will I receive back?
If you pay for your accommodation as a refundable accommodation deposit (RAD), you will receive this money back after you move out.
If you pass away, the RAD is repaid to your estate. The service provider will generally ask to see a copy of probate for your estate. The full RAD should be refunded to your executor within 14 days of seeing probate.
The full amount you paid as a RAD is refunded unless you have asked the service provider to deduct any other fees from the RAD or you have unpaid fees outstanding, which the provider can deduct from the RAD. Your accommodation agreement will explain which outstanding fees can be deducted from the RAD.
Before making any decisions, contact an accredited aged care adviser to talk through the care options available to you, the costs associated with them and the best way to restructure your finances to pay for the appropriate care.
Getting the correct information and advice can help you understand your options and the implications for your cash flow, Centrelink or other concession cards, aged care fees, taxation and estate planning. This will allow you to make the best choices for your future care, security and happiness.
We can talk you through the care options available to you, the costs associated with them and the best way to restructure your finances to pay for the appropriate care.
Bill Savellis
Senior Financial Adviser
Having navigated the Aged Care landscape for both of his parents, Bill understands how challenging it can be to make the right decisions for your future care needs. That's why he believes that everyone should have access to financial advice during this time. Bill has been a Financial Adviser for over 22 years, and is passionate about helping others access the financial advice they need. Drawing from his own experience in the financial sector, Bill develops strategic, personalised plans to support transitions to Aged Care or Home Care.
Disclaimer: Prepared without taking into account your objectives, financial situation or needs. Before acting on any information in this article, Olive Grove Financial Advice recommends that you consider whether it is appropriate for your circumstances. Information in this article was correct and current as of 22 February 2022. Olive Grove Financial Advice is operated by Bill Savellis through The Financial Advisor (Australia) Pty Ltd ABN 72 619 546 431, who is a Corporate Authorised Representative (No. 1278394) of Havana Financial Services Pty Ltd.
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