RAD payment rules from 1 November 2025: DAP first until Services Australia means outcome

RAD payment rules: Amendments to the Aged Care Act (effective from 1 November 2025)

ByRob Laurie

RAD Payment Rules: What Changed from 1 November 2025 (and How to Plan)

Last updated: 13 February 2026. This article is general information only and doesn’t consider your objectives, financial situation or needs. Aged care rules and guidance can change. For official information, check My Aged Care and the Department of Health and Aged Care’s accommodation payments and contributions guidance.

RAD payment rules changed from 1 November 2025 in a way that can catch families off guard at the worst possible moment: entry into residential care. In some situations, even if you have funds available and you want to pay a Refundable Accommodation Deposit (RAD), you may be required to start with a Daily Accommodation Payment (DAP) until the correct assessment outcome is in place.

In plain English: some residents can be pushed into a short “DAP-only” window at the start. That creates a cashflow shock when families are already juggling medical decisions, contracts, and (often) a home sale.

This guide explains what the new RAD payment rules mean in real life, why it happens, and the practical steps that reduce delays and protect cashflow.

If you want help modelling the numbers for your family (RAD vs DAP, home timing, Centrelink impacts, and a realistic bridge plan), see Aged Care Financial Planning Services. For pricing transparency, visit Aged Care Financial Advice Costs, or reach us via Contact Us.

Key takeaways

  • From 1 November 2025, some new residents may start on DAP-only until the correct assessment outcome is issued (even if a RAD is intended).
  • This is usually a timing problem, not a “you can never pay a RAD” problem. But timing can cost real money if the DAP runs for weeks.
  • Delays are often avoidable (missing documents, unclear authority, incomplete property/investment details).
  • The interest rate used to calculate DAP matters. The Department of Health publishes current and historical BIR/MPIR rates: BIR/MPIR for residential aged care.
  • The first 2–8 weeks are where families make expensive “default decisions”. A simple checklist and a cashflow bridge plan reduces panic.
  • Home decisions (sell vs rent vs keep) should be made with modelling, not urgency. Start with the family home when moving into care.

Table of contents

A quick refresher on accommodation payments

When someone enters an aged care home, they agree to a room price. My Aged Care explains the main payment options as:

  • Refundable lump sums (RAD or RAC)
  • Daily payments (DAP or DAC)
  • A combination (part lump sum + part daily)

A RAD is a refundable deposit (refunded when the resident leaves, subject to any permitted deductions/retentions that apply under the rules and the agreement). A DAP is a daily, rent-like payment and is not refundable.

If you want a plain-English explanation of RADs, DAPs and how the trade-offs work, see Understanding RAD and DAP in aged care.

RAD vs DAP (and why the interest rate matters)

The DAP is calculated using a government-set rate (commonly referred to as the Maximum Permissible Interest Rate (MPIR)) on the unpaid portion of the accommodation price. The Department of Health publishes current and historical rates here: BIR/MPIR for residential aged care.

That’s why the forced DAP-only window matters: even a few weeks of daily payments can be a meaningful cash cost, especially if you were planning to pay a RAD quickly.

To compare the options in a practical way, read RAD vs DAP: which option is more cost-effective? and (if you want the interest mechanics explained clearly) MPIR and interest rates in aged care.

Accommodation payments vs accommodation contributions

Depending on the person’s assessed means, they may pay:

  • an accommodation payment (where the resident pays the agreed price), or
  • an accommodation contribution (where government assistance applies and the resident contributes some of the cost).

The Department of Health provides an overview of how providers charge accommodation and how Services Australia advice is used: Accommodation payments and contributions.

For families, the important point is that accommodation sits inside a broader cost picture. If you need a full overview, start with A guide to the costs of aged care.

The new RAD payment rules: why some residents start on DAP-only

From 1 November 2025, changes to the legislative framework introduced an “interim” approach that can apply when a person enters permanent residential care without the necessary means assessment outcome yet finalised.

In practical terms, this is the scenario that causes the shock:

  • You’re ready to pay a RAD (or part RAD),
  • but the assessment outcome hasn’t been issued yet,
  • so the person is charged as a daily accommodation payment (DAP) for the interim period.

This doesn’t mean “you can never pay a RAD”. It means timing now matters more than ever. The easiest way to avoid long DAP-only periods is to reduce delays in the assessment and documentation process.

If your entry is imminent and you want help mapping the likely timeline and your cashflow exposure, we do this modelling as part of Aged Care Financial Planning Services.

Why this is awkward in real life

Cashflow shock and assessment delays

Families often plan a RAD based on a property settlement date, an investment sale, or a superannuation strategy. The forced DAP-only window can derail that plan because:

  • assessment timelines can stretch out if information is missing or inconsistent
  • providers still need payment while the process runs
  • the daily cost creates pressure to make rushed decisions (often “sell the house now”)

Home decisions are frequently where the biggest mistakes happen. Before you rush into selling or renting, read the family home when moving into care and renting vs selling the family home.

Authority and documentation issues

Delays are commonly caused by authority problems (who can sign and provide information). If someone is acting for a parent, make sure the legal authority is clear early: Power of attorney and aged care.

Means assessments: the gatekeeper to paying a RAD

The means assessment process is often the “gatekeeper” that determines what the resident contributes and what advice the provider can rely on. My Aged Care explains the assessment process here: Means assessments for residential aged care.

For many families, it’s also helpful to understand the practical side of means testing and what is assessed. Start here: Aged care financial means test (plain-English guide).

The fee advice letter (and why providers ask for it)

Providers commonly ask for the fee advice letter because it clarifies the resident’s fee pathway and reduces the risk of later adjustments. If you’re stuck in a DAP-only period, chasing missing information and responding quickly to requests can materially reduce how long you pay daily charges.

What changed about RAD vs DAP timing

My Aged Care already explains an important principle: you can’t be forced to choose your accommodation payment option before you move in, and you can pay a lump sum after entry; until you do, daily payments apply: Accommodation costs and payment options.

The difference since 1 November 2025 is that, in certain circumstances, the resident may be treated as being in an interim daily-payment phase until the necessary assessment outcome is issued — which can make paying a RAD immediately on day one harder in practice.

Practical strategies to reduce the DAP-only window

1) Start the means assessment process earlier than you think you need to

If residential care entry is likely in the next few months, don’t wait for a crisis. Aged care administration is not “instant”. Start with My Aged Care and keep documentation ready.

2) Avoid avoidable delays (authority and documentation)

Have these ready:

  • certified ID documents
  • bank statements and investment summaries
  • superannuation/pension details
  • property documents (title/rates notice/ownership details)
  • gifting history where relevant
  • trust/company documents if assets are held in structures

If someone is acting under authority, confirm it early: Power of attorney and aged care: what you need to know.

3) Model the cashflow bridge before you decide “sell the house now”

When daily payments start, families often panic-sell assets. A better approach is to build a short-term bridge plan first (cash, planned drawdowns, staged asset sales) and only then decide on property timing.

If you’re weighing a property decision, also consider whether equity release is relevant (for some families it is, for others it isn’t): using home equity for aged care costs.

Mid-article help: If you want us to map your likely DAP exposure, reduce avoidable delays, and model a RAD/DAP plan that protects cashflow, see Aged Care Financial Planning Services or use Contact Us.

Funding the DAP while you wait

If you’re temporarily forced into DAP-only under the new RAD payment rules, the planning question becomes: where does the daily cash come from?

Common approaches include:

  • Short-term liquidity bridge: cash savings, offset/redraw (where appropriate), or a planned drawdown from investments.
  • Orderly asset sales: staged sales to avoid “fire-sale” conditions.
  • Combination strategy later: once permissible, paying part RAD to reduce ongoing DAP while keeping a cash buffer.

To understand the accommodation funding options clearly, start with Understanding RAD and DAP in aged care and the comparison guide RAD vs DAP: which option is more cost-effective?.

Other post–1 November 2025 changes to keep on your radar

Alongside the interim DAP-only issue, families should be aware that accommodation rules and settings can be updated over time (including how daily payments are calculated and how certain retention/deduction concepts apply under current guidance).

The safest place to check for official, current settings is:

Family checklist: entry day to week 8

Before entry (ideally)

At entry

  • Read the accommodation agreement carefully (room price, payment method, interim daily payments).
  • Budget for DAP immediately, even if your plan is to pay a RAD soon.
  • Create a simple “what happens next” timeline (assessment steps, document requests, expected decision points).

In the first weeks

Worked example (simple numbers)

Example only: A room price is $550,000. The family intends to pay the full RAD, but the assessment outcome isn’t available on entry, so the resident pays DAP for 35 days.

What to take from this example: even short delays can cost real cash. The exact daily amount depends on the rate in force and the agreed price. The MPIR/BIR settings are published by the Department here: BIR/MPIR rates.

How families reduce the cost:

  • start assessment paperwork earlier
  • avoid missing-document delays
  • build a short-term bridge plan (so you don’t panic-sell assets)
  • use a part RAD strategy once allowed, to stabilise ongoing cashflow

If you want help modelling this for your position and timing, we can help: Contact Us.

Common mistakes we see

  • Waiting to start paperwork until a bed is offered. By then, time pressure is extreme.
  • Assuming “we have the money, so we can pay the RAD immediately”. The interim DAP-only period can still apply.
  • Rushing to sell the home. This can lock in a poor outcome and create avoidable stress. Read home rules in aged care first.
  • Underestimating DAP cashflow. The first month is when the budget gets tested.
  • Trying gifting or asset transfers in a panic. This can backfire. Read gifting rules and deprivation before taking action.

FAQs

What are the RAD payment rules from 1 November 2025?

From 1 November 2025, families need to be aware that in some circumstances a resident may start with DAP payments during an interim period until the relevant assessment outcome is issued. Check current guidance on My Aged Care and the Department of Health accommodation guidance.

Does this mean I can’t pay a RAD at all?

Usually it’s a timing issue, not a permanent restriction. Many residents can pay a RAD (or part RAD) after entry; the challenge is that daily payments may apply until the correct assessment and agreement conditions are satisfied.

How long can the DAP-only period last?

It depends on how quickly the assessment and documentation process runs. Missing documents, unclear authority, complex asset structures, and incomplete property details commonly cause delays.

How is the DAP calculated?

The DAP is calculated using the MPIR on the unpaid accommodation amount. The Department publishes current and historical rates: BIR/MPIR rates. For a plain-English explanation, see MPIR explained.

Should we sell the family home to fund the RAD?

It depends. Selling can solve liquidity, but it can also create pension and aged care consequences depending on circumstances. Before acting, read renting vs selling the family home and the family home when moving into care.

What if we’re acting for a parent and paperwork is slow?

Authority issues are a frequent cause of delays. Make sure the legal authority is clear and usable early: power of attorney and aged care.

When advice is worth it (and what we do)

These rule changes can create a short, expensive decision window. Advice is often valuable when:

  • there’s an at-home spouse and cashflow must be protected
  • you’re choosing between RAD vs DAP vs a combination and want a numbers-based plan
  • the home decision (sell/rent/retain) is uncertain
  • assets are complex (trusts, companies, multiple properties)

We help families reduce panic and prevent expensive “default decisions” by modelling accommodation choices, mapping the interim DAP risk, and building a cashflow bridge plan that fits your timeline. Learn more at Aged Care Financial Planning Services. For fee transparency, visit Aged Care Financial Advice Costs. To speak with us, use Contact Us.

General advice only disclaimer

This information is general in nature and doesn’t consider your objectives, financial situation or needs. Aged care and Centrelink rules can change—confirm details with My Aged Care, Services Australia and the Department of Health or seek personal advice.

Similar Posts