Residential Care Guide
RAD / DAP Interest Rate - Maximum Permissible Interest Rate (MPIR)
What is a RAD, DAP and MPIR ?
When you begin researching residential aged care, you will hear about three acronyms relating to the price of residential aged care accommodation; they are essential to understand.
- The Refundable Accommodation Deposit (RAD) is a standard room price set by the aged care home, and paid as a lump sum deposit which is returned to the family when the care recipient is no longer a resident at the home
- The Daily Accommodation Payment (DAP) is a daily payment which can be paid as an alternative to paying a large lump sum deposit payment
- The Maximum Permissible Interest Rate (MPIR) is the Commonwealth regulated maximum interest rate used to calculate DAP on the agreed RAD value
The RAD and DAP is loosely based upon the quality, location and features of the accommodation and can vary from aged care homes in the local area and can also vary from room to room in the same aged care home.
If an aged care home wants to charge more than $550,000 for their RAD, they need to seek approval from the Aged Care Pricing Commissioner.
The DAP is calculated by multiplying the RAD by the current government interest rate (MPIR) and divided by the number of days in that year.
Aged Care Providers must display their accommodation prices in both RAD and DAP figures prior to charging their clients.
From the day of entering care, the new resident has 28 days to work out whether they want to pay the facility a lump sum, daily payment or some combination of the two.
Under the Living Longer, Living Better reforms, the resident must be left with a minimum asset value of 2.25 times the basic age pension at the time of entry.
That sum is subject to quarterly change, but currently it means a resident must be left with at least $61,500 if they choose to pay at least part of the accommodation costs by refundable deposit.
The introduction of the RAD and DAP was predicted to increase marketplace competition and broaden consumer choice.
Alongside the introduction of the RAD and DAP, a means test measuring a combination of assets and income determines how much the government will contribute to a person’s accommodation.
A person’s home is considered a part of their assets, unless a spouse or dependant relative still lives there.
Maximum Permissible Interest Rate (MPIR) - Historical Rates
| Period | MPIR |
|---|---|
| 1/10/2024 to 31/12/2024 | 8.38% |
| 1/07/2024 to 30/09/2024 | 8.36% |
| 1/04/2024 to 30/06/2024 | 8.34% |
| 1/01/2024 to 01/03/2024 | 8.38% |
| 1/10/2023 to 31/12/2023 | 8.15% |
| 1/07/2023 to 30/09/2023 | 7.90% |
| 1/04/2023 to 30/06/2023 | 7.46% |