RAD or DAP: lump sum or daily payment for an aged care room
A room has one price. You can pay it as a refundable lump sum (RAD), as a daily payment (DAP), or part of each. Here is what each choice costs and what to weigh up.
By the AgedCareClear editorial team. Published 8 November 2026; last checked against the law on 8 November 2026 (what it relies on). Rates from the government schedule of 20 September 2026.
The same room, three ways to pay
The daily payment is interest on whatever part of the room price is not paid as a lump sum, at the maximum permissible interest rate on the day the price is agreed (8.51% for prices agreed now). For a $550,000 room:
| How you pay | Lump sum | Daily payment |
|---|---|---|
| All as a lump sum | $550,000 | $0.00 |
| Half and half | $275,000 | $64.12 a day |
| All as a daily payment | $0 | $128.23 a day |
Daily payment = unpaid amount × 8.51% ÷ 365.
What to weigh up
- The lump sum comes back, less retention. From 1 November 2025 the home keeps 2% a year of it for up to five years; the rest is refunded when your parent leaves, guaranteed by the Australian Government. How the 2% is worked out
- The daily payment is gone once paid. It is the price of not paying the lump sum. Compare it with what that money would earn, or cost, elsewhere.
- Many families do both while a house sells: a daily payment at first, then a lump sum once the sale settles, which brings the daily payment down.
- The means test counts what your parent owns. How the choice changes their contributions is worked out by Services Australia; the calculator shows the effect for a room price you enter.
The government's free Financial Information Service (Services Australia, 132 300) can talk the choice through with you, and a financial adviser can give advice for your parent's situation.