There are different ways you can pay for your accommodation. The choices are:
The amount you pay is as negotiated and agreed with your aged care home.
Your payment is refunded when you leave the aged care home, less any fees you have agreed to draw down from it and less the retention amounts. Retention amounts are deductions from the lump sum that go to the provider. The amount is 2% of your lump sum per year, for up to five years.
The agreed lump sum cost of your accomodation is converted to an equivalent daily cost, according to a government legislated formula.
This payment is not refunded when you leave the aged care home. It can be considered as rent.
This alternative allows for just part of the full lump sum cost of your accomodation to be paid up front. The proportion not paid up front then becomes the basis for determining your daily payment.
Having paid a partial lump sum, you could choose to draw down your daily payment from it. This would mean that as your lump sum is diminished, your ongoing daily payments would increase.
The partial lump sum payment is refunded when you leave the aged care home, less any fees you have agreed to draw down from it and less the retention amounts. Retention amounts are deductions from the lump sum that go to the provider. The amount is 2% of your lump sum per year, for up to five years.
The daily payments are not refunded when you leave the aged care home.
If you have not paid an accommodation lump sum when you enter your aged care home, you will pay by daily payment. At any time in care, you can choose to pay a lump sum.
If you pay for all of your accommodation costs ie. without a government accommodation co-payment:
RAD: If you pay with a full or partial lump sum, this is called a Refundable Accommodation Deposit or RAD.
DAP: If you pay your accommodation payment as you go, this is called a Daily Accommodation Payment or DAP.
If you pay for part of your accommodation costs and the government pays for the remainder:
RAC: If you pay with a full or partial lump sum, this is called a Refundable Accommodation Contribution or RAC.
DAC: If you pay your accommodation payment as you go, this is called a Daily Accommodation Contribution or DAC.