Is it best to be able to pay maximum RAD?

My mum has been in a low care hostel since 2012. She?s 88, has dementia and the usual things, but is overall pretty well. She is on the age pension.
She may need to move to high care in the future and we are wondering whether we need to make provision out of our own funds to help her fund the RAD. She has a RAD of approx $300k where she is currently and looking around, this is well short of the typical ( maximum) RAD being asked these days, and the gap will only increase with time. Using the residential care estimator, it seems she will definitely have to pay a RAD or DAP, but how much of the maximum RAD is opaque. Do they only ask what the income and assets assessment concludes is available or do we have to make up the difference somehow?
We?re not looking at gold plated tap type places but for example, the local well regarded high care facility currently has a max RAD of $390k, which she could not afford without help from us.
Would facilities offer a place to someone who can fund the maximum RAD over someone who can?t? Is she likely to be disadvantaged/ limited to a real extent if she is unable to fund the maximum RAD?
Thank you very much for any advice.

Hi Suelavo,
Each aged care home sets its own pricing depending on factors such as the home’s geographical location, the quality of the build and the size of the rooms ie whether it is a single or shared room, if there is a shared bathroom or ensuite , if there are any additional care services offered etc. According to the government’s website " Providers are able to set the accommodation prices for different kinds of rooms up to a Refundable Deposit of $550,000 or the equivalent daily payment. Accommodation prices above this have to be approved by the Aged Care Pricing Commissioner. The provider and the resident may negotiate any price up to the published amount and this is agreed in writing with the resident before they enter care. However whether the resident can be asked to pay this amount will depend on their means tested amount which may not be worked out prior to entry. This information is published on My Aged Care and must be also published on the provider’s website (if they have one) and in relevant printed material given to the prospective residents so that they can compare different accommodation options and prices and make an informed decision about their accommodation.". As you mentioned you can also pay a combination of the RAD and DAP. This combination method allows residents to pay a partial refundable deposit, ensuring that they are left with the minimum permissible asset level (currently $49,500), and then pay the balance of the agreed price by daily payments. Paying a full RAD ( if you can afford it) does have a few benefits. It is fully refundable when the resident leaves the home (the DAP is not) and is fully guaranteed as long as the aged care home is government accredited. A RAD payment is exempt from the calculation of the pension test but it is assessable for your aged care means tested fees. Navigating the world of aged care fees can be confusing which is why we always recommend that people get specialised aged care financial advice to ensure the best outcome.

Hi. I am currently negotiating the Aged Care mine field.How is the RAD determined? We have been offered $420000 RAD, however, no-one wants to explain how this amount is determined. $420000 will not leave her with enough assets to invest to cover her combined daily care and daily means tested amount. To pay a combined RAD & DAP will cost more in the long term as the MPIR is greater than any current investment interest.Are there rules determining how the RAD amount payable is determined and is there an RAD calculator?

Hi Pippa,
Given that the RAD is refunded within 14 days of a resident leaving an Aged Care home whilst there is no refund for the DAP then it is always best to pay as much of the RAD as you can comfortably afford. The RAD is government backed and any RAD over $550,000 has to be Government approved. The DAP is calculate as a daily cost that is charged monthly if the RAD has not been paid in full. The DAP is calculated as a percentage of the remaining RAD. For example if the RAD on a room is $400,000 and the RAD paid is $300,000 then the resident will pay a DAP of $100,000 x 5.72% / 365. ie $15.68.In addition all residents in aged care, including respite residents, are required to pay a basic daily fee as a contribution towards care and living expenses. This daily fee equates to 85% of the basic single age pension. Depending on the aged care home there may be fees for extra and additional services. Residents may also be asked to pay a means tested fee depending on their income and assets assessment. This is wd out by the Department of Human Services. This fee is capped at $26,566.54 ( as at 20th September 2017) and is indexed on 20th March and 20th September each year.
I hope this helps