Getting your head around aged care fees can be difficult. One of the most important fees to understand is the Daily Accommodation Payment (DAP) and how you should manage it.
In This Article
What is a Daily Accommodation Payment (DAP)?
A Daily Accommodation Payment is a contribution made towards residential aged care services. The Daily Accommodation Payment is largely based on the value of the Refundable Accommodation Deposit and the amount contributed to it.
By understanding how the Daily Accommodation Payment is calculated, you can determine the beneficial amount that should be contributed to your Refundable Accommodation Deposit, and what the resulting DAP will be.
How is a Daily Accommodation Payment Calculated?
The Daily Accommodation Payment (DAP) is calculated by applying the Maximum Permissible Interest Rate (MPIR) against the unpaid Refundable Accommodation Deposit (RAD), using the following formula.
DAP = (RAD Amount – RAD Paid) x MPIR / 365
The result is the Daily Accommodation Payment, which will be payable in addition to other aged care fees and costs such as the Basic Daily Care Fee, Means Tested Care Fee and any Additional Services Fees.
Daily Accommodation Payment Rate
The Daily Accommodation Payment Rate, or interest rate, is reviewed and subject to change every three months. The DAP interest rate, known formally as the Maximum Permissible Interest Rate (MPIR) as of the 1 January 2024 quarter is 8.38% p.a.
You can find the latest schedule of fees and charges here.
Let’s take a look at an example of how the DAP is calculated using the formula and MPIR.
DAP Calculation Example
Doreen is entering a permanent residential aged care facility where the advertised Refundable Accommodation Deposit for a single room with ensuite is $650,000.
Doreen has the option to contribute as much or as little to the RAD as she likes.
After receiving advice from her specialist aged care financial adviser, it is agreed that Doreen should contribute $400,000 towards her RAD.
Therefore, her DAP will be calculated as follows:
DAP = (RAD Amount – RAD Paid) x MPIR / 365
DAP = ($650,000 – $400,000) x 8.38% / 365
DAP = $20,950 / 365
DAP = $57.40 per day
The more that is contributed to the RAD, the lower the DAP will be, and vice versa. Further, a higher MPIR will mean a higher DAP is payable.
A RAD paid in full will result in no DAP payable.
If you opt to have the DAP paid from the contributed RAD, the DAP will increase each month at a compounding rate as the RAD reduces.
Frequently Asked Questions
Listed below are some frequently asked questions in regard to the Aged Care DAP.
What is the Difference Between DAP and DAC in Aged Care?
The difference between a DAP and a DAC in Aged Care is that a DAP is payable by non-low-means residents on the unpaid RAD amount, whereas a DAC is payable by low-means residents on the unpaid RAC (Refundable Accommodation Contribution) amount.
Can DAP be Deducted from RAD?
A DAP can be deducted from the RAD or can be paid from personal bank accounts. If the DAP is deducted from the RAD, the RAD will reduce each month and the DAP will consequently increase at a compounding rate.
What is the Current DAP Rate?
The current DAP rate is calculated by multiplying the unpaid RAD amount by the Maximum Permissible Interest Rate, which is currently 8.38% as at 1 January 2024.
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