Negotiating RAD Aged Care: How to Negotiate Your Accommodation Deposit

The published room price at an aged care facility is not necessarily the price you'll pay. Unlike the daily fees set by Services Australia (the Basic Daily Fee, Hotelling Contribution, and Non-Clinical Care Contribution), the Refundable Accommodation Deposit is negotiated between the resident and the provider. And providers negotiate — particularly when a bed has been vacant, when you're comparing offers from multiple facilities, or when you're prepared to pay the full RAD upfront.

Here's how the negotiation works in practice and what questions to ask before committing.

What's Actually Negotiable (and What Isn't)

Negotiable: The RAD room price. The published price is a starting point. Providers set their own accommodation prices (subject to IHACPA approval for any room priced above $758,627). Occupancy pressure, room age, and market conditions all influence willingness to negotiate. Average RADs vary significantly by city — around $723,000 in Sydney, $739,000 in Melbourne, $612,000 in Perth — but individual rooms within a single facility can range from $350,000 to over $1 million depending on size, view, and finishes.

Not negotiable: The MPIR. The Maximum Permissible Interest Rate used to calculate the daily DAP equivalent is set by the government. Currently 8.43% from 1 July 2026. The provider can't offer a lower rate. However, the MPIR is locked at entry — if you believe rates will increase in coming quarters, entering sooner preserves the current rate.

Not negotiable: The 2% annual retention. For residents entering care on or after 1 November 2025, the 2% per annum retention on the RAD balance is a legislative requirement. The provider must deduct it. They cannot waive it, reduce it, or convert it to a different arrangement.

Potentially negotiable: The HELF scope. The Higher Everyday Living Fee — covering premium services, enhanced meals, or superior room finishes — is entirely optional and negotiated after entry. You can select individual components, reject the bundle, or negotiate the pricing of specific items.

When Providers Are Most Willing to Negotiate

Vacant beds. An empty room generates zero revenue. Providers are typically more flexible on price when a room has been unoccupied for weeks. Ask how long the room has been available.

Full RAD payment. A resident who pays the full RAD upfront provides the provider with a large lump sum that can be invested or used for facility improvements. Some providers offer a lower room price for full RAD payment compared to a DAP-only or combination arrangement.

Commitment to stay. While no one can predict a care timeline, a resident whose clinical assessment suggests a multi-year stay represents stable occupancy for the provider — reducing the cost of re-marketing the room.

End of financial quarter. Like many businesses, aged care providers track occupancy metrics quarterly. A bed filled in the final weeks of a quarter improves their reported performance.

Questions to Ask Before the Negotiation

Before sitting down with the admissions team, gather these data points:

"What is the IHACPA maximum benchmark for this room category?" If the room price is below $758,627, the provider didn't need IHACPA approval to set it. Knowing this threshold tells you how much room they have to price at their discretion.

"What are comparable room prices at [competitor facility] within a 10km radius?" The My Aged Care "Find a Provider" portal publishes room prices. Having three to five comparable prices gives you leverage if the published price is above market.

"What is the facility's current occupancy rate?" Publicly available Commission data includes occupancy figures. A facility at 85% occupancy has more pricing flexibility than one at 98%.

"If we pay the full RAD, would you consider a lower room price?" This is the most common negotiation lever and the one providers respond to most readily.

"Does the accommodation agreement include a guarantor clause?" This isn't a price question, but it signals that you're reviewing the contract closely. Providers who know the family is legally informed tend to be more transparent about flexible terms.

"Can you itemise the Higher Everyday Living Fee?" Requesting an itemised HELF breakdown prevents the provider from bundling premium charges into a single non-transparent fee.

Running the Numbers: RAD vs. DAP at the Negotiated Price

Once you have a negotiated room price, the financial comparison between RAD and DAP becomes a specific arithmetic exercise:

The daily DAP is calculated as: (Room Price × MPIR) ÷ 365

At a negotiated room price of $600,000 and an MPIR of 8.43%: DAP = ($600,000 × 0.0843) ÷ 365 = $138.58 per day ($50,580 per year)

Against this, the RAD option means paying $600,000 upfront, with the provider retaining 2% per annum (about $12,000 in year one, declining as the balance reduces). Over five years, the total retention is slightly less than $58,000 — but the remaining balance is refundable.

The break-even analysis depends on what else the $600,000 could earn if invested rather than paid as a RAD. At deeming rates (1.25% below $66,800, 3.25% above), that $600,000 generates approximately $18,164 in deemed income for pension and aged care calculations — but the actual investment return may be higher, and the RAD itself is exempt from the Age Pension assets test.

This is precisely the kind of modelling where the numbers shift enough between scenarios that working through them carefully — or engaging a specialist aged care financial adviser — pays for itself.

Our Paying for Residential Aged Care guide includes a RAD vs DAP Decision Worksheet that runs these calculations for your specific situation.

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