Aged care interest rate records biggest jump since 2008 from 4.07% to 5%

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The disparity between aged care residents who pay a Refundable Accommodation Deposit (RAD) and a Daily Accommodation Payment (DAP) has again been highlighted by the latest increase in the aged care interest rate (MPIR).

From 1 July 2022, the MPIR will increase from 4.07% pa to 5.0% pa, representing the largest quarterly rate move since October 2008.

The rise is not unexpected – the MPIR has gradually shifted downwards from a high of 11.75% in 2008 to a low of 4.01% in 2021 before beginning to rise again over the last 12 months.

But the increase does mean that the DAPs will rise while RADs will fall.

Aged care advisers including Aged Care Gurus’ Rachel Lane have pointed that a Market Price Resident with a $550,000 RAD will pay a DAP of $75.34 per day from 1 July 2022 – an increase of $14.01 or $5,113 a year.

Given the number of residents opting to pay a DAP is increasing, that cohort will need to pay more compared to those who can afford to pay a RAD.

A further sign of the need for fairer co-contributions?

 

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