Maximum Permissible
Interest Rate (MPIR)

Aged Care Fees and Charges

Current Refundable Accommodation Deposit - Interest Rate

Maximum Permissible Interest Rate (MPIR) - Historical Rates

Maximum Permissible Interest Rate (MPIR)
Period MPIR
1/07/2024 to 30/09/20248.36%
1/04/2024 to 30/06/20248.34%
1/01/2024 to 31/03/20248.38%
1/10/2023 to 31/12/20238.15%
1/07/2023 to 30/09/20237.90%
1/04/2023 to 30/06/20237.46%
1/01/2023 to 31/03/20237.06%
1/10/2022 to 31/12/20226.31%
1/07/2022 to 30/09/20225.00%
1/04/2022 to 30/06/20224.07%
1/01/2022 to 31/03/20224.04%
1/10/2021 to 31/12/20214.01%
1/07/2021 to 30/09/20214.04%
1/04/2021 to 30/06/20214.01%
1/01/2021 to 31/03/20214.02%

Complete History of MPIR Rates

What is a RAD, DAP and MPIR?

When you begin researching residential aged care, you will discover three terms relating to the cost of residential aged care, that are essential to understand.

  • The Refundable Accommodation Deposit (RAD), is a payment set by the aged care home, related to the accommodation provided
  • The Daily Accommodation Payment (DAP) is the interest payment required on unpaid RAD
  • The Maximum Permissible Interest Rate (MPIR) is the interest rate used to calculate DAP on a specific RAD value.

The RAD is determined on the quality, location and features of the accommodation and can vary from bed to bed in the same aged care home.

If a facility wants to charge more than $550,000 for their RAD, they need to have approval from the Aged Care Pricing Commissioner.

The DAP is calculated by multiplying the determined RAD by the current government interest rate (MPIR) and divided by the number of days in that year.

Aged Care Providers are required to display their accommodation prices in both RAD and DAP figures prior to charging their clients.

From the day of entering care, the new resident has 28 days to work out whether they want to pay the facility a lump sum, daily payment or some combination of the two.

Under the Living Longer, Living Better reforms, the resident must be left with a minimum asset value of 2.25 times the basic age pension at the time of entry.

That sum is subject to quarterly change, but currently it means a resident must be left with at least $58,500 if they choose to pay for their accommodation in full.

The introduction of the RAD and DAP was predicted to increase marketplace competition and broaden consumer choice.

MPIR reducing to 8.34% pa - 1st April 2024 - Implications

Effective from 1st April 2024, the MPIR will reduce (by 0.04 %) to 8.34% pa. We understand that this change may raise questions, and we aim to provide you with all the necessary information to ensure a clear understanding of the implications.

The MPIR plays a crucial role in determining the Daily Accommodation Payment (DAP) in aged care facilities. When individuals choose not to pay their accommodation costs upfront as a Refundable Accommodation Deposit (RAD), they have the option to pay a DAP instead. The DAP is calculated by multiplying the RAD by the MPIR and dividing it by 365 days in a year.

With the reduction in the MPIR to 8.34% per annum, it is important for individuals and their families to consider the financial implications of this change. The lower MPIR will result in an reduction in the DAP amount, potentially improving cash flow and long-term financial considerations.

It is important to note that the MPIR is determined by the Australian Government and is part of ongoing adjustments to ensure the viability and sustainability of the aged care sector. While it may pose challenges for individuals, it is intended to support the overall provision of quality care and services.

To make informed decisions, we encourage you to assess your individual circumstances. We can assist you to understand how the residential care fees are calculated.

Additionally, it is advisable to have open and transparent discussions with the aged care providers you are considering. They can provide detailed information about the costs, payment options, and financial assistance available to you, including government subsidies and support programs. Being well-informed about your financial commitments will enable you to make choices that align with your needs and preferences.

Furthermore, we encourage you to review the Residential Care Fee Estimator provided by the Australian Government. This online tool allows you to calculate the potential costs associated with aged care services based on various scenarios, including different accommodation payment options.

Lastly, please remember that while financial considerations are important, it is equally crucial to prioritise the quality of care and services provided by aged care facilities. Just because an aged care home charges a larger RAD, does not always means that the quality of care is superior to other local homes. Take the time to research and visit different facilities, ask questions, and consider factors beyond the financial aspect, such as the location, amenities, staffing ratios, and overall reputation of the facility.

The Maximum Permissible Interest Rate may raise concerns for families. We are committed to supporting you throughout this process by providing accurate information, resources, and guidance.

Understanding your options, and considering your individual circumstances, you can navigate these changes and make informed decisions.

Like to know more about
the new Star Rating system?

Avoid the mistakes, pitfalls and traps for new players ...

Senior Moves have detailed knowledge and experience in residential care placement and can make sure that you receive accurate and unbiased information.

We have developed trusted working relationships with many accommodation providers and hospitals but are not affiliated or aligned with any aged care provider or financial organisation.