How and when the lump sum is refunded, and what can be deducted

If your parent paid some or all of their room as a lump sum, that money comes back when they leave the home or die. But it doesn't always come back in full, and the timing depends on how they leave.

This guide explains when the refund is due, what can be taken out first, and what protects it.

When the refund is due

The home must refund the balance of the lump sum. How quickly depends on the situation.

Situation	When the refund is due
Your parent leaves care and isn't moving to another aged care home	Within 14 days after the day they leave
Your parent moves to another home and gave more than 14 days' notice	On the day they leave
Your parent moves to another home and gave up to 14 days' notice	Within 14 days after the day notice was given
Your parent moves to another home and gave no notice	Within 14 days after the day they leave
Your parent dies	Within 14 days of the home being shown probate or letters of administration, or other evidence of who is entitled that the home accepts

If your parent leaves and agrees with the home to delay the refund, so they can come back if a room is free, the refund can wait. It's not a reserved place. The refund is then due within 14 days of your parent telling the home in writing that they want to end that arrangement.

After a death, a home can pay sooner without probate if it accepts other evidence of who is entitled, but it doesn't have to. Our guide to when a family member pays the lump sum explains probate in more detail.

Interest on the refund

No interest is earned on the lump sum while your parent is in care. But once the refund period starts:

• During the refund period, the home pays interest at the base interest rate, currently 3.75%.
• If the home pays late, it must pay interest at the higher maximum permissible interest rate, currently 8.51%.

What can be deducted

The refund is the lump sum your parent paid, less amounts properly taken out while they were in care.

• Retention. For people on the new room rules (most people who moved in from 1 November 2025), the home keeps 2% of the balance a year, for up to five years. Retention isn't refunded, unless the home took too much, in which case the extra must be paid back within 14 days. Any retention still owing is taken before the refund. Our guide to retention explains how it works.

• Daily payments taken from the lump sum. If your parent asked the home to draw the daily payment for the room from the lump sum.

• Other agreed fees. Fees your parent agreed in writing could be taken from it, such as the basic daily fee.

• Daily room payments still unpaid. If any daily payment for the room is still owing when your parent leaves, the home can take it from the lump sum without asking.

Any other deduction needs your parent's agreement in writing. A home can't just help itself to some other amount it says is owed.

Check the final figure

Ask the home for a statement showing:

• the amount originally paid, and any top-ups;
• every retention deduction;
• every other amount drawn, with dates;
• the balance refunded, and the interest added.

If the refund looks wrong, ask the home for a full breakdown. If it isn't resolved, you can complain to the Aged Care Quality and Safety Commission.

What if the home goes broke?

If an aged care home becomes insolvent and can't pay the refund, the Australian Government guarantees it, including interest due since your parent left care. This is the Accommodation Payment Guarantee Scheme.

Weighing it up

The Aged Care Costs calculator gives an estimate of the fees, with the home counted as it is today, and compares the ways of paying for the room.

Before deciding how to pay for the room, consider talking it through with a licensed financial adviser who specialises in aged care.

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