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The Residential Care Subsidy
By Jocelyn Weatherall
A crucial component of planning for the cost of residential care is looking at whether you could qualify for a government subsidy.
For those aged over 65 years, eligibility is asset and income tested, however this may not be the case for under 65-year-olds who have a partner living in the community.
Subsidies are paid directly to the facility by Te Whatu Ora – Health New Zealand.
Most rest homes offer standard or premium rooms – which have additional features such as an ensuite, more space, or garden access. The funding is for a standard room only, and the additional charge for a premium room varies. Costs of general supplies, haircuts, medical appointments, and personal items are additional.
New Zealand Superannuation is redirected to fund care and is no longer available to the household.
Superannuation is adjusted for the partner in the community and typically alters to the living alone allowance.
Eligibility to enter care is dependent on a needs assessment concluding long term residential care is required. An application for a residential care subsidy can be supplied by the assessor.
You will be required to prove your assets and income are under a certain level. The criteria is available on the Work and Income website. MSD will review any assets, including those held in a trust.
Assets typically include bank deposits, Kiwi Saver, your home, rental home or secondary dwelling, beach house, your car, loans to others, boats, caravans, investments, and life policies with a value. When you are in a marriage or partnership your home is typically exempt.
ASSET THRESHOLDS:
THRESHOLD A
Able to be chosen by a single individual or a couple.
Entire assets are worth less than $273,628. (Includes your home, car, gifted assets). This value is adjusted minimally each July.
THRESHOLD B
Only able to be chosen by a couple where one party remains in the community.
Combined assets of $149,845 or less, PLUS the value of your home plus your everyday car. The threshold adjusts minimally each July.
If you have gifted assets, they will be added back in. There are some allowances such as gifts in recognition of care ($37,500). Gifting in the 5 years before care can be $7,500 per annum.
This is the typical option chosen by a couple with one partner in care and one partner in the community.
Excluded Assets
- Pre-paid funeral expenses for you and your partner of up to $10,000 each, if they’re held in a recognised funeral plan.
- Personal belongings such as clothing and jewellery
- Household furniture and effects
- Your home owned personally (not a trust) and car if you fall under threshold B
Some key points
- Selling a home and purchasing a lower-valued home or License to Occupy in a retirement village may impact on eligibility.
- If you’re over 65 and don’t qualify for the subsidy, you may be eligible for a Residential Care Loan. Details of this is on the MSD website.
- If you sold an asset in the last five years, you will be required to provide evidence of sale for a fair value.
- Inheritances will need to be documented, no matter how long ago.
- Any gifts to family or family Trusts will be reviewed and most likely included as an asset. If this is your circumstance, we recommend taking advice well ahead of time.
The income assessment
Income must be below the threshold; this is a combined position if you are in a partnership.
What’s included:
New Zealand Superannuation, Veteran’s Pension, or any other benefit for those in care (apart from a small personal allowance)
50% of private superannuation payments
50% of life insurance annuities
Overseas government pensions
Contributions from relatives
Earnings from interest and bank accounts
Investments, business, or employment
Income or payments from a trust or estate
What’s not included:
Any money your partner has earned through work
Income from assets when the income is under:
$1,188 a year for single people
$2,376 a year for a couple when both have been assessed as needing care
$3,564 a year for a couple where one partner has been assessed as needing care
A War Disablement Pension from New Zealand or any other Commonwealth country
Consult with appropriate experts or relevant authorities to obtain personalised and accurate advice based on the current policy and regulations pertaining to residential aged care subsidy and individual circumstances.
This article was originally published in Our Mind Matters Magazine Issue #40.
