Residential Care Loan
If you have been assessed as needing long-term care, and your assets (not including your family home) are less than $15,000.00 for a single person, or $30,000.00 for a couple, you may be eligible for a Residential Care Loan to help pay for your care — so that family members can continue to live in your home without it needing to be sold.
The Ministry of Social Development ("MSD") assesses each loan application on a case-by-case basis. There is no obligation to approve a loan.
What Is a Residential Care Loan?
A Residential Care Loan is an agreement with the Crown to provide a loan for the cost of your care. It is secured by placing a caveat over your home.
It is an interest-free loan, paid directly to the rest home. It is repaid when you pass away or your home is sold, whichever happens first.
Who Can Get It?
You may be able to get a Residential Care Loan if:
you still own the home you lived in before going into residential care;
your home is worth more than $300,811.00 (if it's worth less, you may instead qualify for a Residential Care Subsidy); and
the total of any other assets you own is less than $15,000.00 if you're single, or $30,000.00 if you have a partner.
To be approved, the application must meet the following:
it fits within the loan scheme;
the loan can be secured with a caveat over your home; and
you'll be able to repay the loan and meet your obligations under the loan agreement.
How Much You Can Get
The amount of the Residential Care Loan is paid directly to the rest home to help pay for your care. How much you can get depends on the rest home fees and where you live.
Your Contribution and Personal Allowance
Most of your benefit or pension will go to the rest home, with MSD paying the shortfall. That shortfall is the amount added to your loan balance, and is repaid when you die or when your house is sold — whichever happens first. The amount you pay yourself is called your contribution.
You are allowed to keep a certain amount of your pension — currently $58.34 after tax, based on the M tax code — with the balance going towards the cost of your care. This amount is called your personal allowance.
Once your loan balance reduces your assets to less than $300,811.00, you may qualify for a Residential Care Subsidy instead.
How to Transfer to a Residential Care Subsidy
You will receive loan statements every 4 months, which will let you know when you may be able to move onto a Residential Care Subsidy. (Note: the original draft referred to these statements coming from "the Ministry of Health" — you may want to confirm whether MSD or Health New Zealand – Te Whatu Ora is the correct issuing body, for consistency with your other blogs.) You'll need to complete a 'Financial Means Assessment' form so your assets can be reviewed.
To apply for a Residential Care Loan, you need to contact the Residential Subsidy Unit at Work and Income.
No two situations are the same. To discuss your needs and how a Residential Care Loan may help you pay for care (if you fit the criteria), please contact Michelle Rossiter or one of her colleagues in the Commercial Team, to arrange a meeting to discuss your specific needs.
Please Note:
This article gives an overview of Residential Care Loans available to people in residential care who meet the eligibility criteria. The information contained here is not an exhaustive list of what may be taken into account, and there is no obligation on MSD to approve a loan.
