Who Pays for My Care If I Am Assessed as Needing Full-Time Permanent Residential Care?
Answer: You do — unless you meet the criteria for a Government Residential Care Subsidy ("RCS").
Planning ahead, such as through annual gifting, can help significantly if you need to apply for a subsidy in the future, by helping you meet the asset and income thresholds.
If you meet the criteria for the subsidy, the cost of your care is paid directly to the hospital or rest home by Health New Zealand – Te Whatu Ora. Your New Zealand Superannuation is then reduced, but you still receive a personal allowance and a clothing allowance.
What Are the Criteria for Receiving the RCS?
You must be assessed as needing care.
Your age:
If you are 50–64, single, and have no dependent children, you'll automatically meet the asset test.
If you are 65 or older and single, your assets must be $300,811.00 or less.
If you are 65 or older and have a partner in long-term residential care, you and your partner's total assets must be $300,811.00 or less.
If you are 65 or older and have a partner who is not in long-term residential care, you can choose whichever option best suits your situation:
Your assets must be $164,731.00 or less if you do not want to include your car and family home; or
Your assets must be $300,811.00 or less if you choose to include your car and family home. To be counted as a "family home," it must be the main place where your partner or a dependent child lives.
Family Home
A "family home" is the main place where your partner or dependent child lives. It can be:
a residential property
a property occupied under a Licence to Occupy (LTO) or an Occupation Right Agreement (ORA)
a life interest in a property owned by a family trust or an estate
an apartment
a granny flat
a motor home; or
a boat
If you choose to include the value of your family home in your assets, you'll need to find out its value. This is usually the net equity you or your partner have in the family home, minus any debts owing on it. The value of a Licence to Occupy unit or Occupation Right Agreement is different — it is the surrender value (if any) that would be paid to you or your partner under the licence or agreement.
What Counts as an Asset?
Assets include (but are not limited to):
cash, savings, and/or investments
life insurance policies with a surrender or cash asset value
investment properties
loans made to others (including family)
If you have sold any assets, they will not be counted in your means assessment, because you no longer own the asset. However, if you sold an asset in exchange for a debt that remains owing to you, that debt will be considered an asset. Any sale of assets must be at "fair market value" to be treated this way.
Income and Gifting
There is no limit on the income you can earn, but any income above the exempt income amount will go towards the cost of your care. Refer to Health New Zealand – Te Whatu Ora for current exempt income amounts.
Any gifts you have made will be taken into account, unless they fall within the following allowances:
up to $27,000.00 per year for gifts made more than 5 years before you apply for the subsidy; or
up to $8,500.00 per year for each of the 5 years immediately before you apply for the subsidy.
This means a total of up to $42,500.00 in gifts made by you and your partner (even if your partner has since died) in the five years before applying can be disregarded.
It is never too early to start planning for your long-term care.
For advice and assistance in taking steps to protect your assets in the event that you need long-term care in future, please contact Michelle Rossiter or one of our colleagues in the Commercial Team to arrange a meeting.
See our other blogs:
Wills - Property Ownership and Residential Care Subsidies | Young Hunter Lawyers
Residential Care Subsidy – Allowable Gifting | Young Hunter Lawyers
This article gives an overview of the subsidy available for people in residential care and the eligibility criteria. It is not an exhaustive list of what is and is not permitted and should not be relied on as a substitute for personalised legal advice.
