Watch to learn more about residential care subsidies in New Zealand. Find out if your eligible and how you go about applying.
The residential care subsidy contributes to the cost of residing in a care home. It’s paid by the Ministry of Health directly to the residential care facility.
Rest home subsidy amount
The subsidy amount is the difference between how much an applicant must contribute towards their care (based on an asset and income assessment) and how much the care costs (according to the Ministry of Health).
For example, if an applicant must contribute $200 to their care, and the Ministry of Health confirms the care costs $1,200 a week, the subsidy will be $1,000 per week.
NB: The cost of care excludes premium room charges, as these must be paid for privately. Other charges may also be excluded; please consult the care facility manager for a list of all excluded costs.
Rest home subsidy eligibility
To be eligible for the residential care subsidy, an applicant must:
- Have completed a needs assessment that confirms they require care in a residential care facility on a permanent basis.
- Be aged 65 years or older*
- Be a New Zealand citizen or resident.
- Have completed a financial means assessment that shows they have assets and income equal to or less than the thresholds administered by Work & Income.
- Plan to receive care from a certified residential care facility that has a contract with a DHB.
*If the applicant is under 65, they may still be eligible under certain circumstances. For further information visit the Work and Income website
How to apply for rest home subsidy
If a needs assessment reveals the applicant requires permanent care, their needs assessor will provide them with the residential care subsidy application forms – including the form for a financial means assessment.
The next step is to complete these forms and send them to Work and Income. It’s recommended to complete these forms as promptly as possible, as processing the application can take some time.
Work and Income will inform the applicant whether they qualify for the residential care subsidy or not.
If they do not qualify for the residential care subsidy, they may choose to apply for a residential care loan.
NB: Those already in long-term residential care can request a review of their financial means at any time.
Rest home subsidy asset and income limits
Below are the current asset and income limits [source: Work and Income].
Rest home asset limits
For those aged 65 or older, there is an asset limit of $256,554. This asset limit applies to both individuals and couples.
For a couple where one person is moving into long-term residential care and the other is not, they can choose whether or not to include the value of the family home* and personal car in this equation. If these assets are excluded, the limit drops to $140,495.
*A home is not counted as an asset if it’s the main place of residence for the partner of the person going into care or any of their dependent children.
NB: Work and Income will also want to know if the applicant or their partner has ever transferred assets into a trust, or been the settlor, trustee, or beneficiary of a trust or estate.
What's included as an asset
- family home and personal vehicle
- investment properties
- investments or shares
- cash or savings
- boats, caravans and campervans
- bonus bonds
- life insurance policies with a surrender or cash asset value
- loans made to other people (including family trusts)
What's not included as an asset
- 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 family home and personal vehicle are included as assets if either you don’t have a partner, you and your partner are in long-term residential care, or your partner is not in long-term residential care but you have chosen to have your assets assessed against the $256,554 asset threshold.
A note on gifting
One important part of the asset assessment is the consideration of assets gifted or sold in the past five years.
Work and Income will check what assets an individual or couple has gifted or sold, but they won’t count up to $7,000 worth of assets per year (a total of $35,000). This is the combined value of any assets that you and your partner (even if your partner has since passed away) have gifted in the past five years.
If a couple applies for the residential care subsidy at the same time, this threshold will double to $70,000 ($35,000 per person not counted if the subsidy is applied for at different times).
Work and Income may also choose to exclude gifts that were given in recognition of care. For example, if the applicant made gifts to a carer who supplied them with at least 12 months of continuous care within the last five years, this may be excluded from the asset assessment. NB: The carer cannot be the applicant’s partner, dependent child or have lived in the same home as the person providing the care.
For gifts that were given more than five years ago, the annual threshold rises to $27,000, including gifts given by a partner.
Those who are eligible for the residential care subsidy are still able to make gifts of up to $7,000 per year once they move into a care facility.
This rate does change occasionally, so be sure to check the Work and Income website before going ahead with any gifting plans, and keep accurate records each year to avoid going over the limit.
NB: These guidelines still apply if gifts were made by the applicant’s partner and the partner has since passed away.
Rest home subsidy income limits
An income is not simply what is gained from private employment. Different income limits apply to different situations.
Work and Income will assess income for each application, including:
- New Zealand superannuation payments, the Veteran’s Pension, and any other benefits
- 50% of life insurance annuities
- 50% of private superannuation payments
- Pensions from international governments
- Interest earned from bank accounts
- Contributions from relatives
- Income from investments, business, or employment
- Income or payments from an estate or trust
NB: The weekly personal allowance and annual clothing allowance are adjusted to the Consumers Price Index (CPI) every April, and the gross income from assets is adjusted to the CPI every July.
What's not included as income
- Any money your partner has earned through work.
Income from assets when the income is under:
- $1,114 a year for single people
- $2,228 a year for a couple when both have been assessed as needing care
- $3,341 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.
Rest home subsidy back payments
After checking an applicant’s income levels, Work and Income will determine the point at which they became eligible to receive the subsidy. It’s possible they were eligible earlier than the date of their application, which means they qualify for a back payment.
For those aged 65 or older, the subsidy can be back paid for up to 90 days before the date Work and Income received the application.