Residential Care Subsidy What you need to know

Table of Content

• Schedule 1 Transitional, savings, and related provisions for residential care and disability support services
• Step 3 - We'll check what assets you've gifted or sold
• Can I gift my money to my children or to a trust?
• Excess Gifting and Other Considerations
• House value assessment
• Rest homes and residential care
• Income test (financial means assessment as to income)

In the 5 years prior to applying you can only gift $6,500 per person. You can gift over and above those amounts if the gift is in recognition of care but this has strict criteria and is considered on a case by case basis. If a person qualifies, it is the difference between what the rest home or care facility charges and what income the person in care has to contribute towards their care. For the purposes of a means assessment as to income, a person’s annual income is the person’s estimated income for the period of 52 weeks commencing on the date of means assessment. The person is required to pay that amount in accordance with the assessment. Medical services means services supplied to a person by a health practitioner relating to the treatment or relief of the person’s disability condition or the rehabilitation of the person from that condition.

If P’s assets are equal to or below the applicable asset threshold, the assessment of P’s weekly contribution from income. In relation to each 50+ single person, the appropriate funder must pay the difference between that person’s contribution and the cost of that person’s LTR contracted care. Between 1990 and 2014 Mrs Broadbent sold her share of the family home and a holiday home to two family trusts for fair value, supported by a debt back. Mrs Broadbent then progressively forgave the debts owed to her by the trusts.

Schedule 1 Transitional, savings, and related provisions for residential care and disability support services

When considering an application MSD will conduct a financial means assessment to determine whether the applicant qualifies under the prescribed eligibility thresholds. The population of New Zealanders aged 65 and over is projected to increase from 15% last year to over 25% by 2068. The Residential Care Subsidy (“Subsidy”) is government-funding to assist those living in a rest home or hospital-level care pay for their residential care fees.

MSD may deem income from this asset, even if it is not actually being received. This section applies where MSD is satisfied that a person who has been means assessed , or P’s spouse or partner, has directly or indirectly deprived himself or herself of any income or property. This section applies where MSD is satisfied that a person who has applied for a means assessment , or P’s spouse or partner, has directly or indirectly deprived himself or herself of any income or property. Determine if and when in the 90-day period P’s assets fell below the applicable asset threshold. The maximum contribution is the maximum amount that an individual may be required to pay towards the cost of LTR contracted care provided to the individual and that is set for each region under section 53.

Step 3 - We'll check what assets you've gifted or sold

A resident’s (R’s) election under clause 2 of Schedule 27 of the Social Security Act to have Column A of the table in clause 1 of that schedule apply to R is, after that repeal, treated as if it were an election to have Threshold A in clause 1 of Schedule 2 apply to R. Be satisfied that each exemption provided for in them is not broader than is reasonably necessary to address the matters that gave rise to the regulations. A revised assessment under subsection takes effect from a date MSD determines . MSD may for the purposes of this Part treat the assets as cash assets. Whether a person who has been so assessed is entitled to that assessment.

If P has been means assessed, the result of the means assessment is not yet known. Note 4 at the end of this version provides a list of the amendments included in it. They have not ‘deprived’ themselves of more assets than MSD allows . The Residential Care Subsidy is paid directly to the rest home or hospital by the Ministry of Health.

Can I gift my money to my children or to a trust?

When applying for public funding you are required to complete a declaration of assets sold or gifted and provide trust documents if you have set up a trust. Any interest generated from the pre-paid funeral amount of the person or of the person’s spouse, as defined in Part 2, Schedule 2 of the Act. A person must have a needs assessment before applying for a financial means assessment. You can gift up to $27,000 per couple, per year, for up to 5 years prior to applying for a subsidy.

Some things are not included in the cost of your care, eg, a Premium Room Charge because you pay for it privately. $3,341 a year for a couple where one partner has been assessed as needing care. We won't count up to $27,000 a year of any assets you've gifted longer than 5 years ago .

Excess Gifting and Other Considerations

If you get New Zealand Superannuation, Veteran's Pension or any other benefit, most of this will go towards your care. We've worked out that you should contribute $300 a week to your care. However, if you sold your assets in exchange for a debt then the outstanding debt that is owed to you will be considered an asset. Something's changed Address, contact details, overseas travel, childcare, relationship or anything else that’s changed.

MSD would therefore expect an applicant to request that the trustees of the trust support them in terms of their care costs. If the trustees refused, MSD would likely treat that as deprivation of income. The New Zealand Ministry of Health can help you with the costs of long-term residential care – in a hospital or rest home – through the Residential Care Subsidy, paid directly to your chosen hospital or rest home. Before you apply for long-term care, you’ll need to have your care needs assessed and then find out whether or not you’re eligible for government-subsidised care. Your home counts as an asset for single people or couples where both are in long term residential care. If you are not financially eligible for Residential Care Subsidy, have other assets of $15,000 or less, you can apply for an interest-free Residential Care Loan .

It calculated that her available assets were above the allowable threshold, because excessive gifts by her husband and her to their family trust were clawed back. The decision went to the Social Security Appeal Authority which sought the High Court’s view on questions of law. If you're under 65 and have a partner, this is all you need to do, as we won't look at your assets or income.

This article aims to assist people who wish to understand how their asset planning may affect their eligibility for the Subsidy. In this case, Mrs Broadbent and her late husband had sold their house to a trust. The purchase price that the trust paid was a market price, so the Broadbents received ‘fair value’. The trust had no money to pay the purchase price, so the Broadbents lent the whole of the purchase price to the trust and then gradually forgave the debt over several years, finishing more than five years before Mrs Broadbent needed to go into care. Do note that your house and car are exempt from the assessment of assets when it’s the main place where your partner, who is not in care, or a dependent child, lives.

The Court of Appeal’s reasoning for dismissing the appeal was largely the same as the decision given by the High Court. That is, although the $27,000 threshold was the same for both gift duty and the care subsidy threshold, it was intended to apply in different ways. The Court agreed that the “additional” $27,000 that the claimant and her spouse had gifted into trust over many years in order to reduce debt without gift duty, ought to be clawed back.

Some people are deciding to wind up the trust due to the new obligations for trustees and increased compliance costs. Before considering whether to wind up a family trust, it is advisable to consider how MSD may treat any loans that have been progressively forgiven, or future application of trust income, in terms of eligibility for the RCS. Where a person has been living rent-free in a trust’s property but now requires care, and the trustees of the Trust decline to provide the equivalent monetary value of support, MSD may consider that the difference is deprivation. The case of Chief Executive of the Ministry of Social Development v Broadbent deals with income deprivation and family trusts.

However, at the income assessment stage, MSD decided to treat the house as if it was still owed by Mrs Broadbent and calculated the present day income Mrs Broadbent could receive from that by renting it out. MSD did that even though the gifting was allowed, because they decided that the gifting had ‘deprived’ Mrs Broadbent of the income from those assets. Your partner is not in long-term residential care but you have chosen to have your assets assessed against the $256,554 asset threshold. Our professional lawyers here at Gillespie Young Watson can assist in advising on eligibility for a residential care subsidy and assist in completing the application.

The Residential Care Subsidy regime, including the permissible asset, income and gifting thresholds, is prescribed by regulations which are subject to change. Accordingly, there is no guarantee that any asset planning within the current permissible limits, would mean an applicant qualifies for the Subsidy. But the Ministry of Social Development argued that the assets' value had increased over the years, thanks to the property boom, and therefore, Mrs Broadbent had deprived herself of an income, and should contribute to the cost of her care. Three years after a landmark case over the impact of gifting on subsidies for long term residential care, a legal expert says the guidelines are still unclear and confusing.