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Financial means assessment - income & asset testing

Income and asset testing refers to a financial assessment undertaken by those who require residential care and who:

  • are unable to afford to pay the required fees and need to apply for a Residential Care Subsidy (RCS),
  • those who are close to this position or,
  • those who require clarification as to their financial situation e.g., possible eligibility for a  RCS, or have a more complex financial situation and may need financial assistance such as a Residential Care Loan.

This assessment considers all your funds and everything you own and how much you must contribute towards your care. (It’s a discussion between you and Work and Income, not the care home.) If you have significant resources, you will pay the full amount (i.e., you are considered to be a private payer). If you can’t afford the full fees, then the financial assessment determines how much you will contribute.

There are several parts to this process:

  1. You must already be considered to be a qualifying person,
  2. You need to apply for the RCS
  3. Your assets are assessed first, then, if you are eligible,
  4. Your income is assessed

There is a dollar amount (of assets) that you can retain. You will not be required to use this amount to contribute towards your care. It is known as the Asset Threshold or Asset Limit. Asset testing determines where your financial situation lies in relation to the Asset Threshold/Limit.

Asset Testing

Assets generally include but are not limited to:

  • Cash or savings.
  • Term deposits, investments, shares or bonds.
  • Loans you have made to others.
  • Property (if you’re single or if you’re a couple and you both require care or if the higher threshold/limit is chosen by those with a partner at home).
  • Most life insurance policies.

These are generally not counted in the assessment:

  • Household furniture and effects.
  • Personal belongings such as clothes and jewellery.
  • Prepaid funeral fund up to the value of $10,000 each in a recognised plan.

For many people who own property, it is likely that their total assets will be worth more than the Asset Threshold/Limit.

Each year on 1 July the Asset Threshold/Limit is adjusted in line with the Consumer Price Index. Check the current thresholds/limits (i.e., the amounts you can retain) as they are different depending on your circumstances.

If your assets are found to be equal to or below the Asset Threshold/Limit and you meet other criteria, you may be eligible for an RCS. You will still need to have an income assessment. This includes any NZ Super.

For those above the Asset Threshold/Limit

As your assets decrease you may become eligible for an RCS. Make sure you know when this is approaching so that you can apply if you wish.

Income testing

This can be rigorous. Although as a qualifying person you may be eligible for an RCS you will still need to contribute towards the cost of your care from your income (as will a special-case person aged 50 to 64). The income assessment determines how much you will pay.

Income includes but is not limited to:

  • NZ Super, Veteran’s Pension or any other benefit.
  • 50% of private superannuation payments.
  • 50% of life insurance annuities.
  • Overseas government pensions.
  • Contributions from relatives.
  • Earnings from interest/bank accounts, investments, business or employment.
  • Income or payments from a trust or estate.

Income does not include and is not limited to:

  • Any money from your partner’s employment.
  • A War Disablement Pension from New Zealand or any Commonwealth country.
  • Income from assets when the income is below a certain threshold/limit.

Outcome of the assessment and who pays what.

You, the Ministry of Health and the care home will be told of the outcome.  Presuming you are eligible for a subsidy, Work and Income will have determined how much subsidy will be paid and how much you must contribute. The subsidy part of the payment will be paid directly to the care home. You pay the balance.

Other important things to know

  • If you are making an application for a RCS, you must return the signed application to Work and Income within 90 days of the date you want payment to start.
  • If you receive an RCS, from your NZ Super you will keep a personal allowance and a clothing allowance.  These change every year on as at 1 April.
  • If you are eligible for an RCS and have a partner living at home, they may be eligible for a weekly Special Disabil­ity Allowance. They may also be eligible for NZ Super at the Living Alone rate.
  • Private payers may be eligible for Work and Income assistance if they meet criteria. Subsidised residents are not eligible for a Disability Allowance as this is factored into the RCS.
  • You can ask for a review of your means assessment or for a financial means assessment at any time.
  • There is a maximum weekly amount (GST inclusive) that any resident assessed as requiring care may be required to pay for contracted residential-care services provided in that region. This covers the cost of standard services only as is known as the Maximum Contribution. Premium accommodation costs more.

For more about this subject see this information on the government health website.

Note: Details may change, individual circumstances vary widely, and some situations can be complex. Please therefore ensure that you get the appropriate advice from Work and Income. You can phone the Residential Care Subsidy Unit freephone 0800 999 727.

If you are looking for residential care vacancies look on Eldernet Residential Care - the aged residential care beds are updated DAILY.

Updated: 11 Jun 2024
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