Marcia Read
Published on
A move to residential care is often brought about by factors outside the control of those involved. It can be a stressful and difficult time and the added prospect of expensive care fees can seem overwhelming.

You or your loved one may be eligible for a Residential Care Subsidies or Loan. This guide summarises the requirements to qualify for this assistance.

Applying for a Residential Care Subsidy

The Residential Care Subsidy (RCS) is government-funding to assist those living in a rest home or hospital-level care pay for their residential care fees. Applications are made to the Ministry of Social Development (MSD).

Once someone has been assessed as requiring long-term residential care in a rest home or hospital, and upon receiving an application, MSD will undertake a financial means assessment to ensure that, where appropriate, people use the resources available to them before becoming eligible for the RCS.

Current assets thresholds

In order to qualify the applicant’s assets must be at or below certain asset thresholds, which are updated annually on 1 July.

The current asset thresholds are:

  • $239,930 including the value of your house and motor vehicle (Threshold A).; or
  • $131,391 excluding the value of your house and motor vehicle (Threshold B).
The reason for excluding your house and motor vehicle would be if the house is the main residence of your spouse or partner. If you are single or you and your spouse/partner are in long-term residential care or you elect to, then Threshold A would apply.

Assets included in the financial means assessment

MSD will include:

  • Cash or savings
  • Investments or shareholdings
  • Life insurance policies with a surrender or cash asset value
  • Loans made to other people (or family trusts)
  • Boats, caravans and campervans
  • Investment properties

Assets not included in the financial means assessment

  • Pre-paid funeral policies for you and your spouse/partner up to the value of $10,000 each
  • Personal belongings i.e. clothes and jewellery
  • Household furniture and effects

Allowable gifts

There are limits to the amount that you and your spouse/partner can gift, these are:

  • $6,500 per year in the five years immediately prior to the date of the financial means assessment
    (“the gifting period”)
  • $27,000 per year in the period before the gifting period.

If you and your spouse or partner makes gifts exceeding these limits, MSD may determine that you have deprived yourself of assets and will include any excess gifting as an asset.

Selling an asset below fair value may also result in MSD considering that you have deprived yourself of an asset.

Income assessment

Providing your assets are at or below the applicable asset threshold, MSD will then complete an income assessment. Income assessments are determined differently depending on the type of income.

Income includes:

  • New Zealand Superannuation or private superannuation payments
  • 50% of life insurance annuities
  • Oversea government pensions
  • Contributions from family
  • Earnings from interest and bank accounts
  • Investments, business or employment
  • Income or payments from a trust or estate

Money your spouse or partner has earned through work is not considered income.

If you have lent money to a person (including a trustee(s) of a family trust) interest-free, then MSD may determine that you have deprived yourself of income.  If so, they may calculate deprived income by using the Reserve-Bank six-monthly interest rates for each year that you did not receive income.

Residential Care Loans

If you have been assessed as requiring rest-home or hospital level care, you own a home and have no more than $15,000 (or $30,000 for an applicant who is in a legal relationship), you should qualify for a Residential Care Loan (RCL).

A RCL is when the Crown provides you with an interest-free loan to cover the cost of your care. It is paid directly to your rest home and is secured by the Crown placing a caveat over the title to your former home.

The loan is repayable when the house is sold, or within 12 months of your death.

Useful links

Contact Us

Should you require advice about your eligibility for a Residential Care Subsidy or Loan, or require assistance with the application, please contact the Elder Law Team at Gibson Sheat Lawyers.