If you are approaching or have already reached 65 years and think you may require long-term residential care, did you know you may be entitled to a residential care subsidy?
What is the average cost of residential care in NZ per annum?
This annual cost of residential care varies based on a range of factors such as location, level of care and accommodation type.
- Health New Zealand – Te Whatu Ora sets a maximum contribution for reach region, being the highest amount a resident can be charged for standard care.
- Currently in Tauranga the maximum contribution is approximately $1,294.86 per week.
What is a Residential Care Subsidy (“RCS”)?
A RCS covers the difference between the actual cost of care and the applicant’s assessed contribution towards the care costs.
- The RCS is paid directly to the care facility by Health New Zealand – Te Whatu Ora.
- The subsidy covers the cost of standard residential care costs only, such as accommodation in a standard room, daily living assistance, nursing, prescribed subsidised medications, and routine GP visit.
- It is important to highlight that the subsidy does not cover premium accommodation charges for features such as private ensuites or superior views.
- An asset and income assessment is carried out to decide whether you are in a position to pay for yourcare yourself, and if not, your residential care subsidy entitlement.
What is the asset assessment for a RCS?
- If you’re 50-64 and single with no dependent children, you automatically meet the asset test.
- If you’re 65 or older, the asset limit for individuals or couples where you are both in care is $284,636 or less.
- If you’re 65 or older, and you have a partner who is not in long-term residential care you have two asset limit options:
- $155,873 or less, if you don’t want to include the value of your house and car; or
- $284,636 or less, if you do want to include the value of your house and car.
What is the income assessment for a RCS?
An income assessment will be carried out to determine the applicant’s contribution towards the cost of care.
For the purposes of the income assessment, income includes:
- 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 and bank accounts.
- Investments, business or employment.
- Income or payments from a trust or estate.
The following is note included as income:
- Any money your partner has earned through work.
- A War Disablement Pension from New Zealand or any other Commonwealth country.
- Income from assets when the income is under:
- $1,236 a year for single people
- $2,472 a year for a couple when both have been assessed as needing care
- $3,707 a year for a couple where one partner has been assessed as needing care.
Can I gift assets in advance of moving into residential care?
You can gift assets to, say, family, friends, charity – but only up to a point.
There are two allowable gifting limits:
1. Gifts made within the 5 year period:
- You are allowed to gift up to $8,000 of assets per couple per year in the last 5 years from when you apply for a RCS. This is a total of $40,000 of assets over the 5 year period with some spreading permissible during this period.
- If you and your partner apply for a RCS at the same time, this amount will double to $80,000.
2. Gifts made outside of the 5 year period:
- You are allowed to gift up to $27,000 of assets per couple per year outside of the 5 year period.
- It is important to note that before gift duty was abolished in 2011, the allowable gifting threshold which applied in the context of gift duty was $27,000 per person per year. This does not align with allowable gifting in the context of RCS and can often catch applicants out.
Any gifting in excess of these limits will be considered as deprivation of assets.
In addition, interest not charged on outstanding debts can be capitalised when assessing eligibility for a RCS as part of the financial means assessment.
Will I be eligible for a RCS if I have a Trust?
- Whether you are eligible for a RCS when you have a Trust will depend on your gifting history.
- There is an expectation that trusts will voluntarily assist with long-term care costs. Where there is a closely held family trust with a history of providing for an applicant, trust income must be assumed to be available unless there are particular circumstances that demonstrate it is not.
Will I get to retain any of my pension?
- If you are successful in applying for a RCS, a majority of your pension (or other NZ Superannuation or benefit) will be applied to their care costs.
- You will retain a personal allowance of $56.58 per week.
- In addition, you will receive an annual clothing allowance of $354.89 which is paid on 1 April in each year.
Residential Care Loans
What options do I have if I am unsuccessful in applying for a RCS?
- Where an applicant is unsuccessful in applying for the RCS, they can consider a Residential Care Loan (“RCL”). A RCL is an agreement with the Crown to provide a loan for the cost of an applicants care.
- To be eligible for a RCL, the applicant must own a property with an unencumbered title. A caveat will be registered against the property’s title which secures the loan.
- The RCL will be paid on the earlier of:
- The sale of the property; or
- Within 12 months of the date of the applicant’s death.
Figures are assessed and updated annually on 1 July. These limits are accurate at June 2025.