Government Funding and Subsidies for Aged Care
While aged care in New Zealand is not free, the government offers financial assistance through the Residential Care Subsidy. This subsidy helps cover the cost of long-term residential care for eligible individuals. Eligibility and the level of assistance are determined by a needs assessment and a financial means assessment.
The needs assessment
A needs assessment, conducted by a Needs Assessment Service Coordination (NASC) agency, is the first step to receiving government funding. This assessment identifies the type and level of care required, which could include rest home, hospital, dementia care, or home and community support services (HCSS).
The financial means assessment
Following a needs assessment, Work and Income (WINZ) conducts a financial means assessment to determine eligibility for the Residential Care Subsidy. This involves assessing both income and assets against set thresholds.
Income assessment WINZ considers various forms of income when determining eligibility.
Asset assessment Asset limits for those aged 65 and over vary based on marital status and whether the family home and car are excluded from the calculation. Assets gifted within the preceding five years are also included in the assessment.
How payments work
If eligible, Health New Zealand—Te Whatu Ora pays the Residential Care Subsidy directly to the care provider. The resident contributes most of their income, such as their NZ Super, towards the cost of care, retaining a small personal allowance. A 'Top-Up subsidy' is provided by the government for those requiring higher levels of care like hospital or dementia care.
Private vs. Government-Funded Aged Care
Individuals whose income and assets exceed the government thresholds will need to fund their aged care privately.
Private funding options
Private funding options for aged care include using personal savings or selling assets. An interest-free Residential Care Loan is also available to eligible homeowners who do not qualify for the subsidy. This loan is repaid from the person's estate. Home equity release schemes are another possibility.
Standard vs. Premium care
Care facilities with a contract with Health New Zealand must offer standard rooms at a government-set Maximum Contribution rate. Many facilities also provide premium accommodation with additional costs that are not covered by the subsidy and must be paid privately.
Comparison of Aged Care Funding
| Feature | Residential Care Subsidy (Government-Funded) | Private-Paying |
|---|---|---|
| Eligibility | Requires needs and financial means assessments, with income and asset limits. | No government eligibility criteria. |
| Cost Covered | Covers standard room and basic care up to the Maximum Contribution. | Covers all standard and premium costs. |
| Personal Expenses | Residents contribute most of NZ Super, keep a small allowance. | Residents keep full NZ Super, responsible for all costs. |
| Accommodation Choices | Standard rooms, unless premium fees paid privately. | Full choice, including premium options. |
| Financial Implications | Asset use may be required; family home can be protected in some cases. | No asset restrictions; Residential Care Loan is an option. |
Conclusion
Aged care in New Zealand is not free, and individuals are primarily responsible for the costs. However, the government provides financial assistance through the Residential Care Subsidy for those who meet the needs and financial means testing criteria. If ineligible, private payment is necessary, with options like savings, asset sales, or a Residential Care Loan. Navigating the funding system requires understanding the assessment processes and seeking advice from services like Seniorline or Work and Income.
