Navigating New Zealand's Aged Care Asset Thresholds
Planning for residential aged care in New Zealand involves understanding the financial assessment process, particularly the asset and income tests. The asset threshold determines if you are eligible for the government's Residential Care Subsidy, which helps cover the cost of care. For those aged 65 and over, the specific threshold varies depending on your circumstances. Your assets are reviewed by Work and Income (part of the Ministry of Social Development) to ensure that the subsidy is provided to those who need it most.
Current Asset Thresholds (as of July 1, 2025)
For applicants aged 65 or older, there are two primary asset thresholds for the Residential Care Subsidy. Your situation—whether you are single, in a couple where both require care, or in a couple where only one person needs residential care—will determine which threshold applies.
- Threshold A: $291,825 or less. This applies to single people, or to a couple where both partners are in long-term residential care. It includes the value of the family home and car.
- Threshold B: $159,810 or less. This option is available only to a couple where one partner needs long-term residential care and the other remains living in the family home. With this option, the value of the family home and car is excluded from the asset assessment.
What Counts as an Asset?
It's important to know what the government includes in its assessment of your assets. The following items are typically counted:
- Cash and investments: Includes money in bank accounts, term deposits, shares, and other financial investments.
- Recreational vehicles: This can include boats, caravans, and campervans.
- Loans to others: Any money you have loaned to family members or a family trust is considered an asset.
- Investment properties: Any property you own besides your main family home may be included.
What is Excluded from the Asset Test?
Certain assets are typically excluded from the assessment, providing some peace of mind for applicants. These include:
- Personal belongings: Household furniture, clothing, and jewellery are generally not counted.
- Pre-paid funeral expenses: A pre-paid funeral plan of up to $10,000 is an exempt asset.
- Family home and car: As detailed under Threshold B, if one partner remains living at home, the value of the house and car can be excluded.
Gifting and the Asset Threshold
One of the most complex aspects of the asset test involves gifting. Work and Income reviews assets that have been gifted away in the past to prevent people from artificially lowering their assets to qualify for the subsidy.
- Recent gifting: In the five years before applying for the subsidy, gifts of up to $8,000 per year are disregarded. Anything over this amount is counted as an asset.
- Gifting over five years ago: For gifts made more than five years before the application, the annual limit increases to $27,000. Any amounts gifted above this will be added back into your asset pool.
Residential Care Subsidy vs. Residential Care Loan
If your assets exceed the threshold, you are not automatically disqualified from receiving help. The government offers a Residential Care Loan as an alternative option for some individuals, which is especially relevant for those who own their own home but do not have a spouse living there.
| Feature | Residential Care Subsidy | Residential Care Loan |
|---|---|---|
| Eligibility | Assets must be at or below the relevant threshold. | Assets exceed the threshold, usually due to owning a home. |
| Asset Inclusion | Varies based on threshold chosen; can include or exclude home. | Allows you to hold onto your home while receiving financial aid. |
| Repayment | Not a loan; no repayment required. | An interest-free loan secured against your home, repaid upon its sale or after death. |
| Purpose | Government covers most of the care costs directly. | Government provides a loan to cover care costs, paid directly to the rest home. |
| Considerations | Involves a full financial means assessment of assets and income. | The loan is a debt that will be recovered from the estate later. |
The Role of Trusts in Aged Care Funding
Trusts have historically been used to protect assets, but the rules around them have tightened considerably. While assets held in a trust are not technically your personal assets, Work and Income will investigate any gifting into a trust. Excessive gifting above the permitted annual limits will be counted back as your personal assets during the financial assessment. Seeking legal advice regarding trusts and aged care planning is strongly recommended, as it is a highly specialised area of law with significant implications. For more detailed information on aged care subsidies, consult the official Work and Income website, the primary source for this information: Work and Income - Residential Care Subsidy.
What About Income Testing?
If you pass the asset test, your income will also be assessed. Most forms of income are considered, including NZ Superannuation, private pensions, and investment earnings. A portion of your NZ Super is used to pay for your care, while you keep a small personal allowance for incidental expenses. However, a partner's employment income is not counted.
Conclusion
Navigating the financial aspects of aged care in New Zealand can be complex, but a clear understanding of the asset thresholds is the first step. The specific asset limit depends on your relationship status and whether your home is included in the assessment. Careful planning, including an awareness of gifting rules and the potential impact of trusts, is essential. By familiarising yourself with these regulations, you can better prepare for future care needs and ensure you or your loved ones receive the financial assistance available.
