Navigating the Costs of Dementia Care in New Zealand
As New Zealand's population ages, the number of people living with dementia is expected to rise significantly, from around 83,000 in 2025 to a projected 170,000 by 2050. This creates an urgent need for families to understand the financial landscape of long-term care. In NZ, the cost of dementia care is a shared responsibility between individuals and the government, determined by a formal assessment process.
The First Step: Needs Assessment (NASC)
Before any funding is discussed, a person requiring care must undergo a Needs Assessment. This is conducted by a Needs Assessment and Service Coordination (NASC) agency, which works under Te Whatu Ora – Health New Zealand. The assessor evaluates the individual's support needs to determine the appropriate level of care, whether it's support at home or long-term residential care in a rest home or hospital. This assessment is a mandatory prerequisite to apply for any government funding for residential care.
Government Funding: The Residential Care Subsidy
The primary form of government assistance is the Residential Care Subsidy (RCS). This subsidy is not guaranteed and is subject to a strict financial means assessment conducted by Work and Income (WINZ). The purpose of the means test is to determine if an individual can afford to pay for their own care.
Asset and Income Testing
The means assessment looks at a person's total assets and income.
- Asset Thresholds: As of the latest updates, there are specific asset thresholds. For a single person aged 65 or over, their total assets must be $291,825 or less. If they have a partner not in care, they can choose between two thresholds. These figures are typically adjusted annually.
- Income Contribution: If a person qualifies for the subsidy, they are still required to contribute to the cost of their care. This usually involves most of their NZ Superannuation and 50% of any private superannuation payments. They are left with a small personal allowance for incidental expenses.
If assets are above the threshold, the individual is classified as a 'private payer' and is responsible for the full cost of their care until their assets reduce to the eligible level.
Private Payers and Typical Costs
Individuals who do not qualify for the Residential Care Subsidy must pay for their care privately. The cost of care is set by Te Whatu Ora for each region, so standard room fees are consistent within that area. While dementia-level care is more expensive than standard rest home care, the Ministry of Health provides a 'top-up', so the maximum contribution for a standard room is the same regardless of care level.
As a general guide, weekly costs for residential care can be around $1,450, but this varies by region. Many facilities also offer premium rooms with enhanced features for an additional charge, which is not covered by any subsidy.
Comparing Funding Options: Subsidy vs. Private Pay
| Feature | Residential Care Subsidy (Public) | Private Payer |
|---|---|---|
| Eligibility | Must pass a needs assessment AND a financial means test (low assets/income). | Anyone who requires care but does not meet the subsidy's financial criteria. |
| Payment Source | Combination of person's income (e.g., NZ Super) and government subsidy paid directly to the facility. | Individual pays the full cost directly to the facility from their assets and income. |
| Room Choice | Covers the cost of a standard room. | Can choose any available room, including premium rooms (at extra cost). |
| Financial Impact | Preserves a small personal allowance and asset threshold. | Depletes personal assets until the subsidy threshold is met. |
Other Financial Support Options
- Residential Care Loan: If a person's assets are tied up in their home and they don't qualify for the subsidy, they may be eligible for a government loan to help pay for care. This interest-free loan is secured against the property and repaid when the house is sold or from the estate.
- Disability Allowance: A weekly payment of up to $80.35 (not taxed) can help with ongoing costs related to a disability, such as doctor's visits or special medical supplies. This is also income-tested.
- Support for Caregivers: The Carer Support Subsidy provides funding to give unpaid, full-time carers a break. This can be used to pay for short-term respite care. Additionally, some family members may be eligible to be paid as a carer under specific funding models.
The Importance of Enduring Power of Attorney (EPOA)
An EPOA is a crucial legal document. It allows a person (the 'donor') to appoint a trusted individual (the 'attorney') to make decisions on their behalf if they lose mental capacity. There are two types:
- Property: Manages finances, pays bills, and handles assets.
- Personal Care and Welfare: Makes decisions about health, living arrangements, and daily care.
For someone with dementia, having EPOAs in place ensures their financial and personal affairs can be managed smoothly when they are no longer able to do so themselves.
Conclusion
In New Zealand, the responsibility for funding dementia care is a hybrid model. While the government provides a safety net through the Residential Care Subsidy for those with limited means, many New Zealanders will need to contribute significantly from their own savings and assets. The journey begins with a NASC assessment, and navigating the system requires a clear understanding of the asset and income tests. Proactive financial and legal planning, including setting up EPOAs, is essential for any family facing a dementia diagnosis.
For the most current rates and detailed eligibility criteria, it is always best to consult the official Work and Income website.
