Financial Frequently Asked Questions
Who can I talk to about finances and residential care?
Ask around your network of family and friends for referral to a lawyer or
financial advisor who has some expertise in this specialist area. Public
Trust may also be able to help.
Work and Income acts as an agent for the Crown, they do the income and
asset-testing on behalf of District Health Boards to establish
entitlement for Residential Care Subsidy. They are prepared to look at
situations on a ‘case by case basis,’ so it is always worth seeking
their advice.
Further information:
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For general enquiries about National Superannuation and Advance Payments
phone Work and Income NZ on 0800 552 002. |
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For specific enquiries about Residential Care Subsidy, Residential Loan or
Superannuation - when you are thinking about long term care, phone Work
and Income NZ on 0800 999 727. |
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http://www.workandincome.govt.nz/publications/brochures.html
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What do I do when my money runs out?
Scenario: I'm paying for my care privately now, but what
do I do when my funds run out?
Public funding for rest home and hospital care for older people is known
as the Residential Care Subsidy. You have to apply for this. Application
forms are only available through Needs Assessment and Service
Co-ordination (NASC), who do an assessment and authorise the
application. Often an assessment done within the previous 12 months is
considered adequate, but check with your local NASC service. If your
health status has recently changed, you may require another assessment.
It is best to do all this before your money gets down to the allowable
amount, as the application process through Work and Income takes time.
Subsidy will not be paid until the Needs Assessment has been completed and
Work and Income have approved the application. They can only backdate
approval 28 days prior to when the application is received.
Once you have applied for the subsidy, Work and Income Residential Subsidy
Unit in Whangarei can calculate when your money will reach the allowable
limit. They calculate the figures based on the 'maximum contribution'
per week. These figures vary from region to region.
Further information:
Do I have to sell my house if I go into residential care?
The short
answer is no. If you do not want to sell your house, but do not have
sufficient money to pay your fees, you may be able to apply for an
interest-free loan. You arrange a residential care loan by applying
for
subsidy
in the normal way, filling in an extra section which relates to
the loan. The loan is not a lump sum, it builds up week by week as a
debt against your property.
If you qualify for a loan, Ministry of Social Development will ask you to sign
a legal contract called the ‘Agreement to pay Residential Care Subsidy’.
Security is taken over your property, usually by registering a caveat over
the title and the fees paid build up as a loan. This becomes repayable on
the death of the owner in care or when the house is sold.
Further information:
Do we sell our home if it’s just one of us going into care?
If you
have a partner or dependent child living at home, you do not need to
sell your property. For a couple where only one partner requires
care, the house, chattels and car are not taken into account and the
allowable level for combined assets is $55,000. You can choose to be
tested against a total asset level of $150,000. If you own two
properties, then it is likely you will have to sell one.
Further information:
How long will it take to organise a Residential Care Loan?
The
average time frame from application for a financial means assessment
to first loan payment can be up to twelve weeks. There have been
large numbers of applications following the July 2005 change in
legislation, so the current time frame may be longer. If it is
determined that you are not financially eligible for Residential
Care Subsidy, Work and Income (part of the Ministry of Social
Development) pass the loan application on to the Ministry’s Legal
Services division.
Ministry
of Social Development recommend that you pay only your New Zealand
Superannuation (less a personal allowance of $30.87 per week)
towards the cost of your care while you wait for the loan
application to be processed, as calculations for the loan are made
on this basis. If any additional money is paid to the provider
whilst awaiting the loan, you will need to negotiate a refund with
the care provider when the loan starts, as loan payments are made
direct to providers.
See also,
Can a rest home ask me to pay before subsidy comes through?
Further information:
How much National Super will I receive once I’m in care and paying
privately?
You will
be paid the basic New Zealand Superannuation, minus other housing
benefits such as 'living alone' payments you may have been entitled
to when you were living in your own home. Your Super will continue
to be credited into your bank account. As you are paying privately,
it is your responsibility to pay fees to the care provider. Anything
you agree to pay for should be in your Admission agreement - a
private contract between you and the care provider.
Further information:
Can I borrow more money if I’m already receiving a Residential Care Loan?
No, this
is not possible. The loan is not like an ordinary loan where you
borrow a set amount of money. Instead, by registering a caveat over
the title of your house, the fees owed for your care are paid by
Ministry of Health and build up as a debt against the property.
Work and Income New Zealand use the maximum contribution rate to calculate the
cost of care, this includes doctor’s fees, incontinence products and
transport costs, etc.
Further information:
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Phone Work and Income NZ 0800 999 727 |
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See the National contract for Aged Residential Care Services on
www.moh.govt.nz/olderpeople , sections A13, D13 |
If I take out a Residential Care Loan, can I keep my NZ National Super?
No, you
must pay the Super contribution towards the cost of your care. You
can do this yourself, or ask Work and Income to redirect on your
behalf. You retain a personal allowance of $30.87 per week. (April
2005)
Further information:
Can a rest home ask me to pay before my subsidy comes through?
You may be
asked to cover the cost of care until your subsidy or loan is
approved. If this happens, pay the New Zealand Superannuation
contribution to the fees until the
Residential Care subsidy payment comes through. You retain
the personal allowance portion for your own use - this is $30.87 per
week (April 2005) ie. a single person will pay $199.87 and one
partner of a couple will pay $161.55 per week to a rest
home/hospital.
If you
have paid the full amount of New Zealand Super to the rest
home/hospital, then you will need to recover the personal allowance
when the subsidy starts being paid.
Further information:
Will my partner's earnings be counted as income?
For couples with one partner in care, any income from paid
employment of the partner living in the community will be excluded.
Will my War Disablement pension affect Residential Care subsidy?
This
pension will not be counted as income for the purposes of
Residential Care subsidy. However, income from the following will go
towards your care:
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income from a family trust |
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accident insurance payments |
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overseas government pensions |
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contributions from relatives |
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earnings from investments or business |
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New Zealand Superannuation, any pension or income support payment |
For New Zealand registered private superannuation schemes and annuities,
only 50% is counted as income.
Further information:
Am I allowed to give $5,000 to my grandson before I go into long-stay
care?
Gifting is
a very complex area - it is best to discuss individual circumstances
with Work and Income, Whangarei before making any decisions.
Further information:
What is Maximum Contribution?
This is a new term introduced with the Social Security (Long term
residential care) Amendment Act 2004. Maximum Contribution is the
amount the District Health Board (DHB) pays for rest home care in a
given area. Maximum Contribution is GST inclusive and rates vary.
Areas with high land values have a higher rate, but for most parts
of New Zealand the Maximum Contribution is $636 per week.
Rates contracted by the DHB for Dementia Units and Private Hospitals
are higher than Maximum Contribution, so the shortfall is paid by
the DHB as Top Up subsidy (part subsidy).
What portion of my capital will I lose when I leave my retirement village
unit?
This fee,
known variously as the 'release fee', 'depreciation', 'transfer
fee', or 'termination fee' is calculated differently by different
villages, but often amounts to about 20% of the original purchase
price.
Depending on your contract with the village concerned, you may also be
liable for ongoing service fees until the unit is sold.
Further information:
How can I get money to pay for a new pair of glasses?
If you are
living at home, you can apply for an 'Advance Payment' of
Superannuation through your local Work and Income NZ office - this
usually needs to be repaid.
If you are in care and receiving Residential Care subsidy, you cannot be
asked to repay the advance from your Personal Allowance. If there is a
caveat over the title of your home, Work and Income may be able to
recoup the money when the house is sold.
Generally speaking, Advances are only made for glasses, dentures and
hearing aids for costs up to a maximum of $1000.
Further information:
Can I pre-pay funeral costs?
You can
deposit up to $10,000 in an approved
funeral trust, ie one where money cannot be accessed until the person
dies. Approved trusts are exempt from asset testing for Residential Care
subsidy. A trust set up by an individual solicitor that meets approval
conditions, may be given an 'ok' by Work and Income on a case by case
basis. Any interest generated by the trust is also exempt.
Public Trust, the Funeral Directors Association of New Zealand,
and a number of other trusts such as Tower, Perpetual,
Guardian etc all offer pre-paid funeral trust schemes. Some require
a one-off establishment fee, some have ongoing costs, and for some
there is also a discharge fee.
Further information:
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Ministry of Health
