The residential care subsidy (“the Subsidy”) provides financial support towards any long-term residential care you might need in a rest home or hospital. If you need residential care and do not qualify for the subsidy, you will need to pay the full cost of your care. Applications for the Subsidy are made to the Ministry of Social Development (MSD) and involve an asset and income assessment.
An assets assessment considers the value of the assets of a person as at the date of the assessment and determines whether those assets are above, equal to, or below the applicable asset threshold. The assessment excludes certain assets including the family home, family car, pre-paid funeral plans or ACC payments.
The thresholds for the assets assessment are continuously changing, but its important to consider the effect any gifting will have on your eligibility. Gifting includes any assets that a person and/or their partner have given away to other people. The assets assessment can include any assets or cash you might have gifted in the past, and apply these to your overall asset total.
In assessing whether your gifting has affected your eligibility, the first question to consider is the timeframe in which you have gifted. There are different thresholds for gifts made in either:
- The 5 year period before your Subsidy application; or
- More than 5 years before your Subsidy application.
Assets gifted in the 5 years before your application
MSD will count in your asset assessment any gifts in excess of $6,500 that you and your partner have made each year in the 5 years before you apply for the Subsidy.
Assets gifted more than 5 years before your application
MSD will count in your asset assessment any gifts in excess of $27,000 that you and your partner have gifted each year in the 5 years before you apply for the Subsidy.
It is important to note that the same limit applies to an individual or a couple. Couples will need to split the gifting amount to avoid over gifting (e.g. $3,250 a year each within 5 years of application or $13,500 a year each more than 5 years before application).
The rules of the residential care subsidy are often changing and it is difficult to predict how the thresholds might change in the future. What is certain at the moment is that the MSD will consider all gifting an applicant has completed. Any gifting above the specified limits is considered “excess gifting” and will be counted towards your total assets, and will impact your chances of being eligible.
If you require advice around the residential care subsidy and the impact your gifting might have on your eligibility, contact Katelyn Silvester or one of our team for further advice.
This article is current as at the date of publication and is only intended to provide general comments about the law. Harkness Henry accepts no responsibility for reliance by any person or organisation on the content of the article. Please contact the author of the article if you require specific advice about how the law applies to you.