How will I pay for Residential Care?
Often one of the primary concerns that will arise if you, or a loved one requires long term residential care, is how the cost of such care will be funded.
A Residential Care Subsidy (“Subsidy”) may be available through Work and Income New Zealand to assist with the costs of living in a rest home, dementia unit, or continuing specialised hospital level care. However, as Subsidies are means tested, you may not initially qualify.
If, following an evaluation of your assets, it is determined that your assets are such that you do not qualify for a Subsidy, a Residential Care Loan (“Loan”) may be provided by the Crown. To be eligible for a Loan:
- you must own and have lived in your own home prior to moving into residential care.
- your home must be valued at over $284,636.00.*
- your other assets – such as cash, investments and cars, must have a combined value of less than $15,000.00 if you are single, or $30,000.00 if you have a partner.
- you must meet any other conditions imposed by the Ministry of Social Development.
Security for the Loan is provided by way of a Caveat in favour of the Crown, registered against the title of your property. Repayments are not compulsory over the term of the Loan, however, the Loan will be required to be repaid in full within twelve months of your death, or the sale of your house, whichever comes first. During the term of the Loan it is your responsibility to maintain the property, and ensure all rates, insurances and other outgoings are paid.
Loans are also available to those who were previously living in a home in a retirement village under an Occupation Right Agreement. In these circumstances, as a caveat is not able to be registered, the security for the Loan is held against the termination proceeds of the Occupation Right Agreement. You will be required to assign your rights in the termination proceeds to the Crown, and the Retirement Village will need to provide consent to this arrangement.
The Loan reduces pressure on you and your family by providing access to funds to pay for your residential care, while you and your family make arrangements for your home to be sold, or to allow for family members to remain living in the home.
The friendly and experienced Seniors Team at Harmans specialise in these matters, and are able to ensure you are adequately advised prior to entering into a Loan. Please contact us on 03 3797835 if you would like to arrange an appointment to discuss.
*This is the current allowable limit as at November 2024, and may increase annually.
