Health of Older People in New Zealand

Questions and Answers on Changes to Income and Asset Testing

On 1 July 2005 the Social Security (Long-Term Residential Care) Amendment Act 2004 came into force. This Act amended the Social Security Act 1964. There are a number of changes to income and asset testing of people who require long-term aged residential care. The new policy applies to people who were already in DHB contracted care facilities and to all people who entered such facilities from 1 July 2005.

Back to Questions and Answers on Residential Care and Income and Asset Testing

What are the asset thresholds?

Asset thresholds are the level at which the value of your assets need to be equal or below in order to qualify for government funding through the Residential Care Subsidy.

Asset thresholds increase by $10,000 on 1 July of each year.

Schedule 27 Means assessment under Part 4 Social Security (Long-term Residential Care) Amendment Act 2004

Applicable Asset Thresholds
The table (below) sets out the applicable asset thresholds that apply annually from 1 July 2005.

Column A applies to every resident assessed as requiring care:

Who has no spouse; or
Whose spouse is also a resident assessed as requiring care; or
Whose spouse is not a resident assessed as requiring care but who has elected to have Column A apply to him or her rather than Column B

Column B applies to every resident assessed as requiring care:

Whose spouse is not a resident assessed as requiring care; and
Who has not elected to have Column A apply to him or her.

Year	Column A $	Column B $



1 July 2005 - 30 June 2006	150,000	55,000
1 July 2006 - 30 June 2007	160,000	65,000
1 July 2007 - 30 June 2008	170,000	75,000
1 July 2008 - 30 June 2009	180,000	85,000
1 July 2009 – 30 June 2010	190,000	95,000
1 July 2010 – 30 June 2011	200,000	105,000
1 July 2011 – 30 June 2012	210,000	115,000
1 July 2012 – 30 June 2013	220,000	125,000
1 July 2013 – 30 June 2014	230,000	135,000
1 July 2014 – 30 June 2015	240,000	145,000
1 July 2015 – 30 June 2016	250,000	155,000
1 July 2016 – 30 June 2017	260,000	165,000
1 July 2017 – 30 June 2018	270,000	175,000
1 July 2018 – 30 June 2019	280,000	185,000
1 July 2019 – 30 June 2020	290,000	195,000
1 July 2020 – 30 June 2021	300,000	205,000
1 July 2021 – 30 June 2022	310,000	215,000
1 July 2022 - 30 June 2023	320,000	225,000
1 July 2023 – 30 June 2024	330,000	235,000
1 July 2024 – 30 June 2025	340,000	245,000
1 July 2025 – 30 June 2026	350,000	255,000

View more information on income and asset testing in the Financial Means Assessment section.
View information on the Residential Care Subsidy.

Does the income test still apply?

Yes. The Government considers that it is reasonable to expect older people to contribute towards expenses they would have to pay for in their own home.

Income from any assets are included in the income test except for:

the first $854 for a single person
the first $1,707 for a couple with both are in care
the first $2,560 for a couple with one partner in the community
for a couple with one partner in care, any income from paid employment of the partner living in the community is also excluded.

View more information on income and asset testing in the Financial Means Assessment section.

Does income and asset testing apply to people aged 50 - 64?

From 1 July 2005, asset testing was removed for needs assessed people aged 50-64 who are single with no dependent children and reside in DHB contracted residential care facilities. They are still income tested to determine how much they can contribute to their care costs.

They will become subject to asset and income testing under the Act at the age of 65. A financial means assessment will determine whether the person is eligible for Government funding and establish the amount they need to contribute towards the cost of their contracted care services. The person will be liable to pay the cost of any services that are not contracted care services that they agree to pay under an admission agreement or private contract with the rest home or hospital provider.

Refer also to Who is responsible for funding residential care services for older people? and What are the criteria for entry into residential care?

What if a person’s assets are worth less than the applicable asset threshold?

If a financial means assessment has determined that a person has assets equal to or below the applicable asset threshold in the Act and thus qualifies for Government funding (the Residential Care Subsidy), the person will not be asset tested again unless their circumstances change and/or they apply for a reassessment.

Refer also to What are the asset thresholds? and What happens if the circumstances of the person in long-term residential care change?
View information on the Residential Care Subsidy.

What happens if a person’s assets are worth more than the applicable asset threshold?

If a person’s assets exceed the applicable asset threshold in the Act, they will have to personally pay the relevant maximum contribution towards the cost of their care until their total assets as determined by the financial means assessment reduce to the relevant applicable asset threshold.

People whose assets are over the applicable asset threshold in the Act, (because they own their former home) may apply for a residential care loan. Whether the person is eligible for a residential care loan depends on whether the person meets the loan criteria.

Under the loan scheme, the Crown funds the loan recipient’s residential care costs directly to the rest home or hospital as interest-free advances which are repayable on certain events. The loan is secured by a caveat over the loan recipient’s house. When the house is sold or the estate is wound up, or other events occur as set out in the loan agreement, the loan is repaid to the Crown.

Refer also to What are the asset thresholds?.
View more information on the Residential Care Loan Scheme.
View more information on the Maximum Contribution.

Page last updated: 18 July 2008