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General, Gifting, Residential care subsidy, Trusts

Residential care subsidy update

The regulatory statement to the Budget 2012 amendments to the residential care subsidy thresholds (now CPI adjusted rather than increasing at $10,000 per annum) makes interesting reading reading.  Accepted that interesting might overstate the matter for many.  Regardless, the statement does throw up some numbers that add some flesh to the bones.

For example, of the approximately 19,000 people in long-term care, at present a little under half, 9000 in all, receive no subsidy.  Those people will meet the full costs of their care until their assets are below the permissible threshold.

And for some, who would have soon qualified, the threshold changes will delay the point of qualification and personal assets will be deployed for a longer period.  In this regard it is noted that the number of recipients of long-term residential care afffected by the new thresholds has been estimated at 170 for the year ending 30 June 2013, increasing to 610 by 30 June 2016.  Although the 170 figure does not seem large, the figures here can be deceptive.  Without the Budget 2012 threshold changes, the Ministry of Health advises that the cost of long-term care would have increased from the current level of $840m to $870m over the coming year.

Bringing these numbers back to person size, a person whose assets are above the threshold, will pay $70 per day from those assets towards that person’s care costs (the balance presumably being met by income contributions).  This equates to an annual contribution of around $25,500, a figure that is curiously similar to the amount of permissible gifting outside the five year period prior to admission (if a joint application is made).

While this could sound like an asset and estate planning message, and this is a trust blog, all said and done, the point of today’s ramble is simply to flesh out some of the numbers, both big and small that relate to long-term residential care, whether or not it is being funded personally.  As noted in earlier blogs on the same subject, the matter is complex – what is important is that informed decisions are made – and the numbers, both big and small, may assist.


  • Social Security (Long-term Residential Care: Budget Measures) Bill 2012
  • Ministry of Health – Agency Disclosure Statement (www.health.govt.nz)


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