Determining whether one will have to pay for care

This is a quide only, to be sure we recommend that one seeks the appropriate advice from Work and Income or a solicitor.

For those requiring residential care the costs can seem high, however when one considers the separate accommodation and care components then the costs are more understandable.

The maximum amount (maximum contribution) that someone can be expected to contribute for care is the price of rest home care in that region. See HERE for further information. Recently however, a distinction has been made between the ‘basic’ provisions of service (as pertains to the maximum contribution) and ‘additional services’ (those things for which you will have the pay more). To find out more about ‘additional services’ see the section ‘What is the maximum I should pay for residential care? I’ve heard that it can vary. Can you comment?’

There are two financial aspects that are considered when a person is means assessed to determine how much they are required to contribute towards the cost of their residential care. These are:



Whilst there is some expectation that those who can afford to pay for their care; do so, there has been an historical issue about the difference between the financial contributions required from younger people receiving similar care and their older counterparts. A better balance was needed. The result which commenced on 1 July 2005 was a progressive removal of asset testing that applied to the elderly. However with the budget of May 2012 the progressive removal of asset testing was halted.  The asset threshold, which previously increased each July by $10,000 now is increased by the consumers price index.  For more information on these changes please refer to the article on the Ministry of Health website "Changes to the Residential Care Subsidy Asset Threshold."

Please note; an income test still applies.

Private hospital care and dementia care are more expensive than rest home care. If you intend to pay privately for your care, it is very important to ask about the cost of care, as there can be a wide variation in prices and charges. (This can vary greatly even within the same facility e.g. private payers/subsidised payers.) Questions also need to be asked about what is and what is not covered in the fee.

The Residential Care Subsidy

After your needs assessment has been done and you have been assessed as requiring long-term Residential Care, you may apply for a Financial Means Assessment. This determines whether you qualify for a Residential Care Subsidy. You will also need to have a suitable care facility to go to.

Whilst the Financial Means Assessment is done by Work & Income the actual application forms are provided and signed by your needs assessor to indicate your eligibility. Take or post your completed forms to Work & Income.

The Introduction to the Residential Care Subsidy section of the Work and Income web site leads you through to other pages explaining qualification criteria, payments, extra assistance that may be available and other relevant information. You may need to move around the site before you find the information you need. (Please note; website links may change overtime.) A useful place to start is the section 65 years or older.

Sections that you may want quick access to include:

     Residential Care Subsidy - overview

     Means assessment of assets

     Means assessment of income


The Residential Care Subsidy Brochure gives a brief overview of the subsidy. (or as a PDF)

The web site also contains relevant sections of legislation pertaining to the subject. Work and Income's Residential Subsidy Unit in Whangarei may be contacted on free phone 0800 999 727 or free fax 0800 999 199 or Deaf Link free fax 0800 621621.

Privately paying people need to be mindful that if their funds run out that an application for the Residential Care Subsidy needs to be made well in advance of it being required as the processing can take some time.

Reviewed 20/08/2012

© Eldernet 2014