The first thing to know is that your relative must be assessed as needing long-term care. The needs assessment, carried out in hospital or by a community team, will confirm what level of care: rest home, long-stay hospital, dementia, or psycho-geriatric. Call Seniorline on 0800 725 463, for advice.
If the move is sudden, as many are, there’s a good chance that a preferred facility is full, or a different type of care is needed. Even if the person lives in a retirement village, a rest home bed may not be available there despite earlier marketing promises.
The cost of care
Rest home and other aged care is subsidised if the person lives on NZ Super alone and has assets below the threshold. For 2025, a single person aged 65 or older must have $291,825 or less in total assets to be eligible. If a spouse or partner is also in care, the combined assets must also be $291,825 or less.
If a partner remains living at home, you can choose whether to include the value of the family home and car in the asset calculation: excluding them, the limit is $159,810, or including them, the limit is $291,825.
People who have more than the asset levels above need to contribute up to a maximum weekly charge set by the government. That charge ranges from $1460.27 in the Far North District to $1571.57 in Auckland City. If you’re not a New Zealand citizen, or haven’t been assessed as needing care, then you’ll most likely be charged more.
The charges above are for a basic standard room. The rest homes and other facilities can charge more for a larger room, a private bathroom, and other “extras” such as a view, ensuite, enhanced decor and so on. Charges for these “premium” facilities range from $10 to $85 per day extra.
Planning ahead
The best time to think about aged care is well before it’s needed. Getting enduring powers of attorney in place is really helpful. Your friend or relative may be in no fit state to make decisions, fill in paperwork and so on when they actually move into care.
It’s too late at this stage to set up family trusts. Any gifts to trusts or individuals over $7000 per year (per couple) in the five years before applying for a rest home can be counted back as assets. Earlier gifts of more than $27,000 per year per couple are at risk of being clawed back.
Be aware that some members of the family can become very difficult when care is mooted, because they don’t want to lose “their inheritance” to rest home fees. They might argue: “mum doesn’t need care, she’s fine at home”. The person may feel guilty, but the goal is often financial.
When assets are over the threshold
If your relative does need to pay, they will need to pay using investments such as KiwiSaver, term deposits and shares.
Other options for paying the fees include: a reverse mortgage, which allows older homeowners to access equity in their home without selling, though interest compounds over time. Some families rent out the home rather than sell it, and use the rent to cover rest home fees.
The bottom line is to educate yourself in advance. It’s likely this will be an emotional time for you and your friend or relative. The less you have to scramble when it happens, the better.
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