Income and asset testing

A financial means assessment looks at the assets and income and any gifting by the person to assess if the person is eligible for Government funding (the residential care subsidy) and/or what the person is liable to pay for the cost of their care.

On this page:

The financial means assessment has two components:

  1. An asset test
  2. An income test

If a person wishes to receive Government funding (the residential-care subsidy), are they required to have a financial means assessment?

Yes, they must have a financial means assessment from Work and Income. However a person who is needs assessed as requiring dementia or hospital care does not have to apply for a financial means assessment in order to receive the ‘top-up subsidy’ (where under section 140 of the Act the DHB funds the difference between the maximum contribution and contract price for dementia or hospital care).

A person must have a needs assessment before applying for a financial means assessment.

For more information, go to Residential care questions and answers.


How does a person apply for a financial means assessment?

The Needs Assessment Service Coordination agency (NASC) will supply a person with an application form for a financial means assessment when they have a needs assessment.

If you think that you may need help in filling out the application form you can call the Residential Subsidy Unit at Work and Income for assistance on 0800 999 727.

It is important that you send in your application form as soon as possible, even if you cannot complete it in full or do not yet have all the necessary documents. Your eligibility for Government funding can only be backdated up to 90 days before the date your application is received by Work and Income.


Who pays for the cost of the resident’s care while awaiting the outcome of a financial means assessment?

Under the Social Security Act 1964 a ‘resident’ who is needs assessed as requiring residential care indefinitely is liable for contracted care costs provided to them up to the maximum contribution amount. The care costs are capped at the amount of the maximum contribution unless the resident has agreed to pay for additional services that are not contracted care services. Where this is so, the resident remains liable to pay for these additional services.

If the person has been means assessed as having assets above the applicable asset threshold in the Act, and the cost of contracted care services they need is above the maximum contribution amount, under section 140 of the Act the DHB must pay the difference above the maximum contribution. This applies from the date the person is assessed as requiring that type or level of residential care or the date they begin receiving contracted care services.

If the person has been means assessed as having assets equal to or below the threshold, under section 141 of the Act the DHB is liable to pay for the difference between the cost of contracted care services needed and the contribution the resident makes (as determined in the means assessment).

The DHB is liable to pay from the date the resident is assessed as having assets equal to or below the applicable asset threshold or up to 90 days preceding the date of the means assessment that determined their eligibility.

The person must be in a facility that has an Age-Related Residential Care Contract with a DHB.


Will a resident be refunded if their means assessment indicates they qualify for Government funding (the residential-care subsidy)?

If a person enters residential care and is waiting for a needs assessment or a financial means assessment to be processed, they are liable to personally pay fully for the cost of their care.

If the needs assessment determines that the person requires long-term residential care indefinitely and the financial means assessment determines that the person qualifies for Government funding (the residential-care subsidy), then the DHB will pay the rest home or hospital for the cost of contracted care services that the person received for up to 90 days preceding the date of the financial means assessment that determined their eligibility. The rest home or hospital will then refund the person for the cost of care for this period only.

If a resident received care for a longer period than 90 days before the application for a financial means assessment was received, then they are liable to fully pay for the cost of care received before the 90 days.

If a resident has been needs assessed and is paying the maximum contribution for contracted care services provided, and a review of their means assessment determines that they should contribute a lesser amount, than the DHB is liable to pay for the difference up to 90 days before the date of the financial means assessment that determined their contribution.


Asset test (financial means assessment as to assets)

Further detail on financial means assessment can be found at the Work and Income website.

What does the term ‘assets’ refer to?

For the purposes of a financial means assessment, the Act defines ‘assets’ as realisable assets of the person and his or her spouse. There is an inclusive definition of ‘assets’ in Part 2 of Schedule 27 of the Act.

Examples of assets that may be considered in the asset test include:

  • the value of property
  • cash or savings
  • investments or shares
  • leisure boats
  • caravans and campervans
  • investment properties
  • licence to occupy contracts
  • the value of assets gifted (gifts given away)
  • loans made to other people (including family trusts).

A person’s home (principal residence) is generally included in the asset test if they do not have a partner (spouse); or both the person and their partner (spouse) are in long-term residential care; or a person’s partner is in long-term residential care, but has chosen to have their assets assessed against the higher asset threshold (Asset Threshold A).

What assets are excluded from the financial means assessment?

Part 2 of Schedule 27 of the Act defines assets that are exempt from a person’s financial means assessment (‘exempt assets’).

Exempt Assets that are excluded from the financial means assessment include:

  • The home (the principal residence) of the person’s partner (spouse) or a dependent child of the person, if that person has chosen to be assessed against the lower asset threshold (Asset Threshold B)
  • A car or similar vehicle that is for the personal use of the person’s partner (spouse), if that person has chosen to be assessed against the lower asset threshold (Asset Threshold B)
  • The value of any ex-gratia payment by the Government of New Zealand or the Government of any other country, because the person or their spouse was a prisoner of war or civilian internee during the Second World War
  • The value of any pre-paid funeral of the person or their spouse, up to a maximum value of $10,000
  • A lump sum paid to the person under Schedule 1 of the Accident Compensation Act 2001, or a lump sum payment of an independence allowance under Part 13 of the Accident Insurance Act 1998 or Part 4 of Schedule 1 of that Act; but this exemption applies only in the first 12 months after the payment is made.

The following assets are also exempt from the financial means assessment as specified by the Social Security (Long-Term Residential Care) Regulations 2005:

  • personal belongings such as clothing, jewellery, personal collectables, objects or family treasures/taonga such as art, books, stamps and antiques;
  • household contents/chattels such as appliances and furniture; and
  • any increase in the value of a person’s assets included in the initial financial means assessment (that determined the person had assets equal to or below the asset threshold) will be excluded from any subsequent review of a person’s means assessment.

Income test (financial means assessment as to income)

Further detail on financial means assessment can be found at the Work and Income website.

There are no limits on the income that you can earn, but any income that a resident earns above the exempt income amount will go towards the cost of their care.

What does the term ‘income’ refer to?

For the purposes of a financial means assessment, Part 3 of Schedule 27 of the Act defines income (after deduction of income tax).

Examples of income that may be considered in the income test include

  • New Zealand Superannuation or any other benefit
  • 50 percent of private superannuation payments received by the person and their spouse (partner)
  • 50 percent of life insurance annuities received by the person and their spouse (partner)
  • Overseas Government pensions (excluding a War Disablement Pension)
  • Contributions from relatives
  • Accident insurance payments
  • Earning from investments or business or employment
  • Redundancy or termination payments
  • Income from a family trust
  • Income that the person or their spouse has directly or indirectly deprived themselves of.

What income is excluded from the financial means assessment?

Part 3 of Schedule 27 in the Amendment Act defines income that is exempt from a person’s financial means assessment.

As of 1 July 2014 income from any assets is included in the income test except for:

  • the first $963 for a single person
  • the first $1995 for a couple with both are in care
  • the first $2887 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.

The amounts are reviewed each year, but not always increased. The latest amounts, and further detail on financial means assessment, can be found on the Work and Income website.

Income are also exempt from the financial means assessment as specified by the Social Security (Long-Term Residential Care) Regulations 2005. These include:

  • any ex-gratia payments or interest from such a payment for prisoners of war and civilian detainees; and
  • any interest generated from the pre-paid funeral amount of the person or of the person’s spouse, as defined in Part 2, Schedule 27 of the Act.

The amount of exempt income from assets increases on 1 July each year. This started from 1 July 2006. The adjustment is based on changes to the consumers’ price index for the year ending on the previous 1 March, and is rounded to the nearest dollar.

In this section

Back to top