Residential care questions and answers

What is residential care?

Residential care includes the following types of long-term care provided in a rest home or hospital:

  • rest home care
  • continuing care (hospital)
  • dementia care
  • specialised hospital care (psychogeriatric care)

Short-term respite care and convalescent care may be provided in these facilities, but do not involve income and asset testing.

Long-term residential care does not include independent living in a retirement village.

More detailed information can be found in our booklet Long-term Residential Care for Older People – What you need to know.


Is there a list of residential care providers?

A full list of certified hospital and rest home services providers is available in our database of rest home providers.


Who is responsible for funding residential care services for older people?

District health boards (DHBs) are responsible for funding residential care services for older people under the Social Security Act 1964. DHBs have a contract with rest home or hospital owners (‘providers’) to provide long-term residential care (‘contracted care services’) to residents who are eligible for government funding through the residential-care subsidy.

Only rest homes or hospitals that have achieved Certification under the Health and Disability Services (Safety) Act 2001 and comply with the Health and Disability Sector Standards 2001 can have a contract with DHBs. Rest homes and hospitals that have an Age Related Residential Care Contract with a DHB are referred to in these Questions and Answers as ‘DHB contracted care facilities’.

DHBs are responsible for ensuring that there are sufficient contracted care beds available to people assessed as requiring long-term residential care indefinitely.


What are the criteria for entry into residential care?

People can enter residential care of their own accord without having a needs assessment by a DHB or DHB Needs Assessment Service Co-ordination agency (NASC), but as a consequence they are personally liable to pay the full cost of their care.

To enter DHB contracted residential care

  • the person must be needs assessed by a DHB or DHB NASC as having high, or very high needs which are indefinite (ie, the person’s condition cannot be reversed);
  • the DHB or NASC must determine that the person cannot be safely supported within the community;
  • the person must be aged 65 or over; or aged between 50 and 64, unmarried and with no dependent children;

the person must be eligible for publicly funded health and disability services (a New Zealand citizen or permanent resident, or eligible under the Eligibility Direction made under the New Zealand Public Health and Disability Act 2000).

View more information on the Eligibility Direction view the Eligibility section.


How does a person apply for residential care?

If a person believes they can no longer live at home even with support, the first step is to apply for a needs assessment from a DHB or local DHB funded Needs Assessment and Service Coordination Agency (NASC). Alternatively a person may be needs assessed by a specialist while a patient in a public hospital.

A needs assessment will determine the level of need the person has – very low, low, medium, high, or very high. During the service coordination process it will then be determined:

  • whether or not the person has a condition that can be reversed;
  • whether or not the person can be safely supported in the community; or
  • if the person needs long-term residential care indefinitely, what level of care is needed in a rest home or hospital.

For more information, read the questions and answers on needs assessment, or see the list of NASC agencies in each DHB region.


How does a person apply for a residential-care subsidy?

Not everyone is entitled to funding under the Social Security Act 1964.

A person must first have a needs assessment from a DHB or DHB funded Needs Assessment Service Coordination agency (NASC). If the needs assessment determines that the person requires long - term residential care indefinitely and the person wishes to apply for a Residential Care Subsidy, then the DHB or NASC will provide the person with a financial means assessment application form to complete.

The Ministry of Social Development (through Work and Income) then carries out a financial means assessment that considers the person’s assets and income, and any gifting that has occurred.

The financial means assessment has two components:

  1. An asset test
  2. An income test.

If the person has assets above the applicable asset threshold then the person is liable to pay for the costs of their care up to the maximum contribution.

Note: From 1 July 2012, the asset threshold used to assess a person’s eligibility to the Residential Care Subsidy will increase by the Consumers Price Index (CPI). Please go to Changes to the Residential Care Subsidy asset threshold for more information.

If the person’s assets are equal to or below the applicable asset threshold, they qualify for Government funding (the residential care subsidy) to pay for most of the cost of their care. An income test will then determine what the person must contribute to the cost of their care. The level of subsidy will depend on the type of care the person is assessed as requiring.

A weekly personal allowance and an annual clothing allowance are paid separately to the person.

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

View the questions and answers on income and asset testing.


What happens if the circumstances of the person in long-term residential care change?

A person in long-term residential care must apply for a review of their means assessment at any time because of a change in their circumstances (ie, their spouse dies or requires care, or the person believes their assets are now equal to or below the allowable asset threshold and they may now qualify for a Government subsidy).

The person should inform Work and Income of a change in circumstances and apply for a review of their means assessment. The reassessment will look at the person’s current assets and income, and will determine whether or not they qualify for government funding (the residential-care subsidy) or whether there is a change in the amount they contribute towards care costs.

If the person requires a higher level of care, the rest home or hospital manager will contact the Needs Assessment Service Coordination agency and a needs assessment will determine the appropriate level of care. The person may be relocated to another facility if the current rest home or hospital cannot provide the level of care required.

DHBs will pay the difference between what the person is contributing (the assessed amount or maximum contribution) and the contract price for the higher level of care – continuing care (hospital), dementia and specialised hospital (psychogeriatric). To be eligible for this, the person needs to be receiving contracted care services in a DHB contracted care facility (in a rest home or hospital that has a contract with a DHB).

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


While the person is in care, what individual services/items do they have to pay for that are not covered by Government funding (the residential care subsidy)?

The services covered by the subsidy (contracted care services) include:

  • Food services
  • Laundry
  • Nursing and other care
  • General practitioner visits
  • Prescribed medication
  • Continence products
  • All health care that is prescribed by a general practitioner
  • Transport to health services.

The Age Related Residential Care contract with district health boards requires rest homes and hospitals to tailor services to meet the needs of each resident. They cannot charge subsidised residents for services that are covered in this contract. The services a person can expect should be set out in the admission agreement or private contract they sign with their rest home or hospital.

The services that are not covered by the subsidy (that are not contracted care services) include:

  • Specialist visits (not publicly funded by the DHB or ACC)
  • Transport to other services or outside social functions
  • Toll calls (made by the resident)
  • Private phone or cellphone
  • Newspapers, books and magazines (personal)
  • Personal toiletries
  • Recreational activities, where those are not part of the normal programme
  • Hairdresser
  • Dietitian, podiatrist or other services that have not been prescribed by a doctor or are not funded by the DHB
  • Spectacles, hearing aids and dental care.

Any extra services a person agrees to pay for must be set out in their admission agreement or private contract with their rest home or hospital.

A person has the right to refuse any or all of the extra services offered by a rest home or hospital (that are not required under the DHB contract). This should be noted in their admission agreement.

Information is also available in the brochure Long-term residential care for older people: What you need to know.

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


What is a Licence to Occupy?

A Licence to Occupy (LTO) agreement is an agreement between a person and a residential care provider that generally requires the person to pay a lump-sum payment for the right to occupy a specific unit or apartment, additional monthly payments for communal expenses and services received and includes termination conditions.

If a person with an LTO, has been assessed as requiring long-term residential care indefinitely and qualifies for Government funding (the residential care subsidy), the LTO will need amending before the subsidy can be paid. The person, or someone on their behalf, should approach the provider to end the LTO or amend it to exclude services covered by the DHB Contract (contracted care services) so the provider is not paid twice for the same set of services.

Providers who charge subsidised residents or anyone else for services under an LTO that are covered by the Age Related Residential Care Contract are in breach of that Contract.


If a person is admitted to hospital whilst in a residential care facility, do they have to continue paying for their bed at the facility?

If the person is a subsidised resident, the Age Related Residential Care Contract specifies what payments will be made for subsidised residents during a temporary absence.

Generally payments will continue for up to 21 days in any one financial year for a subsidised resident admitted to hospital for treatment or to undergo an assessment (or for longer if recommended by a Needs Assessment Service Coordination agency).

If a subsidised resident spends time away with family or friends the district health board will continue payments for up to 14 days at any one time and up to 28 days in total in any one financial year (1 July of a year until 30 June of the next year).

The admission agreement or private agreement should state what other residents are expected to pay.


How does a resident make a complaint?

The first step is to check the resident’s admission agreement or private contract to see what services the person agreed to pay for and also what complaints processes the provider has in place. The next step is to talk to the rest home or hospital manager. A resident may want a family member, friend or advocate with them for support when they meet the rest home or hospital manager to raise their concerns.

For complaints about costs you can seek legal advice or go to the Disputes Tribunal (formerly known as Small Claims Tribunal).

Advice is available at How to take a claim to the Disputes Tribunal on the HowToLaw website.

For complaints about services you can contact your local Health and Disability Advocate (Office of the Health and Disability Commissioner) by phoning Auckland (09) 373 1060, or Wellington (04) 494 7900 or in other areas by phoning 0800 11 22 33.

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