Residential Care Loan

A Residential Care Loan is an agreement with the Crown to provide a loan for the cost of your care. It's secured by placing a caveat over your home.

It's an interest-free loan paid directly to the rest home. It's usually repaid when you pass away or your home's sold, whichever happens first.

The Ministry of Health pays for the loan. We do things like:

• prepare loan agreements and other documents
• a financial means assessment
• handle settlements.

You may be able to get a Residential Care Loan if:

• you still own the home you lived in before going into residential care
• your home is worth more than $284,636 in assets (if it's less, you may qualify for a Residential Care Subsidy)
• the total of any other assets you own is less than $15,000 if you're single, or $30,000 if you have a partner.

To approve your application, we'll also check that:

• it fits within the loan scheme
• we can secure the loan with a caveat over your home
• you'll be able to repay the loan and meet your obligations under the loan agreement.

If you get a Residential Care Loan, it will be paid directly to the rest home to help pay for your care.

How much you can get depends on the rest home fees and where you live. We call this the 'maximum contribution'.

The loan amount covers the ‘maximum contribution’ minus ‘your contribution’.

Your contribution and personal allowance

If you get a benefit or pension, most of it will also go to the rest home. This is your contribution. If you’re getting NZ Super, the current contribution rate is $440.42 per week.

You’ll keep $56.58 a week (after tax on an M tax code). This is called a personal allowance.

Example

If you live in Auckland City and the rest home fee is $1,511.09 a week, the maximum loan you can get is:

$1,511.09 - $440.42 (rest home fee minus your contribution) = $1,070.67

Step 1 - Contact a Needs Assessor

You need to get in touch with a Needs Assessor in your area. They will:

• assess your residential care needs and
• give you a ‘Residential Care Subsidy Application’ form.

For contact details of a Needs Assessor in your area, call the health Seniorline on 0800 725 463.

Step 2 - Fill out an application form

The 'Residential Care Loan' application is also in the form the Needs Assessor gives you. You need to complete the entire form.

First, we'll check your assets to see how much they're worth. If they're worth less than $284,636, you may qualify for a Residential Care Subsidy instead of a loan.

It can take 6-8 weeks to process your application. You may need to pay for the full cost of your residential care while we process it. It's best to talk with your care provider about this.

You need to pay for any costs that come with the loan application, eg, registration of the caveat. These costs are not covered by the loan.

If we approve your loan

We'll send a loan agreement to your solicitor. You, or your power of attorney, need to sign the agreement and send it back to us. You also need to send us confirmation that:

• the rates for your home are paid up to date
• your home is insured.

Then we'll register a caveat over your home. This will remain in place until the loan is repaid.

Payments

The Ministry of Health will pay the loan directly to the rest home. They will start the payments when all documentation is complete.

One of the criteria to get a Residential Care Loan is if your home and other assets are worth more than $284,636.

Once your loan balance reduces your assets to less than $284,636, you may qualify for a Residential Care Subsidy instead.

How to transfer to a Residential Care Subsidy

The Ministry of Health will send you loan statements every 4 months. They'll let you know when you may be able to get a Residential Care Subsidy.

You'll need to fill out a 'Financial means assessment' form so your assets can be reviewed. To get one of these forms, contact our Residential Subsidy Unit on 0800 999 727.

If a Residential Care Subsidy is approved

If a Residential Care Subsidy is approved, the Residential Care Loan will stop. We'll let you know the outstanding balance.

The loan needs to be repaid when your home's sold or within 12 months of the date you pass away, whichever happens first.

If there's a late repayment, interest may be charged at 10% a year, calculated on a daily basis.

Selling your home

Once your home's sold, we'll confirm the amount that needs to be repaid. It could be less than what we told you to start with. This is because we will deduct certain fees for example:

• real estate agency fees
• solicitor fees
• protected equity
• funeral allowance.

Can't repay within 12 months

There may be some situations where you can't repay the loan within 12 months. In these cases you may be able to defer the loan instead.