We all know about the need to protect our assets if we re-partner. And we all know that the Government will sometimes pay for our rest home fees, if we meet the criteria. But what has re-partnering got to do with rest home fees?
Well, this is to do with the rules about the “residential care subsidy”. That is the correct term for this payment from WINZ, but let’s just call it the “Rest Home Subsidy”. This is the scheme by which the Government might pay for rest home fees. In the past this scheme has produced some very unfair results for some families. True, the person in care gets their fees paid so they are no worse off - but in the process sometimes a huge amount of their capital is used up. This might be because they couldn’t get the subsidy and because their income was too little to cover all the fees. That was really noticeable in the past when any money in excess of $45,000 had to be used in paying for your care. Thankfully that figure is much more now (currently about $256,000) but there are still some unfair outcomes.
One nasty example of this is the new relationship, where both parties brought hard-won assets and these were protected (in case of separation) by a “contracting out agreement”. That agreement is fine if the couple separated but it means nothing when doing the “means assessment” as part of applying for the Rest Home Subsidy. In this case WINZ looks at the assets of both people, irrespective of whose property those assets are. So, if there are “surplus assets” these might have to be used up before the Rest Home Subsidy will be paid. This can mean that the person not in care, loses a big chunk of their money. Is this fair? Maybe it is, in a relationship which has run a long time – but for more recent relationships and where there are separate families to provide for, this is a nasty, unexpected outcome.
What is the answer? One answer is to include in the contracting out agreement an agreed formula, to “recalculate the numbers” if this happens. This formula might not produce exactly the right answer each time, but It might help to avoid some of the unfairness.
