Retirement Life
3 August 2021

Residential Care Subsidy Mistakes

It’s not uncommon for people to be unaware of the government financial assistance they are entitled to, and that holds true for the aged care sector too. In fact, could you be missing out on money you should have received? If you are living in a rest home or care facility, you may well be entitled to help in paying for it. However, it’s important to check this properly.

Residential care subsidies totalling up to $20 million have been identified recently as underpaid by the government to elderly people in long-term aged residential care - a fact the last budget now seeks to correct, after those errors were acknowledged.

Permission to Spend

Gain the confidence to spend in retirement with Lifetime Retirement Income.

 

Effectively, what happened is that a large number of people paid too much for their residential care, when the state should have been contributing part of it. Some people who thought they were ineligible actually have been all along. However a series of ministry ‘mistakes’ meant the subsidies were never paid, according to the Ministry of Social Development.

A 2019 court case brought by a chartered accountant regarding his mother’s payment entitlements brought the issue to light, and showed that those who should have received the subsidy underwent incorrect means assessments due to the state having “wrongfully interpreted the law”. The mistakes centred on the process used to identify and assess deprivation of income and assets prior to December 2019, when it was updated and corrected.

The system is set up so that those who have more, pay more, or all, of their residential care costs themselves, while those who have less receive aligned subsidies to help. A threshold of just under $240,000 total in savings and assets indicates when people become eligible for the subsidy - which is paid directly to a rest home or hospital by the Ministry of Health. There are a series of requirements around this relating to age brackets and relationship status though, so for more specific information on these, it’s important to contact Work and Income directly, or visit their website and establish what your own circumstances might be.

Get a Retirement Income Today

Calculate what your income could be in retirement

According to recent media reports, the ministry allocated $5 million for the 2020/2021 period and $15 million for 2021/2022, with this funding to cover repayments to clients and/or their estates for residential care subsidy underpayments.

However, it looks as though the onus is on residential care residents themselves, or their estates if applicable, to actually request a review of their financial means assessment, despite the ministry publishing that it intended to contact financial representatives, such as lawyers and accountants who may be handling people’s money affairs, to let them know their client may be eligible for a payment.

So what can you do if you think you may be eligible for a residential care subsidy that you haven’t received? In the first instance, ask your accountant, lawyer or financial manager to look into it for you. If you don’t use any of these services, you could either ask your care facility’s management to help you look into it, or contact Work and Income directly. It can be a good idea to have a support person with you through any communications, to make sure you are clear on the process and receive everything you are entitled to, even if that may be retrospectively.

Photo of Sadie Beckman
Written by:

Sadie Beckman

Sadie is a writer, qualified multimedia journalist and content creator with a decade of experience. Her work has been consistently published by a wide range of outlets, magazines, newspapers, websites and platforms nationally, including by the country's top media companies, and she was recently a Voyager Media Awards national finalist.

Read More Retirement News