5th February 2004

Asset Testing Legislation

Asset and Income Testing for long term residential care

The Government has introduced to Parliament the Social Security (Long term residential care) Amendment Bill, which is expected to become law in July 2005.

History

We have been lobbying against this regime since its introduction and although it only affects some 5% of the elderly population it does in our opinion cause undue hardship.

Also from the anecdotal evidence we have, elder abuse where relatives refuse adequate care for the person concerned, as it has to be paid from assets, generally the house.

As part of the election campaign in 1999 the Labour Party pledged to remove asset testing from the long-term care regime, a promise now broken by this Bill.

From Cabinet papers we secured early in the first term of this government it was blatantly obvious that cabinet had decided to in no way implement the promise and was proposing instead a thirteen-week stay before the cost for long term care was implemented.

This was a sort of a throwback to the since lapsed requirement of elderly people entering hospital being given 13 weeks assessment and rehabilitation before being assessed as needing long term care.

We have spent considerable time talking to various Ministers and people in the Ministry of Health about our concerns that this was just not satisfactory and the proposal was only just extending the time before payment and in fact not changing the regime itself.

We expressed the view that while complete abolition of the asset testing regime was necessary to meet the election pledge, then Cabinet should at least agree that the house should be exempt in all cases from the asset test.

However the MoH who were advising the Minister argued that a house in Greymouth was not as valuable as a house in Auckland and it would be unfair to do this which argument we consider fatuous as the location or value of the house should not matter. Obviously the Cabinet also holds this view about relative values of houses.

The end result is that the government have tinkered with the thresholds, which may benefit people in the year 2025 but certainly not in the immediate future.

Brief details of the Bill.

The Bill progressively increases the value of assets that people may retain before paying for long term care,

Current regime.

Currently the asset testing thresholds are $15,000 for single people and $30,000 for married couple where both are in care ( assets include car and house ).
For a married couple where one is in care the threshold is $45,000 and assets do not include the car or house.

New Regime

The threshold for single people and a married couple in care is to be $150,000 and for one in care $55,000 - these thresholds increased by $10,000 per year so that in the year 2025 they would be $350,000 and $255,000 respectively.

Currently any income from earnings of the spouse of a person in care is assessed income . As from July 1 2005, income earned by spouses personal effort will not be treated as assessed income.

Other provisions.

The Bill requires that should the cost of care provided exceed the cost of specified care services then the person is to pay the difference . Conversely if the cost of the specified care services exceeds the maximum contribution then the funder pays.

The means assessment will be available on application on a form provided by the chief executive (of the DHB) and this is a means assessment as to assets and an assessment as to income.

A person with assets above the applicable asset threshold but whose assets can only be realised with extreme difficulty may apply for a loan.

There are also determinations as to conjugal status for the purpose of means assessment - a married resident requiring care has no spouse if the resident was living apart from spouse at the time of entry to care .
This also applies to de facto arrangements.

What the Federation will do

We will be making a submission to the select committee asking for complete abolition of asset testing for long term care.

What you can do .

Write to or visit your local MP and express your concerns at what the government offers in this Bill compared to the original pre-election commitment and indicate that it is a breach of faith which saddens us greatly.

The elderly population over 65 remain the only sector of the population that has to pay for its care which is blatant discrimination under the Human Rights Act and remains in force because it is legal by an Act of Parliament.

- The government promise to rectify all legislation that was contrary to the Human Rights Act just has not happened.

Home Return to 2001/2/3/4 Additions index