Legislation passed last week to progressively remove asset testing of older people in long-term residential care is based on fairness and security for older New Zealanders, Associate Health Minister Ruth Dyson said today.

From 1 July 2005 single people and couples with both partners in care will be able to keep up to $150,000 in assets (including both property and savings) before their assets are used to contribute to the cost of their care, up from $15,000 and $30,000 respectively.

Couples where one partner is in care will retain their current exemptions of a house and car, while their cash asset exemption will rise from $45,000 to $55,000. Alternatively, they can opt to be tested against the $150,000 threshold for total assets.

The exemption thresholds for all groups will then increase by $10,000 a year, progressively removing asset testing.

Associate Health Minister Ruth Dyson said the decision was in line with the government’s 1999 election promise and was based on human rights considerations.

“It is unfair that people aged 65 and over are required to use up their assets to contribute to the cost of their care, whereas younger people are not. The gradual removal of asset testing will balance these important human rights considerations against the very substantial costs involved.”

The policy is expected to cost $110 million in 2005/2006, rising to approximately $170 million in 2009/10.

“The increased costs over time reflect the annual $10,000 increase in the exemption thresholds, and the growing number of older people in the population,” Ms Dyson said.

The income test is retained under the legislation.

“The government never intended to remove income testing. If older people are receiving income from sources such as investments, rent and superannuation, it is fair to expect that they will contribute to the cost of care they would expect to pay if living in their own home. However, some changes are proposed to the income test, in light of increased asset thresholds and the needs of spouses.

“The legislation sets out all the provisions for income and asset testing in one place for the first time. It also addresses some significant anomalies, such as removing asset testing completely for people aged 50-64 years, and changing the income test so that a partner of a person in care does not have to contribute their income from paid employment twoards the cost of their partner’s care costs.”

Around 31,000 people - seven per cent of those aged 65 and over - are currently in long-term residential care. The new policy will apply to all new admissions, and to people already in care who are not currently eligible for a residential care subsidy.

Around 5,600 additional people are expected to receive the subsidy from 1 July 2005, taking to 70 per cent the proportion in care who receive the subsidy.

“The government has made separate provision for the additional funding to pay for the progressive removal of asset testing. This funding will not reduce the amount allocated to current health and disability services,” Ruth Dyson said.

A copy of the Social Security (Long-term Residential Care) Amendment Bill can be purchased from Bennetts Government Bookshop and is available on the Parliamentary Council Office website http://www.knowledge-basket.co.nz/gpprint/docs/welcome.html