Budget 2005 follows through on the government's commitment to phase out asset testing for older New Zealanders in residential care.

New funding of $93 million in 2005-06 will cover changes to asset test thresholds, exempting thousands more older New Zealanders in residential care from paying base fees.

"The government is keeping its 1999 election promise on asset testing," says Associate Health Minister Pete Hodgson. "This policy recognises the right of older New Zealanders to benefit from assets they have built up for themselves and their families through their working lives."

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 and their cash asset exemption will rise from $45,000 to $55,000. Alternatively, they can choose to be tested against the $150,000 threshold for total assets.

The exemption thresholds for all groups will then increase by $10,000 per year from 1 July 2006.

"As these changes take effect, more older New Zealanders will be able to retain more of their assets while receiving residential care," Mr Hodgson said.

Elsewhere in the budget the government has increased funding to District Health Boards to help them set more sustainable contract rates with residential care providers. From 1 July, residents with assets over $150,000 will be charged the same weekly rates as the boards pay for rest home care, rather than a capped weekly rate. For some, this will mean an increase in line with those being met by District Health Boards.

For more information: www.moh.govt.nz\olderpeople