Ministry of Social Development are to correct financial means assessment for residential care
In the 2021 Budget the Ministry of Social Development (MSD) announced that they will implement a Court of Appeal decision on financial means assessments for long-term aged residential care.
The Government has provided $20 million over two years to enable the Ministry of Social Development to correct financial means assessments for residential care.
What does this mean?
In 2019 the Court of Appeal found aspects of the MSD approach to undertaking the financial means assessment for the Residential Care Subsidy were not consistent with the legislation.
This related to identifying and assessing the deprivation of assets and income.
The key elements of the decision were that:
When an asset has been gifted by an applicant within the gifting threshold of $27,000 a year (in the period up to five years prior to the application), any income capable of being generated from that asset should also be considered as gifted, and therefore should not be assessed as ‘deprived’ income as part of the FMA.
When exercising its discretion as to where to include ‘deprived’ income or assets, MSD must consider whether financial resources are available to an applicant to help meet the cost of their care. If the financial resources are not found to be available, deprived income or property cannot be included as part of the FMA.
This judgment (Broadbent) is beneficial to clients in some circumstances and in particular in relation to certain gifting practices concerning family trusts.
MSD will be proactively contacting clients and the estate of deceased clients who were in care at any time from the original High Court Judgment in June 2017.
However the executors of estate of people potentially affected before June 2017 will also be able to request a review of their assessment, but we understand that MSD will not be contacting this group.
We would encourage all executors of estates of people who potentially may have been affected both after and prior to June 2017 to call Lucas & Lucas, we would be pleased to assist.