2 JUNE 2005

NEW ZEALAND GAZETTE, No. 86

2045

(a) "subsidy" means the funder’s liability in respect of persons whose assets are equal to or below the applicable asset threshold;

(b) "former home" means a property that was the applicant’s principal place of residence immediately prior to entering residential care; and

(c) "protected equity" means the amount of proceeds from the sale of the former home that the client is entitled to receive before all or any part of the loan is repaid, and it is calculated as set out in paragraphs 22 and 23.

Purpose of the loan scheme

7. The purpose of the loan scheme is to assist older people who, because they own their former home, have assets above the applicable asset threshold and are obliged to pay for the cost of contracted care services. The loan scheme recognises that for many older people their home is their principal asset, and that they may wish to retain it when they enter residential care.

8. Any private agreement between the client and the provider for any services that are not contracted care services is not varied by the loan agreement and remains a personal liability of the client.

Eligibility criteria

9. The Ministry of Social Development considers each application for a loan on a case-by-case basis. There is no obligation on the Ministry of Social Development or the Ministry of Health to offer a loan.

10. A loan may be offered if the Ministry of Social Development is satisfied that the loan offer fits within the purpose of the loan scheme and that the applicant meets all of the following key eligibility criteria:

(a) The applicant is a resident assessed as requiring care.

(b) The applicant’s assets are above the applicable asset threshold and the applicant is liable to pay for the cost of contracted care services.

(c) The applicant has assets above the applicable asset threshold only because he or she owns the former home.

There are three factors that need to be met here:

(i) The applicant must have legal ownership of the former home; and

(ii) the applicant does not qualify for a subsidy because the value of his or her former home means that the applicant has assets above the applicable asset threshold; and

(iii) the applicant’s assets other than the former home must amount to no more than $15,000.00 for a single person and $30,000.00 for a married couple or such other amounts as may be gazetted in accordance with paragraph 30.

(d) The Crown can obtain sufficient security.

A loan will only be offered if the Ministry of Social Development is satisfied that the loan can be adequately secured over the applicant’s former home.

(e) The loan can be recovered.

The Ministry of Social Development must be satisfied that there are no significant risks that would affect its ability to enforce repayment of the loan.

Exceptional circumstances

11. If the applicant does not meet the key eligibility criteria, but has raised individual circumstances that the Ministry of Social Development considers to be exceptional, the Ministry of Social Development (sometimes in consultation with the Ministry of Health) may offer a loan based on those circumstances. Any loan offer will be on such terms and conditions as the Ministry of Social Development considers appropriate in those circumstances. There is no obligation on the Ministry of Social Development or the Ministry of Health to offer a loan.

Loan terms and conditions

12. The loan will be issued on the terms and conditions deemed appropriate by the Ministry of Social Development. If the key eligibility criteria are met, these will generally be as set out below.

13. The client will be required to enter into a loan agreement recording the terms and conditions of the loan. If the former home is co-owned with another party or parties, each of the other co-owners will also be required to enter into the loan agreement for the purpose of obtaining adequate security for the loan. Generally, a caveat will be lodged against the title to the former home as notice of the loan agreement.

14. The client is required to maintain the former home and pay all rates (which may be by way of a deferred rates scheme), insurance and other outgoings until the loan is repaid. The cash assets referred to in paragraph 10. (c) (iii) ($15,000.00 for a single person and $30,000.00 for a married couple) are intended to be for living expenses and for these purposes.

15. The client is required to contribute directly to the provider the New Zealand Superannuation, or any other benefit, that he or she receives, less the personal allowance. The amount to be advanced to the provider on the client’s behalf under the loan agreement will be reduced accordingly.

16. The Ministry of Health will send a statement of the loan balance to the client on a quarterly basis.

17. The loan will continue until the earliest of the following events:

(a) the client dies; or

(b) the former home is sold or otherwise disposed of; or

(c) a new means assessment determines that the client’s assets are equal to or below the applicable asset threshold.

18. If a new means assessment has determined that the client’s assets are equal to or below the applicable asset threshold, the client will transfer from the loan scheme to a subsidy. Payments drawn against the loan will cease from the date of means