2046 NEW ZEALAND GAZETTE, No. 86 2 JUNE 2005

assessment, the client will be informed of the loan balance, and the repayment provisions under the loan agreement will apply.

19. However, if a client does not apply to the Ministry of Social Development for a new means assessment, or does not provide sufficient information to enable the Ministry of Social Development to determine the means assessment, the client will not be able to have a subsidy (to which he or she might otherwise have been entitled) paid on his or her behalf. In such a situation, loan advances will continue to be paid to the provider on behalf of the client.

Repayment of a loan

20. The loan must be repaid six months after the client dies or when the former home is sold or otherwise disposed of, whichever date is earlier. If repayment is more than three months’ late, penalty interest may be charged.

21. The loan must be repaid before the security or obligation under the loan agreement will be released.

22. The client is entitled to receive his or her protected equity after all of the amounts set out in paragraph 25 (that are owing at the date of loan repayment) have been paid. The client’s protected equity is calculated by deducting the following amounts from the relevant asset threshold:

(a) any rates that have been postponed during the term of the loan; and

(b) the total amount of assets (other than the former home) that the client was assessed as having in:

(i) the means assessment at the time of the loan application, if the client has never transferred to a subsidy; or

(ii) the means assessment that determined that the client was eligible for a subsidy.

23. The relevant asset threshold for the purposes of paragraph 22 is the asset threshold that was applicable on:

(a) the day before the client became (or would have become) eligible for a subsidy; or

(b) the day before payments drawn against the loan ceased, if the client has not yet become eligible for a subsidy.

Write-off of a loan

24. The Ministry of Social Development may remit all or any part of the loan if the loan balance exceeds the value of the client’s estate or interest in the former home less the client’s protected equity or if, in the opinion of the Director-General of Health, the circumstances raised by the client or any person resident in the former home are exceptional.

25. The Ministry of Social Development may allow any of the following amounts to be deducted from the sale proceeds before the loan is repaid:

(a) Reasonable and necessary legal fees and disbursements on the sale of the former home (other than the cost of registration of the withdrawal of caveat).

(b) Real estate agent fees payable on the sale of the former home, up to a maximum of 5% of the value of the sale proceeds.

(c) Funeral expenses up to a maximum of $10,000.00 or such other amount as may be gazetted in accordance with paragraph 30 (provided the client had not previously purchased a pre-paid funeral).

(d) If the client has not died and has not previously purchased a pre-paid funeral, funds for this purpose up to a value of $10,000.00 (or such other amount as may be prescribed by Regulations made under section 155 of the Act).

(e) Gifts in recognition of high-level care provided to the client (up to the maximum value prescribed by Regulations made under section 155 of the Act), and any other prior mortgages or charges accepted in the means assessment at the time of the loan application as having priority over the loan.

(f) Any rates that have been postponed during the term of the loan.

26. After any allowable amounts have been deducted from the sale proceeds, the Ministry of Social Development may accept the remainder of the sale proceeds in full and final settlement of the loan.

Deferment of loan repayment

27. Repayment of a loan may be deferred if any person living in the client’s former home meets all of the following criteria:

(a) He or she lived in the former home immediately before the client entered residential care, on a continuous full-time basis for at least 5 years.

(b) He or she lived in the former home while the client was in residential care and continues to live there at the time of the death of the client.

(c) He or she has been left the former home, or a joint share of or a life interest in the former home, by the client in his or her will and has a legal right to live there.

28. Deferment of the loan repayment is only available to the first person who meets the above criteria, and it only applies to the client’s former home. If the former home is sold or the person moves out, the loan becomes repayable.

29. There is no obligation on the Ministry of Social Development or the Ministry of Health to agree to deferment of the loan repayment.

Changes to scheme policy

30. This policy will be reviewed and updated periodically. Any changes to the policy will be gazetted.

Copies of policy statement

31. Copies of this policy statement can be found on the Ministry of Health web site at http://www.moh.govt.nz/assettesting

Dated at Wellington this 24th day of May 2005.

KAREN O. POUTASI (DR), Director-General of Health.