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As new aged-care facilities open in Dunedin, another crop of elderly residents faces the daunting prospect of finding out about assessments, asset limits and additional charges.
Older people in Dunedin who are assessed as needing residential care and whose assets fall within certain limits receive a government subsidy and pay no more than $804.51 a week for a standard rest-home or hospital room.
Services covered by the government subsidy include food, laundry, nursing and other care, GP visits, prescribed medication, continence products, all health care prescribed by a GP and transport to health services.
However, they may be offered additional services that are over and above those delivered by the district health board and if they agree to these, will have to pay for them themselves.
Services that are not covered by the residential care subsidy include specialist visits that are not publicly funded by the district health board or ACC, transport to other services or outside social functions, a private telephone, personal toiletries, hairdresser, spectacles, hearing aids, dental care, and a dietitian, podiatrist or any other service that has not been prescribed by a doctor or is not funded by the DHB. Some facilities may charge more for an extra-large room, a balcony or a courtyard.
District health boards receive population-based funding and determine themselves what they spend in various areas.
The Southern DHB currently pays out $73 million for aged residential care, spending $9.8 million more than its population-based funding share and funding 297 beds more than suggested by the population funding average - one reason it is developing additional home support to allow people to remain at home longer.
Approximate costs of a bed per day for the region are $100 to $105 (rest-home), $126 to $128 (specialist dementia), $171 to $177 (continuing care, hospital level) and $196 (specialist psycho-geriatric).
The board also pays $14 million for home-based support, $2 million for other community support, $2.9 million for respite care and carer support and $23 million for assessment, treatment and rehabilitation services.
Dunedin's newest aged-care facility is the $18 million Yvette Williams retirement village, which has 32 serviced apartments and 90 rest-home/hospital beds, 30 of which are designated for residents with dementia.
Occupants of standard rooms pay no more than the maximum contribution - $804.51 - but larger rooms with a bigger wardrobe and more window space cost an extra $79 to $149 a week.
One-bedroom apartments cost $179,000 to $285,000 and the owners pay $259 weekly for a package that includes rates, insurance, midday meals, morning and afternoon teas, rubbish collection and laundering of sheets and towels. On leaving, they sell the unit back to Ryman Healthcare, which deducts a deferred maintenance fee and refurbishes it for the next occupant.
At Chatsford retirement village in Mosgiel, occupancy rights range from less than $100,000 for a small studio apartment to $469,000 for the newest three bedroom townhouses. Residents also pay a weekly charge ($75 for a single person, $105 per couple) to cover the day-to-day costs of running the village and a deferred maintenance charge when they leave.
Meanwhile, a rented room in Dunedin's Abbeyfield house costs $490 a week including rates, electricity, meals and housekeeper's wages.
Unlike those assessed as needing rest-home or hospital care, older people living in retirement villages or Abbeyfield homes do not qualify for the residential care subsidy.
Malcolm Hendry, chief executive of Chatsford and a member of the New Zealand Aged Care Association, says a small number of retirement villages offer unit titles but more than 80% offer residence through an "occupation right".
A resident buys a lifetime lease on a property and when they leave, this payment is refunded, less a deferred management fee.
Financial adviser Peter Smith says it is important when moving to a retirement village to have a lawyer go over the purchase contract as deductions when a unit is sold can be as much as 30% of the original price, and complex for the average person to work out.
Trusts are a good way to protect assets from creditors but setting one up in order to divest yourself of assets before entering a rest-home is an "expensive way" to go about qualifying for the residential care subsidy, says the principal of Kepler Group Otago Ltd.
In his view, it is better to "sell" assets to your children and then have them look after you; when making arrangements within families it is important to have clear contracts and impartial legal advice.