The $20m Government mistake: Govt to repay elderly in long-term residential care

Elderly people in long-term aged residential care can claim $20 million in state money over the next two years for wrongful assessment and deprivation of financial support.

Budget 2021 allocated the money after the state admitted it wrongfully interpreted the law following accountant Stephen Broadbent’s 2019 Court of Appeal victory for his mother, in long-term care.

The money has now been allocated to cover back payments to aged people who should have received that residential care subsidy – but did not because of ministry mistakes, only clarified by the court ruling.

On its website, the Ministry of Social Development says it “will repay those who paid too much for their residential care. Government has provided $20m over two years to enable the Ministry of Social Development to correct clients’ financial means assessments for residential care”.

Financial means assessments are conducted of people applying for a state subsidy to work out who pays for their long-term residential care: rich pay the whole fee, the poor get the full state subsidy.

The fees can start at around $1200/week but go higher.

The Ministry of Health pays those fees to health providers via district health boards. People are needs assessed based on their assets: if you have $236,336 or more, you might need to pay the full care yourself.

That $236,336 threshold is all assets, including the family home, cars, cash, KiwiSaver, baches, boats and other assets. But if your partner still lives in the family home, that is excluded from the asset test threshold.

The Ministry of Health says: “The effect is that if a resident owns assets above the threshold and is in rest home care, they pay the full cost.”

Care or health providers are mainly the big retirement village owner/operators who have hospitals for the geriatric care, religious orders, charities or other entities which run rest home or dementia care facilities.

In May 2019, the Court of Appeal found that MSD’s approach to undertaking financial means assessment for the residential care subsidy were not consistent with the legislation.

“This related to the process for identifying and assessing deprivation of assets and income. MSD has updated the financial means assessment process and has been using it since December 2019 for new clients and current clients to ensure that they are paying the right amount now,” it says now.

The ministry allocated $5m for the 2020/2021 period and $15m for 2021/2022.

“Funding covers repayments to clients and/or their estates for residential care subsidy underpayments following a 2019 Court of Appeal decision.

“This funding will be used to refund clients or their estates if they paid too much for their care in the past.

“MSD will monitor the levels of uptake by clients or their estates requesting a review of their financial means assessment, the number of reviews that are completed, the amount of money that has been paid out in refunds and whether any debts have been created,” it said.

Broadbent today reacted to the ministry’s latest announcement on the $20m.

“The ministry admits that my contentions were absolutely correct and its argument was absolute rubbish right from the start,” he said.

“They asked the Government to allocate $20m in this year’s Budget to cover the back payments, proposed to be in the health budget labelled ‘other expenses’ which people probably assumed were something to do with the Covid billions being spent.”

Broadbent complained the ministry had never sent him the latest document admitting the errors and saying the $20m was up for grabs.

“I have never received the attached document directly from MSD nor have I ever received any acknowledgment that I was right and they were wrong – obviously no thanks for achieving the just legal outcome. In fact no communication whatsoever.”

The document claims that they will reach out to lawyers, accountants and financial writers to ensure everyone who may be entitled to backpayment has the opportunity to apply, he said.

“As a chartered accountant, I have seen no such communication. No lawyer has advised me of any such communication and no financial writer has written anything about it as far as I know.”

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