Aged Care Costs in New Zealand 2026 — Rest Home Fees and the Residential Care Subsidy

Aged care is one of the largest unplanned financial risks in retirement. A year in a rest home can cost $65,000–$90,000+. Many New Zealanders don’t plan for this — and it can significantly deplete or eliminate estate assets.

Types of Aged Care in NZ

Rest home level care

For people who need 24-hour supervision and some assistance with daily activities (bathing, medication, meals) but are not medically complex.

Cost range: $1,200–$1,500/week privately, though for a needs-assessed resident in a standard room the government sets a Maximum Contribution of $1,513–$1,634/week (varies by district, effective from 1 July 2026) — this is the most a subsidised resident can be charged for standard care.

Hospital level care (psychogeriatric / long-term medical)

For people with complex medical needs or advanced dementia requiring continuous nursing care.

Cost range: $1,400–$1,800/week privately. For a needs-assessed, subsidised resident, the same Maximum Contribution for a standard room applies regardless of care level ($1,513–$1,634/week from 1 July 2026) — moving from rest home to hospital-level care does not increase what a subsidised resident pays, since the government top-up absorbs the difference. Premium or private rooms cost extra on top (typically $10–$50/day).

Home support (before residential care)

Many people are supported at home before entering residential care. ACC or Ministry of Health may fund some home support. WINZ also provides home-based support funding assessment.

The Residential Care Subsidy

Once you exhaust your assets (or fall below the threshold), the government pays the shortfall between your NZ Super contribution and the full rest home cost. This is the Residential Care Subsidy, assessed by Work and Income (WINZ).

Asset thresholds (from 1 July 2026, adjusted annually for CPI)

Assets above the applicable threshold: you pay the full cost privately. Assets below the threshold: the subsidy pays most of the cost.

Note the trade-off for a couple with one partner still at home: excluding the family home and car from the assessment means a lower threshold ($164,731) applies to your other assets, while including the home and car raises the threshold to $300,811 but brings the home’s value into the test.

How NZ Super interacts

When you receive the subsidy, most of your NZ Super is used to contribute to care costs. You keep a small personal allowance ($58.34/week, plus a separate annual clothing allowance of $365.92, as at the most recent adjustment).

What Counts as an Asset

WINZ assesses your total assets including:

• Cash savings and term deposits
• KiwiSaver balance
• Shares, managed funds, investments
• Interest in trusts (see below)
• Life insurance surrender value
• The family home — in some cases

The family home

• If you have a spouse/partner living at home: The home is excluded from the asset assessment while they live there
• If you’re single or your partner has also entered care: The home may be included in the assessment
• If dependent children or a non-qualifying partner lives there: May be excluded — specific circumstances apply

The home exemption is a significant planning consideration for couples.

Trusts and Asset Protection

Many older New Zealanders were advised to transfer assets into family trusts to protect them from aged care costs. WINZ has a gifting policy to address this:

Gifting limits (from 1 July 2026)

• Within the 5 years immediately before applying (and after you start receiving the subsidy): you can gift up to $8,500/year per couple (up from $6,500/year previously) without it being counted as a deprivation of assets — cumulative allowance of $42,500 across the 5-year period
• More than 5 years before applying: the allowable gifting limit is $27,000/year per couple
• Gifts above these limits are added back to your asset assessment as deprivation of assets

WINZ will look back at asset transfers over the past 5 years when assessing eligibility. Transferring your home to children shortly before entering care will be treated as gifting and included in the asset calculation.

Trust assets: Assets held in a trust may still be included in the means test if you are the settlor or if you have access to the funds. This is a complex area — specialist legal and financial advice is essential.

Needs Assessment

Before entering residential care, you need a Needs Assessment through your local NASC (Needs Assessment and Service Coordination organisation). This determines:

• Whether you need residential care (vs supported home living)
• What level of care you require (rest home, hospital level, dementia)
• Eligibility for government-funded support

Your GP can provide a referral.

The MSD/WINZ Application Process

To apply for the Residential Care Subsidy:

1. Enter an approved residential care facility
2. Apply to Work and Income for the subsidy
3. WINZ assesses your assets and income using the means test
4. If eligible, the subsidy begins — NZ Super mostly contributes to care, with small personal allowance retained

You can apply before entering care (to understand eligibility in advance) or after. WINZ has dedicated teams for residential care assessments.

Planning for Aged Care Costs

For people in their 50s and 60s

• Understand the asset threshold and how your current assets compare
• Review whether a family trust established years ago will protect assets (legal advice essential)
• Talk to your family about preferences and expectations
• Consider long-term care insurance (limited NZ market — products vary)

For people with a parent entering care now

• Understand the means test process before making any asset movements
• Do not transfer assets to reduce the assessment without legal advice first
• Contact WINZ early to understand the timeline and process
• Speak with a solicitor about any family trust structures

What NZ Super Contributes Toward Care

Once receiving the Residential Care Subsidy, your NZ Super payment is redirected:

The personal allowance is meant to cover toiletries, clothing, and small personal expenses.

Key Contacts and Resources

• Work and Income — workandincome.govt.nz — Residential Care Subsidy applications
• Your local NASC — needs assessment for care level
• Age Concern NZ — ageconcern.org.nz — support and advocacy
• Citizens Advice Bureau — free advice on rights and process
• Community Law Centres — trust and estate planning advice

Next Steps

1. Check the current Residential Care Subsidy asset thresholds at workandincome.govt.nz
2. Calculate your current assets vs the threshold to understand your private pay period
3. If you have a family trust: get a solicitor to review whether assets are protected under current WINZ rules
4. Have a family conversation about care preferences — what type of facility, and where

→ Related: Retirement Villages NZ | Wills and Estate Planning NZ | Retirement Hub