Many senior clients have asked us questions about how the recent provincial budget will affect them. Before analyzing how the proposed changes may affect seniors, it’s important to understand the current system in New Brunswick. The amount a senior pays per month for nursing home care is based on “net annual income”. When a senior applies for assistance for nursing home care, under the Contribution Regulation, NB Reg 2009-75 under the Nursing Homes Act, the Minister of Social Development looks first at the person’s net annual income.
“Net Annual Income” is defined under the Regulation as “the annual income of an applicant or recipient and his or her spouse or common-law partner as calculated under section 7 less the deductions as calculated under section 8.” The calculation of net annual income includes income from several sources including pensions, old age security, war veteran’s allowance, EI payments, family assistance, long-term disability, income from property, and so on. The deductions under the Regulation include income taxes, health insurance premiums, comfort and clothing allowance, etc.
After calculation of income under a formula attached to the Regulation, an applicant to a nursing home pays what the Minister decides the person can afford and then the government subsidizes additional monthly expenses the person cannot afford. This is defined as “income testing.” This is contrasted with a “means test”, which would include a senior’s family home, assets and income into account.
In its 2015-2016 budget, the New Brunswick Government announced it would still exempt a senior’s family home from the assessment of ability to pay, but would no longer exempt liquid financial assets such as savings or investments. This is a change from the current status, where the definition of net income does not include savings or investments, unless the senior is drawing income from these sources.
The recent budget removes a $113 cap on the daily amount seniors pay for nursing home care and moves towards the true cost of daily care to $233 per day. Finally, the budget may increase payments for seniors covered under Medavie Blue Cross.
Exactly how changes to the contributions regulation will affect seniors depends on how the legislation defines “liquid assets” to be considered in the contribution formula. One thing is certain: a person’s contributions for nursing home care will likely increase if that person has savings and investments. Additional costs will likely lead people considering nursing home care to look for ways to shelter funds from the equation.