Best Tool for Choosing Between Option A and Option B Residential Care Subsidy NZ

If you're a couple choosing between Option A and Option B for the Residential Care Subsidy in New Zealand, the best tool is a side-by-side comparison worksheet that calculates your countable assets under both options and tells you which one protects more of your family's wealth. The answer in most cases is straightforward: if the family home is worth more than approximately $136,000 (the difference between the two thresholds), Option A wins. But "most cases" isn't all cases — and choosing the wrong option locks in a higher care contribution for the entire time your partner is in residential care.

The Two Options Explained

When one partner enters residential care and the other stays at home, MSD offers two ways to calculate the couple's assets:

Option A sets a lower threshold but takes the family home completely off the table. Option B raises the threshold by $136,080 but adds the home's value to the asset total.

The Formula That Decides

The arithmetic is simple: subtract $164,731 from $300,811 and you get $136,080. If your home is worth more than that amount, Option A is better because the home exclusion saves more than the higher threshold provides.

Option A wins when: Home value > $136,080 (and this is the case for virtually every NZ home in 2025 — the median house price is over $700,000 nationally)

Option B wins when: Home value < $136,080 (rare in practice) OR you don't own a home (in which case Option A's home exclusion is irrelevant and Option B gives you the higher threshold)

Why a Worksheet Matters

The formula above covers the core decision, but a proper comparison worksheet handles the edge cases:

• Retirement village ORA units — if the family home is an Occupation Right Agreement in a retirement village, the ORA value is treated as the home for this calculation, but the specific contractual terms matter
• Jointly owned assets — some assets are split 50/50, others are attributed differently depending on relationship property status
• Non-liquid assets — vehicles beyond the exempt one, caravans, boats, collections — these add to the total and can tip the balance in edge cases
• Trust assets — if MSD looks through a trust, those assets go into the calculation, potentially changing which option comes out ahead

The NZ Residential Care Subsidy Guide includes a printable Option A versus Option B comparison worksheet that walks through every asset category, applies the correct exemptions for each option, and produces a bottom-line number for both. You fill in your actual figures and the answer drops out — no guesswork, no spreadsheet-building.

Common Mistakes When Choosing

Choosing Option B because the threshold is higher: The $300,811 threshold sounds better until you realise it includes your $800,000 house. Your total countable assets under Option B are the house plus everything else — almost certainly well above the threshold.

Assuming the choice is permanent: You can change between Option A and Option B. If your financial situation changes (for example, if the at-home spouse sells the family home), the better option may switch. A worksheet lets you re-run the comparison quickly.

Ignoring the car exemption: Under both options, one car of reasonable value is exempt. But if you own two vehicles or one high-value vehicle, the second car or the value above "reasonable" goes into the count.

Not accounting for relationship property: In most cases, the couple's assets are split evenly. But if there's a contracting-out (prenuptial) agreement or the couple isn't legally married, the asset split may differ — and that changes the calculation.

Who This Is For

• Couples where one partner is entering rest home or hospital-level care and the other is staying at home
• Families trying to work out whether the subsidy will cover care costs before committing to a facility
• Anyone who has been told by a facility or case manager to "choose Option A or Option B" without a clear explanation of what each means
• Adult children helping their parents navigate the financial assessment

Who This Is NOT For

• Single applicants — Option A versus Option B only applies to couples. Single applicants use the single person threshold ($239,930 as of 2025)
• Couples where both partners are entering residential care — different rules apply

What a Good Comparison Tool Includes

The minimum a useful tool needs:

1. Asset inventory section — every account, property, investment, KiwiSaver balance, vehicle listed with current value
2. Exemption flagging — which assets are exempt under each option (home under A, car under both, personal belongings under both)
3. Side-by-side totals — countable assets under Option A versus Option B
4. Threshold comparison — how far above or below the threshold each option lands
5. Clear recommendation — which option results in lower countable assets relative to the threshold

The Option A versus Option B worksheet in the NZ Residential Care Subsidy Guide includes all five, plus space for notes on any assets you're unsure about so you know exactly what to ask if you do consult a solicitor.

Frequently Asked Questions

Can I switch from Option A to Option B after the subsidy is approved?

Yes. You can request a reassessment if your circumstances change. The most common reason to switch is if the at-home spouse sells the family home — Option B may become more favourable once the home is no longer in the equation and the proceeds are in a bank account.

Does the Option A home exemption apply to retirement village ORAs?

An Occupation Right Agreement is generally treated as the family home for Option A purposes, though the specific terms of the ORA matter. If the ORA has a significant capital gain or loss clause, discuss with MSD or a solicitor how the value is calculated for the assessment.

What if we own the home jointly but only one name is on the title?

For means assessment purposes, MSD looks at the couple's combined assets regardless of whose name is on the title (unless there's a contracting-out agreement). Joint ownership is assumed for married couples and de facto partners of three or more years.

How quickly do we need to decide?

You choose when submitting the RSU01 form, and you can change later. Don't rush the decision — taking a day to work through the numbers properly is better than picking the wrong option under time pressure from the facility. The 90-day backdating window gives you some breathing room.

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