Individualised Funding NZ: How Flexible Funding Works for Disability Support

Standard government-funded home support assigns your parent to a contracted provider agency — NASC picks the agency, the agency picks the worker, and you get whatever hours the system allocates. Individualised Funding (IF) flips that model. Instead of receiving services through a provider, your parent receives a budget and chooses how to spend it.

For families who want control over who provides care, when they come, and what they do, IF is the most flexible option in the New Zealand disability support system.

How Individualised Funding Works

IF is available through Disability Support Services (administered by the Ministry of Social Development) for people under 65 with qualifying disabilities, and increasingly through Health New Zealand for older adults whose NASC assessment identifies them as suitable candidates.

The funding amount is the same dollar value your parent would receive through a contracted provider — IF doesn't give you more money, it gives you more control over how it's spent. You can hire your own support workers, choose their hours, and direct the care to match your parent's actual routine rather than a provider's scheduling constraints.

A host organisation manages the financial administration. The host holds the funding, processes invoices, handles employment compliance (contracts, ACC levies, tax withholding), and provides varying levels of guidance depending on your parent's capability tier.

The Four Capability Tiers

Under the post-April 2026 operational policy, families using hosted flexible funding are placed into one of four administrative tiers based on their ability to manage the budget independently:

• Tier 1 (High guidance): the host closely manages spending and must pre-approve any single purchase over $500
• Tier 2: moderate oversight, with prior approval required for purchases over $1,500
• Tier 3: light-touch, with the family managing most decisions independently
• Tier 4 (Self-managing): the family handles budgeting with minimal host involvement

The tier assignment is based on how well the family has demonstrated budget management in previous periods. New entrants typically start at Tier 1 or 2 and move up over time.

The 1 April 2026 Purchasing Rules

The revised purchasing operational policy restored significant flexibility after restrictive changes in 2024. Under the current rules:

You can spend on: support workers of your choosing, respite care (including hiring a friend or family member as a temporary carer), self-directed activities that relate to managing the disability, equipment and modifications aligned with the care plan.

You cannot spend on: residential care (unless temporary, non-continuous respite), overseas travel, complementary therapies without clinical evidence, or anything unrelated to the funded purposes.

Prior approval thresholds: any one-off purchase over $1,500 (or $500 for high-guidance hosts) must be approved by the host or NASC agency before you commit. This prevents budget blowouts but means you need to plan larger purchases in advance.

Choosing a Host

The host organisation is your administrative partner — they handle payroll, tax, and compliance so you can focus on directing care. When choosing a host, consider:

• Fee structure: hosts charge a percentage of the budget for administration. Compare rates before committing.
• Responsiveness: you'll need timely invoice processing and quick answers when employment questions arise.
• Guidance level: some hosts provide active budget coaching; others take a hands-off approach. Match the host to your family's comfort level with financial management.
• Employment support: if you're hiring workers directly, the host should provide template employment agreements, handle ACC levy calculations, and manage PAYE withholding.

You can change hosts if the relationship isn't working — contact your NASC coordinator to arrange the transfer.

IF vs Standard Provider-Managed Care

The trade-off is straightforward: IF gives you flexibility and control but requires more administrative effort. Standard provider-managed care is simpler — you receive a worker and don't manage payroll — but you have less say over scheduling and worker selection.

IF works best for families with complex or non-standard care needs: parents who need care at unusual hours, families with strong cultural or language preferences, or situations where continuity of a specific worker is clinically important (such as dementia care where the parent becomes distressed with unfamiliar faces).

For the full breakdown of funding options — including how IF interacts with the Carer Support Subsidy, the Disability Allowance, and ACC — the Home and Community Support Services guide maps every funding stream with eligibility worksheets and budget templates.

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