Retirement villages: Navigating the transition to a higher level of care

Many retirement villages in New Zealand provide a continuum of care, allowing residents to access increasing levels of support as their needs change. This model offers peace of mind, but the process of transitioning to higher care within these villages involves important contractual, and financial considerations. For residents and their families, understanding the legal framework is essential to ensure a smooth transition.

The Role of the Occupation Right Agreement (ORA)

An Occupation Right Agreement (ORA) is the foundation of retirement village arrangements.  It outlines the legal rights and obligations of residents and the village operator. When it comes to transferring to higher care levels, the ORA specifies:

• Conditions for Transition: When a resident may be required or permitted to move to a higher level of care, such as a serviced apartment, rest home, or hospital-level care.
• Costs: Additional charges for care services, accommodation, or other fees associated with the new care level.
• Termination and Resale Rights: The ORA sets out the process for terminating the agreement and refunding capital contributions when vacating an independent unit.

It is important to get legal advice to ensure residents and families understand these terms and their implications.

Legal Framework for Care Transitions

The Retirement Villages Act 2003 and the Retirement Villages Code of Practice 2008 regulate the operation of retirement villages and protect residents’ rights. Key legal principles include:

• Good Faith and Consultation: Operators must act in good faith and consult residents about any significant decisions, including care transitions.
• Consent Requirements: Residents generally need to consent to any move, except in cases where health or safety risks necessitate immediate action.
• Health Assessments: Care transitions are often triggered by health assessments conducted by the village’s clinical team or external assessors, such as the NASC (Needs Assessment and Service Coordination) team.
• Notice Periods: Operators must provide reasonable notice if a resident is required to vacate their current unit to transition to higher care.

Financial Implications of Moving to Higher Care

It goes without saying that the financial impact of transitioning to a higher level of care is a critical consideration. The ORA governs costs such as:

• Additional Fees: Higher care levels often involve increased service fees, including meals, personal care, and medical supervision.
• Refunds and Deductions: The ORA sets out when the capital contribution will be refunded and what deductions, if any, will apply when a resident’s independent living unit is vacated.
• Public Subsidies: Residents may be eligible for government support, such as the Residential Care Subsidy, which is means-tested and designed to help cover the cost of rest home or hospital care.

Availability of Care Services

Not all retirement villages offer every level of care on-site. Some villages may only provide independent living and serviced apartments, requiring residents to relocate to another facility for higher care levels.

The ORA will specify the village’s obligations in such scenarios, including:

• Placement Guarantees: Whether residents are guaranteed access to higher care within the village.
• Alternative Arrangements: What assistance the village will provide if care services are unavailable locally.

Operators are expected to act in good faith and facilitate the transition, but families may need to explore other facilities if care options are limited.

Practical Tips for Residents and Families

• Understand the ORA: Before signing, ensure the agreement is reviewed by a lawyer who can explain its terms, especially those related to care transitions and financial implications.
• Plan Ahead: Discuss care preferences and potential transitions early with the village operator and family members.
• Seek Financial Advice: Assess the financial impact of moving to higher care, including eligibility for subsidies.

Conclusion

Taking the time to review agreements, plan finances, and seek professional advice ensures that residents’ rights are protected, and their care needs are met.  The McCaw Lewis team are very experienced in dealing with these situations and are happy to assist at the appropriate time.

Amanda is the Director in our Asset Planning Team and can be contacted on 07 958 7451.