This is a subscriber-only article
‘I have recently been diagnosed with Motor neurone disease (MND). It’s an awful shock to myself, my wife and family. My consultant has advised me to get my affairs in order. I own a farm which is currently leased and my kids are not interested in farming. I may need nursing home care but I have been told that I may not qualify for the Fair Deal scheme. What are my options?”
Answer: Put simply if you have no income or assets, the state through the Health Service Executive (HSE), will pay for your nursing home care. The more income and assets you have, the less the state will contribute and the more you will have to pay for your own care. It’s best to explain as below.
Example 1: Lets talk the example of John and Mary Murphy, where Mary needs nursing home care.
First, the HSE will assess the couple’s weekly income including pensions and income from leasing their land.
State pension = €530 (state pension x 2)
Lease weekly income = €384 (80 acres x €250 per acre)
Couples combined weekly income = €914
Next the HSE will assess their assets.
Combined savings = €80,000
Farmland (80 acres x €10,000
per acre)= €800,000
Principal private residence = €200,000
Combined assets = €1,080,000
The HSE take into account 40% of the combined income and 3.75% of the combined assets. They disregard the first €72,00 worth of assets for a couple.
This is why, for the cash assets we are calculating 3.75% of €8,000 (€80,000 - €72,000 = €8,000).
For the relevant assets, we are calulating 3.75% of €1million (€1,080,000- €80,000= €1million)
Combined weekly income 40% of
€914 = €365
Cash assets 3.75% of €8,000/ 52
weeks = €5
Relevant assets 3.75% of
€1m / 52 weeks = €721
Assessed weekly contribution
towards cost of care = €1,091
Therefore, if the cost of nursing home care was €1,200 per week, the couple would pay €1,091 and the state would make up the balance i.e. €109 per week.
Example 2: Now lets take the same example of John and Mary Murphy but in this situation, they transferred the land and dwelling house to their daughter Carol five years before they needed nursing home care.
Again, the HSE will first assess their weekly income.
State pension = €530 (state pension x 2)
Couples combined weekly income = €530
Their assests will then be assessed
but in this case, the farmland and
residence is not being taken into
consideration as it has been transferred more than five years ago.
Combined savings = €80,000
Combined weekly income 40% of
€530 = €212
Cash assets 3.75% of €8,000/ 52
weeks = €5
Assessed weekly contribution
towards cost of care = €217
Taking the example of the cost of
care being €1,200 per week, the
couple will now pay €217 towards
the cost of care and the HSE will
pay the balance of €983 per week.
This is a significant difference.
Five Year Rule
Assets transferred in the previous five years are taken into account for the means assessment.
Taking example one, if John and Mary were to apply for the Fair Deal within five years of having transferred the assets to their daughter Carol, they would qualify but they would not receive a lot of money.
Thus, there should be provisions included that if they do need nursing home care within that five year period and they cannot cover that cost, Carol would be obliged to contribute to the cost. This would be tax deductible against her income tax.
After all, Carol is getting the benefit of the assets and not being brought into account for the Fair Deal. Once the five years are up, an application can be made for the Fair Deal and the assets transferred in the previous five years would be excluded.
Three Year Cap
Your principal residence will only be included in the financial assessment for the first three years of your time in care. This is known as the three year cap.
Similarly the farm assets can be capped after three years but this is only in circumstances where the farm/business has been actively run by either the person needing nursing home care or their partner or proposed family successor for at least three of the five years prior to care admission.
Successor
Furthermore, the successor must commit to running the farm or business for six years from the date of the appointment. As you have the land leased out, it is unlikely that you will qualify for this three year cap on the farm.
There is no obligation under the legislation to transfer the land to the person nominated as a ‘family successor’.
Nursing Home Loan
Another option would be to apply to the ‘Nursing Home Loan’. This could be availed of where you do not have the cash to pay for nursing home care.
The HSE would give you a contribution towards the cost of the nursing home care but there would be a charge taken over the property. When the nursing home care ends, the loan has to be repaid and if necessary the asset sold to repay it.
This nursing home loan option would not be available in circumstances where the assets have been transferred as the property would no longer be in the ownership of the person needing nursing home care.
Disclaimer: This information is intended as a guide only. While every care is taken to ensure accuracy of information in this article, Aisling Meehan, Agricultural Solicitors does not accept responsibility for errors or omissions howsoever arising.
SHARING OPTIONS: