On 22 July 2021, the long-awaited changes to the Nursing Homes Support Scheme (Amendment) Act 2021, known as Fair Deal was passed by the houses of the Oireachtas and was signed into law. The Act shall come into operation 90 days after that date, 22 October 2021.
This amendment introduces some significant changes in the way in which the scheme operates. The main one being that family-owned farms and businesses will no longer be included when calculating nursing home costs under the new legislation, where a family successor commits to working the farm or business for six years.*
After three years, the value of family-owned farms and businesses will no longer be taken into account when calculating the cost of a person’s nursing home care. The changes will allow these businesses and family farms to be passed down to the next generation, rather than becoming unviable if a person remained in a nursing home for a great length of time.
Previously there was a three-year cap based on the value of a principal private resident contributions to the cost of care, the bill extends this cap to include the proceeds from the sale of that residence. It is intended that this change will also remove any disincentive for people who want to sell their vacant home while availing of Fair Deal. The new bill allows the family home of the resident to be sold and the proceeds will not be included in the financial assessment regarding the costs of care, once three years has passed. The department considers this important in the context of the housing crisis.
The changes should ensure that it is fair for all, enhancing accessibility and affordability of the scheme for more farms and business owning families.
Speaking in the Seanad, the Minister of State for Mental Health and Older People, Mary Butler said: “Once the bill has been enacted, if a loved one is moving into a nursing home, the successor should be put in place immediately.”
She also said: “Once a successor has been put in place, if a loved one (such as father, mother, aunt or uncle) has been in a nursing home for, say, two years, that time will count. In this case the cap will be reached once that loved one is one more year in the nursing home.”
The total cost of the new proposals to extend the three-year cap to family farms and businesses is estimated at €10.15m per annum for the first three years, rising to €13.9m per annum in subsequent years.
The Nursing Home Support Scheme has an annual net budget of €1.04bn for 2021 to support up to 22,500 people to receive long-term residential care.
Can you claim tax relief on Fair Deal Scheme payments made?
You can only claim tax relief on the amount you pay yourself, not on the amount paid by the HSE. For higher rate taxpayers this is 40%.
What is the average cost of nursing home care?
Nursing home charges cost about €1,000 per week on average, a total of €52,000 in a year. If we use the average amount of time that one spends in a nursing home – about three years – this can amount to €150,000. This figure does not include any items such as, hair dressing, newspapers, beautician costs or involvement in social activities, which are all extras. Fair Deal will only contribute towards the cost of basic nursing home care, not towards the cost of any extras.
How is Fair Deal calculated?
The overall aim of the Nursing Home Support Scheme is that participants contribute to the cost of their care according to their means, while the State pays the balance of the cost. Where an individual’s assessed weekly contribution is greater than the cost of care, they do not qualify for financial support. Therefore, applicants to the Fair Deal Scheme with substantial assets or incomes are unlikely to qualify for financial support.
Participants in the scheme contribute up to 80% of their assessable income annually, plus a maximum 7.5% of the value of their assets, investments and savings, now capped at three years (this was not time limited before the amendment).
The first €36,000 of an individual’s assets or €72,000 in the case of a couple, is not counted at all in the financial assessment. Where one member of a couple is availing of the scheme, the contributions are changed to 40% assessable income and 3.25% to the value of assets. The State contributes to the remaining cost.
Should I gift some of my assets if I think I may need to go into a nursing home?
The whole idea of the Fair Deal Scheme is that everyone should pay their fair share. If you end up applying for Fair Deal within five years of gifting away some of your assets, the value of these assets will be taken into account in assessing your required contribution. This is called the “clawback provision”. Make sure to get professional advice before transferring any assets.
If I apply for Fair Deal, will it affect my existing will?
Yes, you may need to update your will if you sign up to Fair Deal. It is likely your existing will does not mention what is to happen in the event you become a resident in a nursing home and the costs involved with that. You should get some professional tax and legal advice with this.
What is the process to apply for Fair Deal?
Firstly you will need to complete and sign the application form. By doing this you are applying for a care needs assessment and financial support. There is a list of documents (such as tax records and banks statements) you will need to include with your application form. Send the completed application form with the required documents to your local Nursing Homes Support Office.
There are three steps involved in the application process:
1 A care needs assessment – to decide if long-term nursing home care is the right option. This is carried out by healthcare professionals (such as a public health nurse), appointed by the HSE. This assessment may be completed anytime, in a hospital or in your own home.
2 A financial assessment – the application for State support. This looks at your income and assets to assess what your contribution could be to your cost of care. You will contribute 80% (40% if part of a couple) of your assessable income and 7.5% (3.75% if part of a couple) of the value of any assets per annum, now capped at three years once the new legislation become law. The first €36,000 of your assets (€72,000 for a couple) will not be included in the financial assessment.
3 A nursing home loan – where assets include land and property in the State, this loan allows for the 7.5% contribution based on the assets to be deferred and collected from your estate. The person in nursing home care must provide written consent to having a charging order (mortgage) registered against their asset when applying for this loan.
I am a farmer resident in a nursing home for the last two years, what do the changes mean for me?
Once the legislation is operational, and you have appointed an eligible farm successor, you will have to continue the annual 7.5% (or 3.75%) assessable contribution for just one more year based on the value of the farm. This contribution is now capped at three years.
Where someone has been a resident in a nursing home for longer than three years, their contribution will cease, once the legislation is in place. Unfortunately there will be no financial reimbursement for any payments previously made.
How does a farmer/resident appoint a family farm successor?
The person in care will need to appoint a successor who has consistently supplied a substantial part of their working day to the farm or small business for three years out of the previous five years.
The main points are:
James a beef farmer is 69 years old, owns 80ac valued at €800,000. His dwelling house which he shares with his wife is worth €130,000. Both James and his wife have State pensions, totalling €25,823. James’s wife has dementia and needs nursing home care. The cost of the nursing home is €1,100 per week.
Based on the above and on the rate of €1,100 per week for nursing home care, the Fair Deal Scheme would contribute €282.62 per week, while James would contribute €817.38 per week, for the first three years, if no changes.
From year three onwards, the assessment of assets would yield a nil income. The assessed income would be 80% of €25,823 with James allowed to retain 50% of the couple’s income (€10,329), or the entire state pension, whichever is higher. Therefore, the maximum James’s wife nursing home care cost would be €7,746 per annum.
Note: Should it arise that James needs nursing home care, a new financial assessment will be done specific to him. The whole application process will be redone, ie care needs assessment, financial assessment and/or nursing home loan
Emmet Beston, owner of Lady of Good Counsel Nursing Home, Limerick welcomes the new amendments. He said ‘people are slow to plan for their future in Ireland, sometimes long term care has never been considered until the last minute. The previous cost of nursing home care has been a big mental strain and this has now been alleviated.’
Wygram Nursing Home, Wexford also appreciates the new amendments. They said the need for nursing home care has never been compromised while awaiting these changes, and the nursing home is committed to delivering good quality care.
Tadhg Daly, CEO Nursing Home Ireland, while welcoming the changes to Fair Deal, said nursing homes play a critical role in the community, and the new amendments just do not go far enough. He said ‘there are fundamental failings in the pricing mechanism to support the highly specialised care provided to nursing home residents’. He considers it a missed opportunity that this was not addressed as part of the new amendment.