The Fair Deal Scheme, officially known as the Nursing Homes Support Scheme, is a financial support system in Ireland designed to make long-term nursing home care affordable and accessible. This guide provides a detailed overview of the scheme’s rules, eligibility criteria, and how contributions are calculated, helping you navigate the process with confidence.
What is the Fair Deal Scheme?
The Fair Deal Scheme is a government initiative that provides financial assistance to individuals requiring long-term nursing home care. Under this scheme, you contribute to the cost of your care based on your means, and the state covers the balance. The aim is to ensure that no one is denied care due to financial constraints.
Eligibility Criteria
To qualify for the Fair Deal Scheme, you must:
- Be ordinarily resident in Ireland.
- Require long-term nursing home care.
- Undergo a Care Needs Assessment to confirm the need for nursing home care.
- Complete a Financial Assessment to determine your contribution.
Understanding the Financial Assessment
The financial assessment calculates your contribution towards nursing home care based on your income and assets. The assessment ensures that:
- You retain a portion of your income for personal use.
- Your spouse or partner is left with sufficient income if you are part of a couple.
- You do not pay more than the actual cost of care.
Income Assessment
Income includes:
- Earnings from employment or self-employment.
- Pension payments (state, occupational, or private pensions).
- Social welfare benefits or allowances.
- Income from investments, dividends, or interest.
- Rental income from properties (with different rates applied to your principal residence).
- Income from directorships or fees.
- Transferred income (any income given to someone else within five years before the application).
Asset Assessment
Assets are divided into two categories:
- Cash Assets:
- Savings and deposits.
- Stocks, shares, and securities.
- Approved Retirement Funds (value at the date of application).
- Money loaned to others.
- Cash assets transferred to another person in the last five years.
- Non-Cash Assets:
- Your home (if you own or part-own it).
- Other properties or land.
- Businesses.
- Overseas land and property.
The net value of an asset is calculated by subtracting any borrowings or debts related to purchasing or improving the asset.
Transferred Assets
Assets transferred to another person within five years before the application are included in the assessment to prevent deliberate asset disposal to reduce contributions.
Calculating Your Contribution
Your contribution is calculated differently depending on whether you are single or part of a couple.
If You Are Single
You will contribute:
- 80% of your assessable income.
- 7.5% of the value of your assets (both cash and non-cash).
Exemptions:
- The first €36,000 of your assets is exempt.
- This exemption is applied to your cash assets first, then to non-cash assets.
Principal Residence (Home):
- Your home is only included in the financial assessment for the first three years of care.
- This is known as the “three-year cap”.
- You will not pay more than 22.5% (7.5% per year for three years) of your home’s value.
Rental Income from Principal Residence:
- If you rent out your home while in care, 40% of the rental income is included in your assessable income.
If You Are Part of a Couple
A couple is defined as:
- Married partners.
- Partners living together as life partners for at least three years.
You will contribute:
- 40% of your combined assessable income.
- 3.75% of the value of your combined assets.
Exemptions:
- The first €72,000 of your combined assets is exempt.
- Applied to cash assets first, then to non-cash assets.
Principal Residence (Home):
- The home’s value is included for the first three years of care.
- The maximum contribution is 11.25% (3.75% per year for three years) of the home’s value.
Rental Income from Principal Residence:
- 40% of the rental income is included in your assessable income.
Important Safeguards
- Maximum Payment Limit: You will never pay more than the actual cost of care.
- Personal Allowance: You retain a personal allowance of 20% of your income or 20% of the maximum rate of the State Pension (Non-Contributory), whichever is greater.
- Spouse/Partner Allowance: If your spouse or partner remains at home, they are guaranteed 50% of the couple’s income or the maximum rate of the State Pension (Non-Contributory), whichever is greater.
- Both Partners in Care: If both members of a couple are in care, each retains at least 20% of their income or 20% of the maximum rate of the State Pension (Non-Contributory), whichever is greater.
Nursing Home Loan (Ancillary State Support)
If you own assets like land or property, you can apply for a Nursing Home Loan to defer the portion of your contribution related to these assets until after your death. The loan is secured against your assets and is repayable after death or when the asset is sold.
How It Works
- Deferral of Payment: You defer paying the asset-based contribution during your lifetime.
- Repayment: The deferred contribution becomes payable after death or sale of the asset.
- Interest: Interest may accrue on the loan amount, so it’s essential to understand the terms.
Jointly Owned Assets and Multiple Family Members in Care
Jointly Owned Assets
- Each person is assessed based on their share of jointly owned assets.
- If both spouses are in care, both contribute based on their respective shares.
- There is no “double-charging” on the same portion of the asset’s value.
Multiple Family Members in Care
- If both partners enter nursing home care, each is assessed individually but under the couple’s rates as long as both are alive.
- Both are liable for contributions on shared assets like a second property.
- The family home becomes chargeable again for the second partner for another three years.
Changes in Circumstances
Death of a Spouse or Partner
- The surviving partner’s financial assessment changes from the couple’s rate to the single rate.
- The asset exemption reduces from €72,000 to €36,000.
- Contributions may increase due to the higher percentage rates applied to singles.
Reassessment
- You can request a review of your contribution amount every 12 months.
- Reassessments consider changes in income, assets, and personal circumstances.
Exemptions and Special Cases
Excluded Income Sources
- Accommodation Recognition Payment: Payments for hosting Ukrainian refugees are excluded.
- Redress Payments: Payments received under specific redress schemes are exempt.
Approved Retirement Funds (ARFs)
- ARFs are treated as capital assets.
- The total value is subject to the annual asset contribution.
- Income drawn from ARFs is not included in the income assessment to avoid double-counting.
Example Scenarios
Single Individual
- Income: €30,000 per year.
- Cash Assets: €50,000 in savings.
- Non-Cash Assets: Home valued at €200,000.
Contribution Calculation:
- Income Contribution: 80% of €30,000 = €24,000 per year.
- Asset Exemption: First €36,000 exempt.
- Assessable Cash Assets: €50,000 – €36,000 = €14,000.
- Cash Asset Contribution: 7.5% of €14,000 = €1,050 per year.
- Non-Cash Asset Contribution (Home):
- First three years: 7.5% of €200,000 = €15,000 per year.
- After three years: No further contribution from the home.
Couple with One Partner in Care
- Combined Income: €50,000 per year.
- Combined Cash Assets: €100,000 in savings.
- Non-Cash Assets: Home valued at €300,000.
Contribution Calculation:
- Income Contribution: 40% of €50,000 = €20,000 per year.
- Asset Exemption: First €72,000 exempt.
- Assessable Cash Assets: €100,000 – €72,000 = €28,000.
- Cash Asset Contribution: 3.75% of €28,000 = €1,050 per year.
- Non-Cash Asset Contribution (Home):
- First three years: 3.75% of €300,000 = €11,250 per year.
- After three years: No further contribution from the home.
Applying for the Fair Deal Scheme
To apply:
- Obtain the Application Form: Available from the HSE website or local health office.
- Complete the Care Needs Assessment: Conducted by a healthcare professional.
- Complete the Financial Assessment: Provide details of income and assets.
- Submit Supporting Documents: Proof of income, asset valuations, and any relevant deductions.
- Review and Approval: The HSE reviews the application and notifies you of the outcome.
- Arrange Nursing Home Placement: Choose an approved nursing home and arrange admission.
Key Considerations
- Annual Reassessment: Contributions are recalculated annually to reflect changes in income and asset values.
- Maximum Contribution: You will not pay more than the cost of care.
- Professional Advice: It’s advisable to seek financial or legal advice to navigate the scheme effectively.
- Transparency: Keep records of all financial transactions, especially asset transfers.
For more information, visit the Health Service Executive (HSE) website or contact your local health office.
For a Free Fair Deal valuation contact Kelly Bradshaw Dalton here