Farm Ireland
Independent.ie

Tuesday 6 December 2016

Time to plan for high cost of nursing home care

Martin O'Sullivan

Published 20/04/2016 | 02:30

It's time to think about the cost of nursing home care
It's time to think about the cost of nursing home care
Martin O'Sullivan

Life for farmers has changed a lot in the past 40 years. The commonplace practice of family members caring for an aging parent until they passed on to their eternal reward is virtually no more.

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Most farming spouses are now working outside the home and are simply not in a position to care for an elderly relative. This raises the spectre of future nursing home care in many farmers' minds and how the cost of same can be borne.

THE TRANSFER DILEMMA

Farmers contemplating transferring the family farm can be faced with a very difficult choice. Will they hold on to some land as security in the event that their successor runs into financial or matrimonial difficulties in which case the land is an assessable asset for determining eligibility for free nursing home care should the need arise, or will they throw caution to the wind and transfer everything.

One of my clients referred to this as the 'Divorce Dilemma'.

His concerns surrounded the possibility of his son's marriage hitting the rocks and the possible consequences for the farm.

It is very difficult to advise farmers in this regard as circumstances will differ in every case.

However, regardless of how far off the prospect appears, nursing home care will be a reality for many and those families who are currently bearing the full cost of nursing home charges are unlikely to make the same mistakes that their parents did.

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Accordingly, if it is your intention to hold on to land you need to be fully aware of the fact that income assessment for the nursing home support scheme also know as the 'Fair Deal' scheme, is arrived at on the basis of applying a figure of 7.5pc to the value of all assets held after the first €36,000.

The case study shows that a farmer with relatively modest savings and investments but who owns 30 acres of land will have to pay nearly €39,432 each year for the first three years and €33,432 per year thereafter.

If he had no savings and investments, the annual cost would still be €34,332 or €28,332 from year three on.

It is worth noting that an individual is entitled to hold up to €36,000 in savings or investments without affecting their entitlement to nursing home support care cost but it also should be noted that the HSE will do a five year 'look back' at what assets you disposed of during that period and whether it could be reasonably concluded that you did so for the purpose of making yourself eligible for nursing home care support. In other words, gifting or transferring assets within five years of applying for nursing home support may not always achieve the desired result.

There is a three year cap or 22.5pc on the value of a householders home. However, there have been calls for a cap to also apply to farm assets in all circumstances.

A Department of Health review last year recommended a cap on the recovery of nursing home costs against the value of the farm assets be considered.

THE NURSING HOME SUPPORT SCHEME

The Nursing Homes Support Scheme is a scheme of financial support for people who need long-term nursing home care and do not have the means of funding such care.

Under the Nursing Homes Support Scheme, you will make a contribution towards the cost of your care and the State will pay the balance. This applies whether the nursing home is public, private or voluntary. There are three steps to the application process.

Step One is an application for a Care Needs Assessment which identifies whether or not you need long-term nursing home care.

Step Two is an application for State Support.

This will comprise a financial assessment which will determine your own (or your family's) contribution to your care and your corresponding level of financial assistance ("State Support").

Step Three is an optional step which should be completed if you wish to apply for the Nursing Home Loan.

NURSING HOME LOAN

This case study highlights the potential cost that may occur in the event that nursing home care became a reality. The good news, if you could call it good news, is that under the Nursing Home Scheme where the individual possesses assets but does not have the ability to pay, you can apply to have the HSE pay the money to the nursing home on your behalf and it will be collected after your death.

This is an optional benefit of the scheme.

It is effectively a loan advanced by the State which can be repaid at any time but will ultimately fall due for repayment upon your death.

Its purpose is to ensure that you don't have to sell assets such as your house during your lifetime. The legal term for the loan is 'Ancillary State Support'.

TAX RELIEF ON NURSING HOME CHARGES

Income tax relief is fully available on fees paid to nursing homes.

Tax relief on nursing home fees applies at the highest rate of income tax that you pay.

The relief does not apply to PRSI or Universal Social Charge.

The tax relief applies whether you are in the nursing home yourself or you are paying for another person to be there.

ADVICE

Every time I sit down with a client to advise them on succession planning and handing on the farm, this question of possible future nursing home care has to be mentioned.

As a general rule one has to advise farmers to exercise caution in divesting themselves of all of their assets particularly if they are still relatively young. If they are going to be dependent on the farm to supplement their income, well then retaining a portion of land can make good sense from a security point of view. However, the advice in all cases will be to revisit the matter at regular intervals with the intention of finally transferring when they are comfortable that the time is right.

For further information you can call the HSE information line on 1850 24 1850 or visit www.hse.ie.

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