Your Money: New 'fair deal'
Costs are rising for those in both public and private healthcare, but with the Nursing Homes Support Scheme, if you can't pay everything, the State will pay the rest, writes John Cradden
Fair Deal: The Government claims its scheme will make the arrangements for financial support for people who need long-term care
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IT HAS been a long time coming, but a new support scheme designed to help relieve the burden of rising nursing home costs has finally been implemented.
The 'Fair Deal' Nursing Homes Support Scheme is designed to provide financial support to those who need nursing home care, regardless of whether they are in a public or a private nursing home.
The scheme was due to come into force in January 2008, but was beset with legal delays and other issues.
It has replaced an old subvention scheme for nursing home care that was widely acknowledged to be inequitable and very complicated.
The basic principle of the new scheme is that you contribute as much as you can towards the cost of your care based on your income and any assets you own and, if this doesn't meet the full cost, the State will pay the rest.
However, there remains a lot of confusion about how exactly the scheme works, not to mention some other concerns (see panel).
Here we will explain how your contributions to your nursing home care under the scheme are calculated.
How much do you have to contribute from your income?
Under the new scheme, there are two basic principles that determine how much you contribute to the cost of your care.
The first is that new entrants to nursing homes will pay a maximum of 80pc of their income every year towards the cost of their care.
So, for example, if your sole means of income is a State pension of €219 per week, your contribution to the nursing home cost will consist of 80pc of this pension, which works out at €175 per week, or €9,100 a year.
Under the scheme, the State would pay the balance of your nursing home costs, so if your care costs €1,000 a week, the State pays €825 a week.
However, this scenario will only be realised if you have no property or valuable assets, and little or no savings.
How much do you have to contribute from your savings or assets?
This is where the second principle comes in. Under the scheme, the State is entitled to recoup some of the costs of paying for your nursing home care by claiming a further contribution based on the value of any assets you own.
So if you have any savings or assets worth more than €36,000, you will be required to pay 5pc of the value of these every year, along with the 80pc of your assessable income.
For example, if you have savings of €70,000, you will be required to pay 5pc of €70,000 minus the first €36,000, which is disregarded. This works out at €1,700 a year.
If you have a house and/or other land and property
If you own any land or property, this is where it starts to get a bit more complicated, but there are two important points to bear in mind.
The first is that if your home is your principle residence, then you will be required to contribute 5pc of its value only for the first three years.
So, for example, if your house is worth €400,000, you would pay a total of €60,000.
The second point is that you will not be expected to sell your home in order to pay this €60,000, as long as you are still alive and receiving nursing home care.
Instead, your payment of €60,000 can be effectively deferred and only collected from your estate after you die.
If your land or property is not your principle residence, then there is no three-year cap on contributions, and so you would be expected to pay 5pc of their value every year for as long as you are in a nursing home.
But like your principal residence, the payment of this contribution can also be deferred until after you die.
Nursing home loan
This is made possible by what the HSE calls 'Ancillary Costs Support'. This is essentially a loan advanced by the State that can be repaid at any time, but ultimately must be paid off by your estate some time after you die.
There is no fixed interest rate as such on this loan, but in calculating the repayment due, the HSE will take into account any inflation or deflation since the loan was taken out based on the Consumer Price Index.
However, this loan is entirely optional.
In other words, you can choose to raise the €60,000 or whatever is due on your house (or other land or property assets) any way you like and pay it to the State while you are still alive and in nursing home care.
You could, in theory, take out equity release on your home or other properties, but it may well work out more expensive than if you take the HSE option.
Either way, it would be worth seeking independent legal advice if you are not sure what to do.
If you are an existing resident in a nursing home, you can continue with your current financial arrangements, but you can also apply to the new scheme if it you believe it would work out cheaper.
Despite several attempts to get a response in reasonable time from the HSE press office to some specific queries about the scheme, no response was received at the time of going to press.
Irish Independent
