Q: Liam, I’m wondering if in the future, I ever have to go into a nursing home, how will I be able to finance the cost? I have pension income of c. €24,000 per year, my house is worth c. €250,000 and I have €65,000 in savings. If I applied to use the fair deal scheme, what impact would it have on my savings, income and house?
A: Under the scheme, you have to make a contribution towards the cost of your care, with the HSE paying the balance. Your care needs are first assessed and then your finances are reviewed to see how much you can pay. And if you are deemed to have enough resources to pay the cost yourself, you’ll receive no support, but if your ability to repay are less than the cost of the nursing home, the HSE will pay the rest.
You will always have pay 80% of your assessable income, less some allowable deductions, along with 7.5% (3.75% if you are part of a couple) of the value of your assets i.e. home, farm, investment or rental income and cash.
If you had a partner and they continued to live in the family home, they will be left with 50% of your income, or the maximum rate of state contributory pension, whichever is the greater.
In relation to savings, the first €36,000 of them are discounted for a single person or €72,000 for a married couple.
The 7.5% taken from the value of your property is only used for the first 3 years’, of your time in care, which means the maximum amount used against your home is 22.5% regardless of how long you spend in a nursing home, and this amount reduces to 11.25% if a spouse or partner remains in the family home while you’re in care.
So, after 3 years, if you’re still in long-term nursing care, you will note pay any further contribution based on the value of your primary residence.
If the cost of nursing home care was for example €1,200 per week, the amount you’d contribute is €771.63 with the HSE paying the balance.
How I arrive at your contribution is as follows:
80% of your pension is taken which amounts to €369.23 (€24,000 x 80% / 52 = €369.23)
7.5% of your house is taken which amounts to €360.58 per week (€250,000 x 7.5% / 52)
And 7.5% of your savings is taken which amounts to €41.82 (€65,000 - €36,000 x 7.5% / 52)
You could defer payment of the amount associated with your home i.e. €360.58 per week if you apply for what’s called ancillary state support (Fair Deal Loan Scheme). And this means the state will pay their portion and the amount linked to your property. They are effectively giving you a loan which must be repaid to them within a year of the person dying. However, it doesn’t have to be paid if a partner or adult dependent or child continue to live in the property.
If you’re looking at reducing your assessable assets, your timing needs to be right, because when your financial means are being reviewed, any gifts or transfers made in the 5 years before you make an application will still be factored in.