Fair Deal nursing homecare leaves little for bills and gifts

My mother recently went into a nursing home and is part of the Fair Deal scheme. My question is, does she have any access to her savings now that they have been counted under the scheme? Can she give her children or grandchildren any monetary gifts now?

What money does she use to pay her house insurance, health insurance, oil to keep her home heated when no one is living in it? Also, what money can she use to pay bills that the nursing home are sending me monthly for her activities, hairdos, etc?

I’m really at a loss here. I would really appreciate your advice on this.

Ms CB, email

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Having a close relative move into nursing home care can be a very difficult time. Obviously, the priority is that a loved one is accommodated where they can best receive the appropriate care but, especially in societies like Ireland with a strong family culture, the option of nursing homecare is very often an equivocal one.

And then there are the practicalities of finding a place in a nursing home and then figuring out how to fund it.

For many people, this means an application to Fair Deal where, broadly, 80 per cent of your income goes to meet the cost of basic care, along with 7.5 per cent per annum of your savings in excess of €36,000 and, for the first three years, 7.5 per cent of the value of your home.

There are some items that are deductible from your income before the 80 per cent assessment is made. These include outstanding loans and tax bills, including local property tax (and income tax).

Certain other things clearly are not deductible, including ancillary costs of your mother in the nursing home, such as hairdressing and optional activities. These are very important for nursing home residents both in remaining active (physically and mentally) and for self-image. But residents are expected to pay for them out of the 20 per cent of their income that they retain for their own use.

Depending on the costs, this may or may not be practicable.

But what about insurance of the family home? Most families choose to retain ownership of the home even if the only surviving owner is in nursing home care. This is largely because there is a three-year limit on what can be charged against the property under Fair Deal; but, if it is sold, the money becomes part of the patient’s savings and are subject to the annual 7.5 per cent charge over an unlimited number of years.

I had assumed this would be deductible but I couldn’t find it in any list, or the cost of private health insurance (though private medical expenses are deductible) or oil to keep the family home from falling into disrepair.

Apparently not. OpesFidelio Ireland, an investment and pensions adviser based near Bray, in Co Wicklow, assures me that such expenses must also be met out of the residual 20 per cent of income that your mother retains.

That won’t leave a lot for incidentals.

In relation to gifts that your mother may have made to your children, two issues arise. OpesFidelio tell me that any gifts given to them by your mother in the past five years will be considered still to form part of your her savings – in the same way as if she had sold assets to ensure they were not available for assessment under Fair Deal.

This includes anything given under the €3,000 small-gift exemption. While this is generally free of any tax or impediments, Rachel Reid, director at OpesFidelio Ireland, tells me there is no provision in the Fair Deal legislation to allow for it. That doesn't mean they have to repay the money but the sums will be added to your mother's savings under Fair Deal before the annual 7.5 per cent charge is assessed.

Once she is already in Fair Deal, it is her choice whether to continue to make such gifts but it won’t reduce her annual Fair Deal contribution, OpesFidelio confirms. That means, in effect, that it has to come from the 20 per cent of income she retains which is already getting squeezed from several directions. In practical terms, she simply may not have the funds to do so.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.