How does the Fair Deal scheme work, who qualifies and how do you apply? asks FIONA REDDAN
THE FAIR Deal, or Nursing Home Support scheme, was finally introduced on October 27th, replacing the current subvention scheme. While it has been criticised by many for being less than fair, it is here to stay.
Already, €55 million has been allocated to pay for nursing home care for 2009, but, given the dramatic fall in asset values in Ireland since the scheme was first announced back in 2006, it looks set to cost the Government more to run.
With the value of houses and investments having plunged, the 5 per cent asset contribution from nursing home residents towards the cost of their care may be less than expected.
The Government is expected to outline its funding for the scheme for 2010 in the forthcoming Budget, but if the parlous state of the public finances limits its allocation for next year, it will mean growing waiting lists for those looking for support under the scheme.
But for those already in nursing homes who are looking to avail of State support for either themselves or family members, or those who will have to wait for support, what are the practical elements of the new scheme?
Q What are the main differences between the old system and the Fair Deal?
AThe new Fair Deal scheme applies to both public and private long-term nursing home care, while the subvention scheme covered only private nursing home care. Under the subvention scheme, a person whose means exceeded a certain limit was effectively deemed ineligible for subvention.
Of those who qualified for a subvention, the maximum basic rate was capped at €300 per week. Under the Fair Deal, each person’s contribution to care is worked out and the State then pays the difference between this and the cost of care.
Q How do you qualify for the Fair Deal?
ATo be able to participate in the scheme, you must be ordinarily resident in the State and assessed as needing long-term nursing home care.
Q What is involved in applying for support?
AThere are three steps involved in an application under the Fair Deal. Step 1 involves completing a care needs assessment to determine whether you need long-term nursing home care. Step 2 is a financial assessment to assess your contribution towards the cost of your care, and Step 3 involves the Nursing Home Loan.
Q What is involved in the means test?
ATo determine how much the State needs to contribute towards the cost of your care, you will need to undergo a detailed financial assessment. If you are a member of a couple, the assessment will be based on half of the couple's combined income and assets.
In principle, you must contribute 80 per cent of your assessable income (which includes all earnings such as pension income, social welfare benefits/allowances, rental income, income from holding an office or directorship, income from fees and commissions) and 5 per cent of the value of any assets per annum, but there are deductions.
First off, the first €36,000 of your assets, or €72,000 for a couple, will not be counted at all in the financial assessment. Moreover, there are other eligible deductions such as income tax, social insurance contributions and maintenance payments in respect of a child, spouse or former spouse.
With regards to the asset contribution, your home will only be included in the financial assessment for the first three years of your time in care, under the 15 per cent or “three year” cap, regardless of the time you spend in nursing home care.
The final amount repaid under the Nursing Home Loan scheme will only ever reflect the actual time spent in care. So, for example, if a person spent two years in care, the maximum contribution payable from their asset would be 10 per cent, rather than the 15 per cent (ie 5 per cent for each of the years spent in care). Therefore, the three-year rule does not apply.
If you are unable to meet these costs, this contribution can also be deferred and collected from your estate, under the “Nursing Home Loan”.
There are certain protections for farms and businesses, to ensure their sustainability. For example, a farm or business will only be taken into account within the financial assessment for three years under certain criteria, such as if the person suffers a sudden illness or disability.
If you transfer income or assets now, and enter into a nursing home within the next five years, then these will still be taken into account in the financial assessment.
Q What is the Nursing Home Loan?
AUnder subvention, a person's principal residence was included in the financial assessment but there was no facility to defer contributions based on the residence, which meant that some people had to sell their family home to meet care costs.
Under the Fair Deal however, if your assets include land and property, then you can defer the annual 5 per cent asset contribution (capped at three years for the family home) based on these until after your death, at which time your property will be sold and the State repaid.
If you decide to go down this route, you will need to have a charging order, a type of mortgage which secures the money loaned, registered against your assets.
Once you die, the loan will become repayable to the Revenue Commissioners. But, while any part of the loan which was based on assets other than your home must be repaid within 12 months of the date of death, repayment of the part based on your home can be deferred.
If, for example, your spouse or child is living in the house, then repayment can be deferred for the duration of the person’s lifetime.
It should be noted that if the loan isn’t repaid within this time period, then an interest charge will apply. The rate of this interest will be levied at: the repayable amount X the number of days of delay X 0.0219 per cent. So, if a loan of €15,000 was not repaid until a year after the deadline, then an interest charge of €1,199 would apply. The Revenue also has discretionary powers under its care and management provisions which allow it to deal with any hardship cases which may arise.
Q How much will the Fair Deal cost patients?
AUnder the scheme, an individual will contribute a maximum of 80 per cent of their income and 5 per cent of their assets, and the State will then meet the balance of the cost.
Take the example of a person on an old-age pension, who must contribute 80 per cent of this, or €184.24, to the State each week to pay for their care, leaving them with €46.06. In addition, the individual must make provision to contribute 5 per cent of their assets over the value of €36,000.
If the only assets the person has is a house valued at €200,000, then the State will look for €8,200 a year for the first three years. If the person’s family can’t meet this contribution, but doesn’t wish the home to be sold, then the patient can sign up for a Nursing Home Loan. Under this scenario, the contribution is deferred, and the individual’s estate will repay the loan of €24,600 upon their death following the sale of the house.
If there is an outstanding mortgage on a property, it is only the net value of the asset which is assessed, ie €150,000 if there is a €50,000 mortgage.
Q Will public patients pay more under the new system?
APreviously, patients in public long-term nursing homes had to pay long-stay charges for their care, which were charged at a maximum of €153.25 per week. While those currently in public care will not see their circumstances change, new applicants will have to pay more, given that the charges under the Fair Deal encompass a levy on both income and assets.
Q Is there an upper limit on eligible incomes?
AWhile there are no thresholds or limits within the scheme, a person whose assessed income exceeds the cost of care, will not warrant financial support from the State.
Q If I avail of the Nursing Home Loan, am I prevented from selling my properties?
ANo, you can still sell or transfer any land or properties, but the order on the asset means that the loan must be repaid. Moreover, if you don't repay the loan within six months of the date of sale or transfer, then interest will be charged back to that date.
Q What if the patient doesn’t have mental capacity?
AIf the individual applying for support under the Fair Deal is of diminished mental capacity, then a specified person, such as a person's spouse or partner, or child over 18 years of age, can act on his/her behalf for Steps 1 and 2 of the application process. However, only a court-appointed care representative can act on the applicant's behalf for Step 3, the Nursing Home Loan. In such cases, a specified person must apply to the County Registrar to become a care representative.
Two reports from two separate registered medical practitioners are required as evidence that a person is of diminished mental capacity.
Q What happens if I apply but the funding allocated for the year has run out?
AThe Fair Deal will have a certain sum allocated to it each year – for example this year it is €55 million – but once this runs out, there will be no further funding. So, if you apply late in the year you might find yourself waiting some time to get relief. According to the HSE, "while it is hoped that there would be sufficient funding to support everyone, there may be situations where a person's name must go onto a waiting list until funding becomes available.
If this is the case, the HSE will notify you when it writes to advise you whether you are eligible for State support”.
Q Does the Fair Deal cover all the costs of nursing home care?
AUnder the HSE's agreement with private nursing homes, it will pay for the costs of bed and board charges. However, additional expenses such as physiotherapy, incontinence wear, transport and specialised wheelchairs will not be covered by the scheme.
According to the Department of Health, the majority of people in nursing home care hold a medical card, which should cover the cost of such services.
Q How will the scheme affect current residents of nursing homes?
AFor individuals already in a private nursing home, they will be eligible for the new scheme provided their nursing home is approved for the purposes of the scheme. Furthermore, if they have been resident in the nursing home for three years or more, the financial assessment will be based only on income and assets other than the principal residence.
As mentioned, while waiting lists may arise, anyone already in an approved nursing home at the date of commencement of the scheme will have State support paid from October 27th, regardless of when their application is processed.
Q Can the Government increase the contribution required from an individual?
AThe contributions payable under the scheme can only be amended by way of primary legislation, which must be passed by both Houses of the Oireachtas and signed into law by the President.
Nevertheless, before the scheme was even launched, An Bord Snip Nua earlier this year proposed an increase in the percentage of care costs contributed by an individual from their residence.
It suggested that the level be increased from 15 per cent to a maximum of 22.5 per cent over three years, which would result in annual savings to the Government of €50 million.
