Can it make more sense to pay privately for nursing home fees?

I read your article about Fair Deal Vs Paying Privately for care homes in Ireland, written back in 2018!

My quick question is: has anything changed since 2018? It sounds like money is payable on death of the person in the care home if you opted for paying privately. And no interest payable, is that correct?

So getting a Fair Deal loan is more expensive? Many thanks for any opinions on this minefield.

Ms MMcG

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Crikey . . . over four years ago! I had to go back and dig that one up when your question landed.

Fair Deal is still the method used by most people who find they, or a loved one, need long-term residential care but a few things have changed in relation to the financial contribution since that 2018 article. I’m also concerned that you might have got a mistaken impression from the piece in relation to the process of paying privately. Let’s tackle that first.

You appear to have taken from the article that, if paying privately, money is payable on the death of the person in the nursing home without interest being due. That is not the case.

Whether you are paying privately or through Fair Deal, payment for care is made as you go, generally on a monthly basis. Furthermore, in either case someone in the family – or someone selected by the person in care – will have to act variously as the “responsible person” for Fair Deal or “guarantor” in the case of private care.

If bills fall due and are not paid, that is the person who will be pursued by the nursing home for any missing monies. And, while I have not checked specifically, I think you can assume that interest will be charged at or above market rates on any money due and not paid, certainly in the case of private care.

One thing to note is this: if you make a Fair Deal application and the assessment of the Nursing Home Support Scheme (Fair Deal) team is that you would be paying more under Fair Deal than you would be by going private, they are obliged to tell you this, and your application will be null and void. So there is never really any harm in going through the process, apart from the hassle of gathering the necessary information.

You should never find yourself in a position where Fair Deal costs you more than going private – either on a running basis or in terms of paying off a Fair Deal loan.

To recap, Fair Deal will take 80 per cent of the resident’s income as a financial contribution as well as 7.5 per cent of the value of their assets in excess of €36,000 (for a single person) per annum. In the case of the family home, that 7.5 per cent is capped at three years, so a maximum of 22.5 per cent of the property value.

You should never find yourself in a position where Fair Deal costs you more than going private

If they are one of a couple, the income contribution is 40 per cent of the family income, and the take on assets is 3.75 per cent on anything above €72,000, and also 3.75 per cent per annum on the family home capped at three years – 11.25 per cent.

That money coves the basics of care. Extras, which can be as basic as incontinence wear or medical dressings or other items like haircuts, social events etc, come on top of that, paid presumably out of the remaining 20 per cent of income or other assets.

So what has changed? First up, it is now common that nursing homes will require families to pay a weekly or monthly “top-up”. This effectively is a recognition that the Fair Deal rates paid by the Government to nursing homes have not risen in line with costs and regulation. It’s not mentioned in any of the documentation around the scheme, so it can come as a shock to people already under stress at the time when they are having to consider such care.

In better news, the Government has finally accepted the need to address the issue of homes left empty because of nursing home care at a time of housing crisis. It is telling that this crisis is one of the things that certainly has not changed since we wrote that 2018 piece.

[ 2018: Nursing home care: Can paying privately be better than Fair Deal? ]

Recent changes mean that if the family home is sold, the three-year cap on contributions from it remains in place: previously if you sold the property, the 7.5 per cent levy on assets would apply ad infinitum. This is good news as it suits nobody to have these houses sitting empty but, equally, no one was going to sell their home only to be penalised financially on the move.

One thing to bear in mind is that you will be required to pay off any Fair Deal loan – the credit given generally on the contribution due from the family home – within six months of selling the property.

Whether it makes sense to go privately or through Fair Deal is still not a black and white issue

Changes have also been made in relation to renting out the empty family home. Previously 80 per cent of rental income would have gone to Fair Deal: now that figure is just 40 per cent, a significant change.

Whether it makes sense to go privately or through Fair Deal is still not a black and white issue. In large part, it can depend on how long the person will remain in nursing home care. The average, I gather, is around three years but I certainly know people who have been in a nursing home for 15 years. Clearly, the amount of time during which you have to pay privately – especially the ongoing contribution from assets – will affect which is the better choice.

And of course, it will depend on the person’s income and savings/assets.

Of course, there is nothing stopping you going private initially if that makes financial sense, and then making a Fair Deal application subsequently if circumstances – or the figures – change.