Fair Deal Programme - What is it?
There has been a lot of media coverage in recent months regarding the Fair Deal programme, and what it entails. In this blog we will give you a brief outline of how the programme works, who is eligible for it, and how much you might pay towards your care.
The Fair Deal programme was introduced by the government in 2009 with a stated aim to provide financial support towards the cost of long-term Nursing Home care for people unable to afford to personally pay for it. Anyone who is resident in Ireland can apply, regardless of age, and you do not have to own a property to apply either.
In essence, the HSE/State will pay a portion of the Nursing Home fees and you will pay a portion also. The exact split depends on your specific circumstances. The amount you pay depends on your assets (home, property, land, cash assets) and your income (income, investments, pensions, rental income). If you have relatively little by way of assets and income, you will pay less, and the State will pay more. The average amount of client contribution is €305 per week.
There are set limits on how much you have to pay towards the cost of care, as follows:
- 80% of your income per annum (40% if you are part of a couple)
- 7.5% of your assets per annum (3.75% if you are part of a couple)
If your individual calculation exceeds the cost of care, the HSE will review the application in 3 years time, and at that stage your family home will not be included in the assessment. In some cases, this may mean that the HSE will then make a contribution towards the cost of care if your circumstances have changed.
The following should be noted:
- The first €36,000 of savings/ investments (€72,000 if you are part of a couple) is excluded from the assessment.
- Your family home is only included in the assessment for the first 3 years you are in care, even if you don’t enter the Fair Deal programme at the same time as you enter care. The family home then ‘falls out’ of the calculations. Therefore, you will only pay a maximum of 22.5% of the value of your home (11.25% if you are part of a couple). This cap also applies to your farm or business where applicable.
Tax Relief is also available on your own contributions to the cost of care, which can reduce the cost by 20% or 40%, depending on whether you are a standard or higher rate taxpayer.
Another element to the Fair Deal programme is the Ancillary State Support, also known as the Nursing Home Loan. Where someone does not want to dispose of or liquidate their assets during their lifetime, they can opt to apply for a Nursing Home Loan. They are not required to be in receipt of State support (i.e., HSE contribution to care) to avail of this – the Nursing Home Loan operates independently of any HSE contribution to care. Once an individual has clear title on the property or asset, they can apply for the Nursing Home Loan. The Nursing Home Loan is used to fund the amount of your weekly contribution based on your relevant assets. This is an interest free loan made by the HSE to you, which is secured against your assets, such as your family home. You can choose to pay back the loan at any time, but in most instances, it is repayable on death. For someone who could be described as “asset rich and cash poor”, this facility can be of real benefit.
The Fair Deal programme was established on the premise of progressiveness – i.e., the more you have the more you pay. As a result of this, the people who will benefit most from this programme are those with relatively smaller levels of income and assets.
If you would like to discuss this further, and how it intersects with your overall financial planning, or that of a family member, please contact me at firstname.lastname@example.org and I would be delighted to assist you.