Some would be better off paying for their nursing home themselves instead of using Fair Deal Scheme

I think the title of this thread, i.e Some people would be better off opting out of the Fair Deal scheme, is correct in spirit but should be re-phrased as ' Some people would be better off paying nursing home fees themselves even after having been approved for the Fair Deal Scheme'.

At the values quoted above, the lady in question and her family are clearly better off out of FD. However, this assumes that all variables remain unchanged, i.e. government changes to the FD scheme, in particular the assessment of value/length of PPR contribution, the issue of whether the lady's income will rise, government tax policy, the rising cost of nursing home fees, not to mention her life expectancy.

In the light of this, twofor1 is absolutely correct, the lady should apply for FD, hopefully get approved but pay the full cost of her care for a few years and, if the conditions change against her, opt in to NH support from FD.
 
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Slim

Has it been established that one can seek approval and then not pay your own fees?

It has been asserted, but I don't think anyone can provide a link to this?

The main point that Sarenco made is that some people should pay their own fees. If we make it too complex, then that point might well be missed.

Brendan
 
Brendan Burgess said:
She can claim the full amount paid by her, but lent by the HSE.

The sons cannot claim tax relief on the amounts paid by her and lent by the HSE.
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Hi Brendan,

In the specific case we are discussing there is no money lent by the HSE.

My understanding is we are talking about a lady who has a house worth €700K, and an annual income of €40K and assuming she has savings below the €36K threshold. Her family are in a position to pay on her behalf and fully avail of the tax reliefs.

If this lady goes into a nursing home privately the cost is €60K annually, the net cost after tax is €36K.

If this lady goes into a nursing home under Fair Deal and has opted not to avail of the Nursing Home Loan, her assessed contribution is more than the cost of her care so the €60K is paid without any contribution or loan from the HSE. The net cost after tax is also €36K.

I hope this clarifies my position.
 
OK, it clarifies it that she is clearly better off paying for it herself than letting the HSE pay for it. Which was Sarenco's main point.

That's great.


Brendan
 
Brendan Burgess said:
Slim

Has it been established that one can seek approval and then not pay your own fees?

It has been asserted, but I don't think anyone can provide a link to this?
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Under Fair Deal, if your assessed contribution is more than the cost of your care, you or anyone else on your behalf can pay the cost of care in full for the first 3 years. You do not have to avail of the Loan.

Thereafter you will only pay the amount assessed on your income and other assets (if any), ie excluding the family home. This is because after 3 years under Fair Deal the HSE will disregard your principal private residence from further assessment.

Your local Nursing Home Support office will confirm if you give them a ring.
 
I have deleted all the posts which were off the core topic or which were later corrected as they should be all covered in the summary below:

If anything is unclear, please ask again.

upload_2017-8-21_14-42-24.png


1) Because the resident or their children get tax-relief on their payments for nursing home care, in some cases, they will be better off paying it themselves than relying on a loan from the HSE.


2) They should, however, register for the Fair Deal Scheme as soon as they enter the Nursing Home, because after three years, their home will be ignored by the HSE in conducting a means test. (Although there is no independent verification of this.)

Cost to the family after the first three years:
upload_2017-8-21_14-42-56.png


3) There is no disadvantage in registering for the Fair Deal Scheme when you first enter the Nursing Home, even if you are not seeking a contribution to the fees from the HSE. (There may or may not be any advantage either.)

Clarifications
A) Anyone paying nursing home fees can claim tax relief on the payments - that could be the resident, their children or even a friend who is not related.
B) Only the person paying the actual nursing home fees can claim the tax relief on them. If the mother pays the fees, the children cannot claim tax relief.
C) If the HSE lends the money to the resident to pay the fees, that resident can claim tax relief on those payments (although this is probably irrelevant as she would be paying no income tax anyway.
 
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Brendan Burgess said:
Slim

Has it been established that one can seek approval and then not pay your own fees?

It has been asserted, but I don't think anyone can provide a link to this?

The main point that Sarenco made is that some people should pay their own fees. If we make it too complex, then that point might well be missed.

Brendan
Click to expand...
Maybe you have mistyped the question? If you're approved, you can avail of the scheme and pay the assessed contribution. The HSE will pay the balance, if any. Obviously, if your assessment is greater than cost of the nursing home, you'd be daft to go this way. You can get approved but then 'no one pays more than the cost of their care' applies, so you pay your own fees and if, at a later date, your income/assets decline or the rules change, you are already approved for the scheme and the scheme will ensure you are no worse off and maybe better off in some cases.
 
Sorry Slim, I don't follow that at all. I thought that post no 34 clarified it.

Is there still some lack of clarity?

The right strategy is
1) Get approved for the Fair Deal Scheme
2) But, despite the HSE agreeing to pay some of your fees, your children should pay them instead.

Slim said:
Obviously, if your assessment is greater than cost of the nursing home, you'd be daft to go this way.
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Not sure what you mean by this.
If I am assessed at being able to pay €70k, but the nursing home charges only €60k, I pay the €60k and not the €70k

Brendan
 
OK, I checked with the HSE and they told me that the three years starts after you go into the nursing home. It's not three years after you go into the Fair Deal Scheme.

They referred me to page 5 of their [broken link removed]
Your principal residence will only be included in the financial assessment for the
first 3 years of your time in care. This is known as the 22.5% or ‘three year’ cap
(15% if application was made prior to the 25th July 2013). It means that you will
pay a 7.5% contribution based on your principal residence for a maximum of
three years regardless of the time you spend in nursing home care. After 3 years,
even if you are still getting long-term nursing home care, you will not pay any
further contribution based on the principal residence. This ‘three year’ cap applies
regardless of whether you choose to opt for the loan or not (see section 5).

So when you enter a nursing home, apply for the Fair Deal Scheme.

They will assess your means as :

80% of €40,000 = €32,000
7.5% of €700k = €52,500
Therefore, State Support is zero.

After three years, the house is ignored.

And the state support will be €28,000 a year.

There is no disadvantage in applying for the Fair Deal Scheme, as long as you pay the full amount between yourself and your family.

There may be an advantage if you apply now and the rules tighten up later.

Brendan
 
Why do you not understand that?

The resident cannot claim tax relief on the state support as the HSE pays it.

But the resident pays the full cost - they just happen to be borrowing the money.

Look at it like this. Let's say that the resident borrowed the money from the Bank of Ireland. It's clear that they are paying the fees.

Brendan
 
I don't think the table in #26 is correct with regards to what the person would receive under Fair Deal. Their means would be assessed as 80% of their income (ie €32,000) plus 7.5% of the value of their house (ie €52,500), giving a total of €84,550. As the assessed means is greater than the cost of care, then they will receive nothing under Fair Deal and will have to fully fund the cost of care, ie €60,000, themselves, either through family providing the money or through the homeloan scheme.
 
Sarenco said:
Assuming the statement is correct, would it not be fair to say that it would be positively unwise to apply for the FD scheme until the lady in this case has been in a nursing home for three years?
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Just to make sure I understand this Sarenco.

This was based on the assumption that if you were in the Fair Deal Scheme, the HSE would be paying the €28,000?

In fact the HSE is not paying the €28,000 - the woman is. It's just that the HSE is lending the money to her.

So it's not unwise to apply for the FD scheme.

Brendan
 
Andarma said:
I don't think the table in #26 is correct with regards to what the person would receive under Fair Deal. Their means would be assessed as 80% of their income (ie €32,000) plus 7.5% of the value of their house (ie €52,500), giving a total of €84,550. As the assessed means is greater than the cost of care, then they will receive nothing under Fair Deal and will have to fully fund the cost of care, ie €60,000, themselves, either through family providing the money or through the homeloan scheme.
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But isn't that what the table says?

Which line do you think is incorrect?

Maybe the title is misleading? The Fair Deal Scheme does not pay the fees as such? If I change that to "FDS - opts for the homeloan schme" would the table then be correct?

Brendan
 
Brendan Burgess said:
Why do you not understand that?

Look at it like this. Let's say that the resident borrowed the money from the Bank of Ireland. It's clear that they are paying the fees.
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I can't grasp that the HSE "loan" is the equivalent of a bank loan. The HSE is repaid the "loan" by the contribution of (up to) 7.5% value of the PPR for up to 3 years. For many people this will not repay the loan. If the person in this example stayed in care for 10 years it would not repay it here either.

I had understood that, although called a "loan", this is a misnomer. It is actually a "scheme" by which the HSE pays the money on behalf of the resident and in return places a claim on the PPR. Therefore, if the tax can be reclaimed it would (technically) be the HSE who could reclaim it.
 
Brendan Burgess said:
But isn't that what the table says?

Which line do you think is incorrect?

Maybe the title is misleading? The Fair Deal Scheme does not pay the fees as such? If I change that to "FDS - opts for the homeloan schme" would the table then be correct?

Brendan
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The 3rd line 'Fair Deal Scheme' and '€28,000' is incorrect IMO. It implies that the person is eligible to receive €28k under Fair Deal, when in fact they are not eligible to receive anything. The line setting out the person's assessed contribution towards their care is also incorrect - it needs to show the 7.5% of the value of the house in addition to 80% of their income.

To make up the shortfall between the 80% of income and the cost of care, the person needs to come up with €28k from family or from the loan scheme, ie the ancillary state support scheme. For the loan option, the HSE effectively pays the difference and it is reclaimed from the estate of the individual at a later date.
 
Andarma said:
The 3rd line 'Fair Deal Scheme' and '€28,000' is incorrect IMO.
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OK

I see the problem now. Thanks for pointing it out.

I will think about how best to lay it out.
The State Support for the first three years is nil.

However, they can borrow the money from the HSE on the strength of their house.

I see that the table suggests that the HSE is paying it. It's not. It's just lending it to the resident.

Brendan
 
Early Riser said:
I had understood that, although called a "loan", this is a misnomer.
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No. It's actually a loan. Wait until I do the revised tables, which will probably be tomorrow and it should be clearer.

This is a bit like my attempts to explain the Shared Ownership scheme, which no one understood or, if they did, they could not explain it.

Brendan
 
Hi Andarma

It's a loan in every sense of the word.

upload_2017-8-21_17-38-17.png

It's a secured loan - secured on the resident's property.
The interest is the rate of inflation.

I think that is where I got confused at first. I understood the general public view that the HSE pays 7.5% of the value of the property in nursing home fees and then recoup them.

No they don't. The resident pays the actual shortfall. The HSE lends the amount to the resident.

My table tomorrow should clear it up.

Brendan
 
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