# Fair Deal scheme and the 5 year rule on asset transfer, also medical cards



## The Ghoul (30 Oct 2011)

My first question is - let's say someone applies for the nursing home Fair Deal scheme and had transferred an asset (eg cash) to a relative, say 4 years before the application. Is this cash taken account of for the duration of their stay in the nursing home or just for the first year (i.e until 5 years have passed since the asset transfer) 

Also if someone has 100k in cash assets, as per the Fair Deal rules, 5% of this is payable each year. Is it 5k each year for 20 years? Or is it 5k the first year, 4.75k the second year, 4.5125k the third year etc.

Also as regards the over 70s medical cards means test which takes account of pension, deposit interest and other income - I have been searching for a similar 5 year rule for this but cannot find it. Let's say an over 70 year old transfers cash assets and as a result reduces their income from deposit interest, how is this assessed?

Thanks


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## twofor1 (30 Oct 2011)

The Ghoul said:


> My first question is - let's say someone applies for the nursing home Fair Deal scheme and had transferred an asset (eg cash) to a relative, say 4 years before the application. Is this cash taken account of for the duration of their stay in the nursing home or just for the first year (i.e until 5 years have passed since the asset transfer)
> 
> Also if someone has 100k in cash assets, as per the Fair Deal rules, 5% of this is payable each year. Is it 5k each year for 20 years? Or is it 5k the first year, 4.75k the second year, 4.5125k the third year etc.
> 
> Thanks


 


I think it is taken into account for the duration of the stay.

You can apply for another financial assessment during the stay, but the rules state, in the 5 years leading up to your application, not the previous 5 years.

5% of savings is taken into account when assessing your contribution, your contribution remains the same for the duration of the stay. Again you can apply to be reassessed during a stay, as paying your contribution will significantly reduce savings.

If this person is a member of a couple, the assessment will only be based on half the combined savings, and the first €36K is disregarded for a single or €72K for a couple.

http://hse.ie/eng/services/Find_a_Service/Older_People_Services/nhss/#fin

http://www.dohc.ie/issues/fair_deal/


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## The Ghoul (30 Oct 2011)

Thanks, twofor1.


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## STEINER (30 Oct 2011)

I was looking at this scheme online a few days ago.  The 5% assets deduction regarding principal private residence is only for the first three years, after that nil, so a person could be 20 years plus in care and it would only be for the first 3 years.

[broken link removed]


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## The Ghoul (30 Oct 2011)

STEINER said:


> I was looking at this scheme online a few days ago. The 5% assets deduction regarding principal private residence is only for the first three years, after that nil, so a person could be 20 years plus in care and it would only be for the first 3 years.
> 
> [broken link removed]


You're right but the PPR is not what those with substantial cash or other non PPR assets are likely to be concerned about. If you have a house worth 1 million the most the FD can get from the sale of it is 150,000. If you have 1 million in the bank the most it can get would appear to be 964,000. 

If you are a farmer I believe you get special exemptions/treatment when it comes to non PPR assets.

The Fair Deal scheme was developed when house prices were sky high and the average pensioner's PPR comprised a high proportion of their wealth. Now the value of that asset that the FD can take max 15% of is on the floor. Whereas the asset that the FD can take ~100% of may have the same or higher value as it did a few years ago.

The Fair Deal also takes up to 80% of a person's income which includes deposit interest. So, for those with savings, not only is the lump sum in the firing line, so is the interest.

Now the Fair Deal will not take more from a person than than the cost of their care. The last time I checked nursing homes were charging around 50,000 per year, more in Dublin. However I could see price increases coming thick and fast in this sector and outstripping general inflation.


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## twofor1 (30 Oct 2011)

The Ghoul said:


> If you have a house worth 1 million the most the FD can get from the sale of it is 150,000. If you have 1 million in the bank the most it can get would appear to be 964,000.


 
I don’t see anything wrong with a person with no home and €1 million in cash paying 5% of this annually towards their nursing home costs.

I do see the anomaly though in the person with a €1 million house and no cash only paying 5% for 3 years.

No scheme is perfect, there will always be some who gain more than others.

I think the fairest solution to this anomaly would be for the person with the valuable house to pay more rather than the person with substantial cash paying less.


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## Black Sheep (30 Oct 2011)

It's 5% of the assets each year for as long the person is still in care. However as the amount or value of the assets are reducing each year because of the payments to the care home the situation should be reviewed each year.


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## The Ghoul (31 Oct 2011)

Thanks for the responses. Does anyone have a comment on the question on transferring assets and how this affects the over 70s medical card means test. 

Simply put, if a person has cash savings, the interest from which could put them over the 700 euro weekly income limit for a medical card, can they transfer/gift their savings to reduce the interest and then become eligible for the medical card? Or is there a 5 year rule?


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## Black Sheep (31 Oct 2011)

Having checked the "Health Act 2008" which introduced the means test for over 70's, nowhere in it is there any mention of the transfer of assets in the previous 5 years or any other time.
As there is no ruling on it, then it seems to leave that door open


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## The Ghoul (31 Oct 2011)

Thanks Black Sheep. I couldn't find it either but thought I might be missing something.


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