# Fair Deal real world example and Case Study



## Poliver

Hi All,

My siblings and I are in the situation where we need to examine the Fair Deal scheme and consider if it is (a) applicable to us and (b) feasible.

I would appreciate any feedback.

I found this example on the a previous thread which linked to the FAQs about the Fair Deal scheme:
_Ms. Murphy, Single, House and Savings Ms. Murphy has an income of €270 per week, savings of €56,000 and a house worth €250,000. She decides to apply for financial support under the Nursing Homes Support Scheme. Under the scheme, she will contribute 80% of her income each week towards the cost of care. This equates to €216 per week (i.e. 80% of €270). She will also make a contribution towards her care costs based on her assets, i.e. her savings and her house. When the asset disregard is applies to Ms. Murphy’s savings, only €20,000 remains to be taken into account (i.e. €56,000 - €36,000 = €20,000). The contribution towards her cost of care based on savings will amount to 7.5% of their value per annum or €28.85 per week (i.e. €20,000 x 7.5% = €1,500/52 = €28.85). The portion of the contribution based on assets, i.e. the house, will amount to 7.5% of its value per annum or €360.58 per week (i.e. €250,000 x 7.5% = €18,750/52 = €360.58). This means that Ms. Murphy must contribute €605.43 per week towards her cost of care (€216 + €28.85 + €360.58). The cost of the nursing home is €1,000 per week. The HSE will pay the balance, i.e. €394.57 per week. However, Ms. Murphy does not have €360.58 per week to pay upfront and does not want to sell her house. She, therefore, applies for and receives the Nursing Home Loan. This means that the HSE will pay the additional €360.58 on top of the €394.57 it is already paying per week and is effectively giving Ms. Murphy a loan of €360.58 every week. The HSE’s weekly contribution is now €755.15 (i.e. €394.57 + €360.58 = €755.15). If Ms. Murphy did not apply for the Nursing Home Loan, she would have to pay the contribution of €360.58 based on her house on a weekly basis during her time in nursing home care. After three years, Ms. Murphy’s house would be discounted from the financial assessment. _​
If it's compared to my family's situation, the figures look like this:

Pension 240

Savings 200000

House 80000

Farm 410000
Contributions based on above figures:

*INCOME *(Pension)
80% contribution of income = *192*
*SAVINGS*
200000 – 36000 (asset disregard) = 164000
7.5% of that = (164000 x 7.5% = 12300/52 = *236.53*)
*HOUSE*
80000 x 7.5% = 6000/52 = *115.38*
*FARM*
410000 x 7.5% = 30750/52 = *591.34*


So according to the example, we have to contribute *1134.25 *per week to the nursing home.

As the nursing home costs less than that (approx 900 pw.), then the Fair Deal scheme wasn't really intended for these purposes I assume.

BUT, in our situation, can we apply, pay the Savings and Pension contribution each week (192 + 236 = 428), then the Fair Deal loan covers the rest of the cost of the Nursing Home up to the total (€900)??

So the loan would then be 900 - 428 = 472 per week or 24544 per year.
After the death, the loan (which is secured against the house/farm) is to be repaid.

Am I understanding this correctly?

Second question: After the 3rd year, the house and farm are removed from the considerations based on certain criteria which we are fairly sure of meeting.
So, how does this element affect the calculations above?? I feel like I'm wrongly leaving them out but I can't be sure based on everything I've read.

The info on this is confusing to say the least and the more you look into it, the more complex it gets (as always). Finding a solicitor who can give me a proper straightforward answer is not simple either. So I'm looking to the wizards on here to help out.

Thanks,
P.


----------



## Slim

No wizard here, but I'll try. Others will correct my errors.
1. Your contribution is capped at the actual cost of care. So, as you have worked out, cost = €900, Contrib =€900, made up of €429 on cash assets and balance on property, €471. The €471 may be deferred as the 'Loan'.
2. After 3 years, the value of the Principal Private Residence is removed for assessment purposes, so contribution reduces to €192+€225(savings reduced from paying 3 years, + €591 (farm is not removed from assessment after 3 years) = €1008, therefore with contribution capped at €900(assuming no increase in NH costs), €483 can continue to be added to the loan. 

You can have the financial assessment repeated each year to reflect reducing cash savings but may also include increase in  value of farm etc. Hope that helps.


----------



## Poliver

Hi Slim and thanks for the reply.

OK so a couple of things occurred to me on reading your post.
1) The reducing amount of the savings means the contribution changes each year? And so the corresponding loan amount increases each year?
2) The PPR and Farm are both removed after 3 years (in the case of the farm there are criteria that need to be met wrt taking over the management/running of the farm etc) which we are pretty sure will be satisfied. Now, how does that affect the loan repayments as you showed that the loan portion of the NH cost would increase?
3) If the max value of the house and farm over 3 years is 22.5% of both, then €110250 is the max amount that can be taken from (liened against) the property? 
What happens if the estate isn't worth that much (without everything being sold) as the original savings have been consumed by the NH costs and loan? Does the lien stay until some time in the distant future when it is sold or does it have to be paid during probate?


----------



## Slim

Poliver said:


> OK so a couple of things occurred to me on reading your post.
> 1) The reducing amount of the savings means the contribution changes each year? And so the corresponding loan amount increases each year? Yes - until the cost of care exceeds your assessed contribution.
> 2) The PPR and Farm are both removed after 3 years (in the case of the farm there are criteria that need to be met wrt taking over the management/running of the farm etc) which we are pretty sure will be satisfied. Now, how does that affect the loan repayments as you showed that the loan portion of the NH cost would increase? I don't where you get that the farm will be removed - can you clarify? If the farm & PPR are removed, no further loan will accrue.
> 3) If the max value of the house and farm over 3 years is 22.5% of both, then €110250 is the max amount that can be taken from (liened against) the property? If the PPR is valued at €80k, max lien=€18k: Farm, if only three years(?), max lien= €92,250.
> What happens if the estate isn't worth that much (without everything being sold) as the original savings have been consumed by the NH costs and loan? Does the lien stay until some time in the distant future when it is sold or does it have to be paid during probate? The lien can be deferred in certain circumstances but generally recouped during probate. The lien is against the property of the estate and unless the property declines in value dramatically, can be reclaimed unless further deferred.


----------



## Prittstick

Why would you go with the Loan option?

My understanding is this.

OK, the weekly cost of this is 900.  The person has a pension of 240, so stick with the 192 going towards the weekly cost (this gives the lady 48 a week for personal stuff)
Now you need to find 708 a week (900 less 192)  to pay the nursing home. The lady has 200,000 in savings... so this will deplete by 36,818 a year ( 708 x 52) and in 3 years time her saving balance will be  approx 90,000.

At the end of year 3 you can re-calculate:

Pension 240 = 192 a week.

Savings 90,000  less 36,000  at 7.5% =4,050 = 78 a week

Total contribution  270 a week, HSE pays balance of 630

The house and farm are excluded under the 3 year rule

You avoid all the legal stuff regarding the Loan.


----------



## Poliver

Slim said:


> 1) The reducing amount of the savings means the contribution changes each year? And so the corresponding loan amount increases each year? Yes - until the cost of care exceeds your assessed contribution.


I don't understand what you mean by that.


----------



## Poliver

Prittstick said:


> The house and farm are excluded under the 3 year rule


OK how do you work this out? Are you assuming that because the lady will be in the NH for 3 years paying privately that the HSE won't look at the property when she goes for the loan because she's been in the NH already for 3 years? I somehow doubt they work that way.


----------



## Slim

Poliver said:


> I don't understand what you mean by that.


What I mean is: Assessed at €1,134 in your example. As savings whittle down, the contribution drops each year but is capped at €900. So, contribution assessed on savings drops so balance of €900 is taken up by property loan. Savings assessed drops but property loan balance rises to make €900(until overall contribution drops below €900).

I also am puzzled as to why you think the farm will be excluded after 3 years. By the way, the three years will start from date of application for FD even if you do not use it.


----------



## Prittstick

Hi Poliver.. yes. See your own original quote   _After three years, Ms. Murphy’s house would be discounted from the financial assessment. _

Like Slim says --- By the way, the three years will start from date of application for FD even if you do not use it.


----------



## Slim

My bad. The scheme includes a farm and business in the 3 year cap subject to certain conditions.


----------



## Michael Joe

Examples are very informative . Any examples available for the following scenario for married couple where one is admitted to long term nursing home care utilising the Fair Deal scheme.

Husband pension 45k pa . Wife pension 13k pa.
Savings 130k.
House value 500k.


----------



## Slim

My bad. Did it too late at night!


----------



## twofor1

Michael Joe said:


> Examples are very informative . Any examples available for the following scenario for married couple where one is admitted to long term nursing home care utilising the Fair Deal scheme.
> 
> Husband pension 45k pa . Wife pension 13k pa.
> Savings 130k.
> House value 500k.



As a member of a couple, the applicant will be assessed on half the income, savings and house.

In this case;

 The income is €58K, so 80% of half is €23,200

Savings are €130K, less the €72K disregard per couple, leaves an assessable amount of €58K, so 7.5% of half is €2,175.

House is worth €500K, so 7.5% of half is €18,750.

The initial contribution for one of a couple in this case should be;

 €23,200 + €2,175 + €18,750 = €44,125 annually, or €848.55 weekly.


----------



## Michael Joe

twofor1 said:


> As a member of a couple, the applicant will be assessed on half the income, savings and house.
> 
> In this case;
> 
> The income is €58K, so 80% of half is €23,200
> 
> Savings are €130K, less the €72K disregard per couple, leaves an assessable amount of €58K, so 7.5% of half is €2,175.
> 
> House is worth €500K, so 7.5% of half is €18,750.
> 
> The initial contribution for one of a couple in this case should be;
> 
> €23,200 + €2,175 + €18,750 = €44,125 annually, or €848.55 weekly.


Thanks for this info


----------



## learnwell

If, apart from PPR, sole asset is made up of savings, is the 7.5% calculated on the diminishing balance;  eg if 100,000 left after 72,000 disregard:
take away 7500 in year 1, leaving 92,500.   In year 2 is it 7.5% of 92,500, or is it again 7.5% of 100,000 and continuing until total 100,000 is gone, approx 13 years?


----------



## twofor1

learnwell said:


> If, apart from PPR, sole asset is made up of savings, is the 7.5% calculated on the diminishing balance;  eg if 100,000 left after 72,000 disregard:
> take away 7500 in year 1, leaving 92,500.   In year 2 is it 7.5% of 92,500, or is it again 7.5% of 100,000 and continuing until total 100,000 is gone, approx 13 years?



Your contribution will remain the same until you ask to be reassessed, I would guess most don’t know of this facility and continue to pay the original amount.

Particularly if you didn’t go for the Life Loan, reassessment is usually very beneficial as savings would be reducing substantially.


----------



## Cavan 123 cars

Slim said:


> My bad. The scheme includes a farm and business in the 3 year cap subject to certain conditions.


Hi slim does anyone know what these certain conditions are ? Is it if farm is handed on to son or daughter and they are running it for there own livelihood


----------



## Slim

Cavan 123 cars said:


> Hi slim does anyone know what these certain conditions are ? Is it if farm is handed on to son or daughter and they are running it for there own livelihood


Hi. The guidance says that the 3 year cap will extend to farms and businesses where:
(i) the person has suffered a sudden illness or disability which causes them to need long-term nursing home care, and
(ii) the person or their partner was actively engaged in the daily management of the farm or business up until the time of the sudden illness or disability, and
(iii) a family successor certifies that he or she will continue the management of the farm or business.


----------



## Cavan 123 cars

Slim said:


> Hi. The guidance says that the 3 year cap will extend to farms and businesses where:
> (i) the person has suffered a sudden illness or disability which causes them to need long-term nursing home care, and
> (ii) the person or their partner was actively engaged in the daily management of the farm or business up until the time of the sudden illness or disability, and
> (iii) a family successor certifies that he or she will continue the management of the farm or business.


My mum had a stroke and ended up in a wheelchair paralysed on one side   4  years ago she ran the farm with my dad she left hospital and came home and my dad minded her for two years hopme help came in till his own health failed and we had to put her into a nursing home as my dad could not cope in the mean time farm fell apart until it was handed on to me and brothers who run it now .she had a sudden illness but we did not want her to go to a n home it was last resort so I don't know where we stand


----------



## twofor1

Cavan 123 cars said:


> I don't know where we stand



Have you asked your local Nursing Homes Support Office ?

http://www.hse.ie/eng/services/list/4/olderpeople/nhss/#offices


----------



## Slim

twofor1 said:


> Have you asked your local Nursing Homes Support Office ?
> 
> http://www.hse.ie/eng/services/list/4/olderpeople/nhss/#offices


Yes, you need to check with your nearest NH Support Office to establish your exact position, as  2F1 says!


----------



## Limbo1

If the patients main residence (asset) was transferred over for zero money to her son 4 years ago, does the patient still pay the 7.5% value of the market value of the property?


----------



## AlbacoreA

They say they look at assets (cash & property) transferred within 5yrs. What they do in practice I have no idea.


----------



## Slim

Yes. They check for assets transferred and main residence will the first asset checked.


----------



## ClubMan

In case it's of any use there's a Fair Deal calculator here - I don't know yet if it's correct and up to date...

http://myfairdeal.ie/?page_id=285


----------



## twofor1

As far as I am aware it is correct and up to date.

On AAM there are many posts on Fair Deal and various links.

I think the above mentioned http://myfairdeal.ie/ site with its calculator and their explanation of the scheme, terms, conditions, important notes etc is the best and most informative one stop shop for anyone considering Fair Deal.


----------

