# Fair Deal nursing home scheme - calculating income from savings



## The Ghoul (12 May 2012)

If someone applies for the nursing home Fair Deal scheme, both income and assets of the applicant are taken into account when determining how much they pay towards their care. I believe the income is net income and includes deposit interest, dividends from shares etc.

I was wondering abot a couple of things:

1) how exactly does one determine the income from multi year deposit accounts or An Post NTMA certs etc. Is it the interest accrued in the previous year? Is it based on the average AER? Or is the income zero until maturity?

2) In the Fair Deal application form there is a section on "income that was transferred from you to another person within the last 5 years". If someone had transferred cash in the previous 5 years does the "lost" interest from it count as transferred income and how is this lost interest calculated. It seems bizarre that a person would have to include interest that they never earned as income. What if they had kept the money in a current account paying 0% instead of transferring it? The income would be zero in both cases. 

Thanks


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## putsch (12 May 2012)

In relation to q 2 I think they mean "money" that was transferred in last 5 years  and this is intended to stop people divesting themselves of assets (probably to family) in order to qualify for the scheme.

This whole thing to me seems to contain the most perverse incentives for people to transfer assets to their families and act without regard for their future thus transferring liability for their old age from the individual to the state. It is unsustainable.


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## The Ghoul (12 May 2012)

> In relation to q 2 I think they mean "money" that was transferred in last 5 years and this is intended to stop people divesting themselves of assets (probably to family) in order to qualify for the scheme.


Thanks for the reply. There is a separate section for transfer of cash assets which I presumed would cover "money".

Income part:
"Income that was transferred from you to another person within the past 5 years"

Cash assets part: 
"Total cash assets transferred to another person within the last 5 years"

Thinking about it some more I'm not sure how to interpret this.


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## Black Sheep (12 May 2012)

There are parts of this deal which seem so complex and ambiguous that it almost sounds like something that was cobbled together in a pub one night.

However my understanding of the calculation on savings and investments is that they may use the current interest rates for investments of more than 1 year. ie. 20,000 on a 3 year investment at say 3% = income of 600 per annum


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## The Ghoul (13 May 2012)

Thanks for that, Black Sheep.

Let's say I open that 3 year fixed term deposit with 20,000 at 3% (non compound) Interest is "paid" at the end of each year. After 1.5 years I apply for the Fair Deal

Cash Asset value - is it 20,000, 20,600 or 20,900
Income from asset - is it 0, 300, 600 or 900

If the asset value was stated as 20,600 and the income was stated as 600 would this be double counting the interest as both income and an asset and overstating the means of the applicant?


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## twofor1 (13 May 2012)

The Ghoul said:


> 1) how exactly does one determine the income from multi year deposit accounts or An Post NTMA certs etc. Is it the interest accrued in the previous year? Is it based on the average AER? Or is the income zero until maturity?
> 
> 2) In the Fair Deal application form there is a section on "income that was transferred from you to another person within the last 5 years". If someone had transferred cash in the previous 5 years does the "lost" interest from it count as transferred income and how is this lost interest calculated. It seems bizarre that a person would have to include interest that they never earned as income. What if they had kept the money in a current account paying 0% instead of transferring it? The income would be zero in both cases.
> 
> Thanks


 
My understanding is;

If you gave anything away in the last 5 years your contribution will be assessed as if you still have whatever you gave away whether that be cash, property, shares or anything else. 
Eg, if you gave away €100K in the last 5 years, although you no longer have this cash your contribution would increase by €96 weekly (€100K x 5% /52).

I don’t think you can also be assessed for interest you could have earned on this €100K because as you say it could be in a current account earning nothing.

In our case anyway they did not get caught up on too much detail, some figures given were estimates. Our contribution assessed by the HSE was less than the worst case scenario I had worked out, meaning they adapted a reasonable and practical approach.


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## Black Sheep (13 May 2012)

The Ghoul
I think Two for one has the more realistic approach, perhaps you are getting too caught up in unnecessary detail.
I'd be more interested in their valuation of property (if there is property involved)

Don't forget it's the income from the asset (not the asset itself) the counts.

Example:- Married couple   
Income from pensions = 50.000
Savings & Investments = 150.000 (disregard 73.000) = 77.000 @ 3% =2310

Total income for Fair Deal calculation 52,310 + 2.5% of property


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## The Ghoul (13 May 2012)

Thanks again Black Sheep and twofor1. I agree that I am getting into a bit of detail with this - however the applicant in question has substantial cash assets which dwarf the current value of their home. The applicant has also given away cash in the last 5 years. 

If someone has insignificant savings but a home worth 1 million - they pay a max of 15% (or 7.5% if one half of a couple) of the value of their home.

If someone else has an insignificant home but savings of 1 million - they pay a max of 92.8% (or 46.4% if one half of a couple) of the value of their cash + 80% (or 40%) of the income generated by the cash.

The choices one has made in one's life can therefore have a huge effect on how "fair" the Fair Deal seems.


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## Black Sheep (13 May 2012)

If one has very significant savings/investments then perhaps the Fair Deal is not for them as the assessment of interest on assets is on going whereas the interest on the property (the family home) is for a max of 3 years.
Perhaps the better route would be to pay the full costs and claim the tax on it.
BTW I totally agree with the choices made earlier in life. Many who lived prudently to provide a plan for old age are wondering should they have enjoyed many of the good things of life


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