General Nursing home and Fair Deal

Namehere

New Member
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8
Hi Guys,

My parent will soon be going into a nursing home, and I have met with a financial advisor and he has advised me not to apply for the fair deal scheme in year 1, for various reasons which make sense and I understand. A question that I forgot to ask, is if we apply for the fair deal scheme after year 1, does my parent pay 7.5% of his primary residence for only 2 years?

From reading the information of the citizens information website, it states that if you are currently in a nursing home 3 years, then the primary residence is ignored in the calculations, (I assume this is based on the fact that you will have paid privately for the last 3 years, and hence saved the state from paying)

https://www.citizensinformation.ie/en/health/health_services/health_services_for_older_people/nursing_homes_support_scheme_1.html
If you have already been in a nursing home for 3 years when you apply for the scheme, then you do not pay the 7.5% on your principal residence.
From meeting with the advisor and going through the numbers, my parent would be paying the full cost of care for the first 3 years, due to the value of their primary residence, but I am trying to understand if he will be paying full cost of care for 4 years if we delay the application by a year. Hope that makes sense

One other question that I forgot to ask is, are there every scenarios where a fair deal application would be rejected?
 
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Slim

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2,195
Hi. Fair Deal is primarily an assessment of care needs. Once the FD committee has agreed that the applicant requires full time care, they will be approved and the financial assessment completed. I would question your financial advisor on why he feels your parent should wait a year. The 3 year period for PPR commences on application/approval even if the applicant receives no financial assistance, so your fears are justified. However, if your parent transferred substantial assets 4 years ago, it might make sense to wait but usually it does not.
 

AlbacoreA

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3,249
I don't understand the reason for waiting a year.
Something else going on here. Are substantial assets other than PPR that you don't want included in it.
Even if there are other properties, you can choose to put the lien of the total assets against a single property, if you don't want legal complication with conveyancing of other properties. Those assets (other then PPR) are not limited to 3 years. But you do not pay more than the cost of care anyway.
 

Easter

Registered User
Messages
41
The 3 year period for PPR commences on application/approval even if the applicant receives no financial assistance, so your fears are justified.
What exactly do you mean by this? How does it work. Plenty of people apply and don’t actually use the scheme until a year after the application is first made. What happens in this situation?
 

AlbacoreA

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I assume if you are already in a place its starts from once your application is approved.

Some places only admit you if you are accepted to the scheme. In which case it will start on the day of admittance.

No?
 

twofor1

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1,270
My parent will soon be going into a nursing home, and I have met with a financial advisor and he has advised me not to apply for the fair deal scheme in year 1, for various reasons which make sense and I understand. A question that I forgot to ask, is if we apply for the fair deal scheme after year 1, does my parent pay 7.5% of his primary residence for only 2 years?
If you want to get the benefit of the 5-year transfer rule, then it is very important that you don’t apply for Fair Deal until the 5 years has passed, not before. See the second paragraph of Transferred Income and Assets here; http://myfairdeal.ie/?page_id=153

If you have been paying privately for 3 years, the family home will be disregarded from the financial assessment. No personal experience of it but my understanding is if you pay privately for year 1 your parent will then only pay 7.5% on the family home for 2 years. Your local Nursing Home Support office should be able to give you a definite answer. I have always found them to be very helpful. https://www2.hse.ie/services/fair-deal-scheme/contact-a-nursing-homes-support-office.html
 

Namehere

New Member
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8
I don't get why you would only do it for one year. There must be more to this.
Without going into the specifics of the personal issue, the QFA actually told us he has had a few instances of it in the past and has given the same advice,

Going by the part from the citizen information quote above, there is no disadvantage to waiting (unless you can think of one then please post it here), and so you might as well wait one year, two years or 3, in order to have all issues resolved, and have the contribution in year 4 onwards based off the assets (excluding the principle residence), which will lead to a lower contribution, than if it was based off said assets today (as 3 years worth of private costs would have been paid). Yes you can have a re-assessment annually - but again why increase the hassle/costs if there is no disadvantage to waiting? I have asked a couple of nursing homes and they have advised that they have residents that apply for the FD Scheme after a few years, and there is no problem from the nursing home perspective of paying privately and then applying, once you provide proof that you can afford to pay privately.
 

AlbacoreA

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Its a lower contribution only because you've already spend it paying privately. Same difference. Nothing wrong with it. I don't see how it's saving anything.

The only way a delay saves something if it excludes previously transferred assets. Nothing wrong with that either. That's the system in place.

Can't really offer any advice.
 
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Namehere

New Member
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Its a lower contribution only because you've already spend it paying privately. Same difference. Nothing wrong with it. I don't see how it's saving anything.

The only why a delay saves something if excludes previously transferred assets. Nothing wrong with that either. That's the system in place.

Can't really offer any advice.
Here is an example

PR 700k, cash 400k, cost of care 70k, first 3 years contribution will be full cost of care., I.e. 70k. then year 4 onwards it would be 30k p.a.
Now if we were to wait to end of year 3, and do the calcs, year 4 would be 190k*0.075 = 14,250 p.a.

Yes I understand that we can have a re-assessment done annually, and so potentially at end of year 3 we could get it reduced if did applied now, but just seems like un-necessary hassle to do it twice. Also I wonder how many people actually get reassessed each year? Would some people just forget - especially if they don't have anyone in their court looking out for them. In theory everyone who has been in a nursing home more than 3 years and who has more than 36k in cash assets, should be getting reassessed annually.
 

AlbacoreA

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3,249
The cash is what makes the difference. You use that for 3yrs, removing the PPR from the scheme entirely.
Then you only pay 7.5% on the remainder for as long as the person remains in care, or the fund runs down to 36k.
Which is about 10yrs, a bit less if re-accessed each year.

Still not sure why you only pay cash for 1 yr and not 3.
 

twofor1

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1,270
Going by the part from the citizen information quote above, there is no disadvantage to waiting (unless you can think of one then please post it here), and so you might as well wait one year, two years or 3,
There might not be any disadvantage in your case in applying for Fair Deal after 1, 2 or 3 years as your financial advisor after looking at your parent’s income and assets has said they will be paying the full cost of care for the first 3 years anyway.

For most though including some of my own family members who would have reasonable income and assets it is very beneficial financially to be in under Fair Deal from the start of year 1.
 

twofor1

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1,270
I don't get why you would only do it for one year. There must be more to this.
It could be where a person disposed of a substantial asset 4 years ago.
If they applied for Fair Deal now, they would be assessed on that asset indefinitely.
If they applied for Fair Deal next year the asset disposal would not be in the past 5 years and would no longer be assessable.
 
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AlbacoreA

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I suggested that earlier.

The only way a delay saves something if it excludes previously transferred assets.
The only other alternative is the recipient won't need care for longer than 3yrs.
Which is something it would be prudent to plan for.
 

Early Riser

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What about if there was substantial pension income - say money in an ARF that could be drawn down for fees and attracting top rate tax relief? Would that make a difference?
 

Early Riser

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You can't pay more than care costs.
But if you have no other assets but they can take up to 80% of income to pay costs.
What I mean is, if their is money in an ARF would it make sense to draw this down sufficiently to pay the fees (along with any other pension income) before applying for Fair Deal later (if necessary)? I assume that tax relief at 40% would apply.
 

Namehere

New Member
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What I mean is, if their is money in an ARF would it make sense to draw this down sufficiently to pay the fees (along with any other pension income) before applying for Fair Deal later (if necessary)? I assume that tax relief at 40% would apply.
You only get 40% tax relief if you are paying tax at 40%. I also think you only get the top rate on the portion that you pay at the top rate.

So if you have a job that pays you say 60k per year - your only paying 40% tax on about 25k (60-35). I maybe wrong but I think that’s how it works.

Someone with an ARF for instance - unless they have a large pension and say rental income from somewhere - won’t really have that much income about the 35k night tax band.

He can’t just draw down his 200k in ARF and start paying 50k of fees each year and think he’s getting back 20k unless he’s paying 50k in tax
 

Early Riser

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587
He can’t just draw down his 200k in ARF and start paying 50k of fees each year and think he’s getting back 20k unless he’s paying 50k in tax
I get you - not all relievable at 40%, some at 20%.

But - and this is purely hypothetical:

Let's say pension income of €35K. Plus there is €100K in an ARF. So draw down enough from the ARF annually to meet the fees (combined with with pension income) plus any necessary expenditure and living expenses - say €33k ? Say fees etc come to €55k. Get the available tax relief on this - not all 40% but still a substantial amount.

Would it make sense in such a scenario to defer the Fair Deal application for 3 years (if still applicable)? I suppose it depends on the value of the house?
 
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