Nursing home costs can be expensive with the costs of some homes being in the thousands per week. This was something that was recognised by the state and in attempt to help people in this situation they introduced the “nursing homes support scheme” often referred to as the fair deal scheme.
Last Tuesday I discussed the topic with Ian Guider on Newstalk here is a link to the piece skip forward to 5 minutes and 55 seconds http://www.newstalk.com/player/listen_back/5/14677/02nd_December_2014_-_Breakfast_Part_1
When I am going through long term financial planning for clients one of the things that is often built in to anybody’s financial plan is the need for long term nursing home care in later life.
This need can have a major impact on people’s financial security if it is prolonged, that is why most clients are interested to hear about the fair deal scheme.
How it works is if you are ordinarily resident in the state and in need of long term nursing home care you have two choices. You can opt to pay for a nursing home yourself or you can apply for the fair deal.
If you opt for the scheme your care needs will be initially assessed and then you will be assessed financially.
You will be required to pay 80% of any income you have towards the cost of the care. If you are married or cohabiting for 3 years or more you will only have to pay 80% of half the household earnings.
In addition to any income you have the financial assessment will also look at your assets. You will be required to pay 7.5% of your assets per annum. You are also required to pay 7.5% of the value of your primary residence but this is capped to the first 3 years of care only i.e. total of 22.5%. Again this is halved if you have a partner.
When all of this is added up if you don’t have enough to cover the cost of the care the state will make up the shortfall.
Let’s look at an example. Imagine you are looking at a nursing home at a cost of €1000 per week. Let’s assume you have a pension and some rental income totalling €600 per week and your spouse does not earn. You own your home and it is valued at €400,000. You also have €50,000 in the credit union. So total assets are €450,000.
Firstly your income is halved to €300 because you are married and you will be required to pay 80% of the €300 or €240 towards the nursing home.
The assets are slightly different:
You take 7.5% of the €50,000 or €3750 per annum/€72 per week from the credit union assets.
You also take 7.5% of the value of the house which is €30,000 per annum or €576 per week.
So that is €72 and €576 per week from the assets but remember that will need to be halved to take account of your spouse. Meaning your assets will increase your contribution by €324 per week.
So between your assets and your regular income you will be assessed to be able to afford a contribution of €564 out of the €1000 payment. The state will make up the difference.
The good news however is that €288 per week that you pay as a result of the house is only for the first 3 years after that it stops.
If you would prefer not to have to pay the €288 per week then you can apply for the Nursing home loan. In this instance the state pay the €288 per week on your behalf and then you repay the loan either after you die or you can opt to wait until after your spouse dies. The loan amount to be repaid will increase in line with inflation but if you pay it back on time it won’t be subject to interest.
There are approved nursing homes that partake in the scheme and there is a relatively short waiting list which I believe is currently about 3 months.