Fair Deal Scheme
Under the Fair Deal scheme, individuals are required to contribute a certain amount towards the cost of their long-term care in a nursing home, the remainder of the cost is paid for by the Health Service Executive (HSE). Financial assistance to offset the cost of care is available through the Nursing Homes Support Scheme or Fair Deal scheme, which is overseen by the HSE. To be considered for financial support, individuals must meet the eligibility requirements and be ordinarily resident in Ireland and requiring long-term nursing home care.
It is important to note that the Fair Deal scheme does not cover short-term care such as respite, convalescent care or day-care, or additional fees charged by the nursing home for services like hairdressing, therapies or activities. It is advisable to inquire with the nursing home about any extra fees that may be required and to ensure that they are included in the contract.
To apply for the scheme, an application form must be downloaded and completed. Subsequently, the HSE will arrange two separate assessments: a Care Needs Assessment and a Financial Assessment.
Care Needs Assessment
The Care Needs Assessment, conducted by a healthcare professional such as a geriatrician, public health nurse (PHN), or occupational therapist, evaluates an individual's ability to perform everyday activities, their mental abilities, any health and personal services received, the availability of family and community support, and personal preferences. This assessment may include a physical examination by a healthcare professional, and the individual's general practitioner (GP) may be consulted.
The healthcare professional then writes a report detailing the findings of the Care Needs Assessment, which is used to determine if long-term nursing home care is the most appropriate option. Following this assessment, a decision will be made regarding an individual's care needs, and they will receive a copy of the report along with the reasons for the decision.
The second step in the Fair Deal process involves a Financial Assessment, which determines the amount you are required to contribute towards your nursing home fees based on your income and assets. To conduct this assessment, the Health Service Executive (HSE) requires several financial documents, such as bank and pension statements, proof of social welfare payments, and a property valuation. You can find the full list of required documents on the application form.
Income is broadly defined as any earnings, pension, social welfare benefits, allowances, income from holding an office or directorship, income from fees, commissions, dividends, interest, transferred income, or rental income from properties that are not your main home.
How a single person's contribution is calculated
80% of assessable income
40% of rental income received from your primary residence
7.5% of cash assets (such as savings, stocks, and shares)
7.5% of non-cash assets (such as land or property)
The first €36,000 of assets are exempt from assessment, which is discounted from cash assets first and then non-cash assets.
Your primary residence is included in the financial assessment for only the first three years you are in a nursing home, with a maximum contribution of 22.5% of its value over the three-year period. The same cap also applies to your farm or business.
How a couple's contribution is calculated
Couple is defined as a married couple or a couple living together as life partners for at least three years
40% of the combined assessable income
40% of rental income received from the primary residence
3.75% of combined cash assets
3.75% of combined non-cash assets
The first €72,000 of assets are exempt from assessment, which is discounted from cash assets first and then non-cash assets.
As with a single person, the primary residence is included in the financial assessment for only the first three years, with a maximum contribution of 11.25% of its value over the three-year period. This cap also applies to farms or businesses.
Certain legitimate deductions can be subtracted from your financial assessment, including income tax, levies required by law, interest on loans for home purchase, repair, or improvement (if you own it), rental payments if a partner, child, or partner's child under age 21 lives in the residence, maintenance payments for a child or former spouse, dependent child in full-time education, and any redress received under a qualifying redress scheme.
If you are renting property that is not your primary residence, you must pay 80% of the rental income towards nursing home care. Health expenses such as GP visits, prescription charges, medicines, and medical expenses after tax refund (excluding contributions paid under the Fair Deal scheme) are not included in the financial assessment.
The HSE will commence payment of the State support and nursing home loan (detailed below) from either the date of application approval or the admission to the nursing home, whichever is later. If you opt for a public or voluntary nursing home, you are required to pay your contribution to the HSE, who will then pay the nursing home. If you choose a private nursing home, you pay your contribution to the nursing home and the HSE pays the balance. Financial support will only be provided if the nursing home is deemed appropriate for your needs.
The scheme has a predetermined level of funding each year, which may result in a waiting list until funding becomes available. In such a case, the HSE will notify you of your eligibility for State support in writing. While you may be on the waiting list, the HSE will confirm that you have been approved for financial support under the scheme.
You will not be charged more than the actual cost of care.
You are entitled to a personal allowance of either 20% of your income or 20% of the maximum rate of the State Pension (Non-Contributory), whichever is higher.
If you have a spouse or partner residing at home, they are entitled to at least 50% of the couple's income or the maximum rate of the State Pension (Non-Contributory), whichever is higher.
If you sell your home while you are in care, the net proceeds of sale will also qualify for the 3-year cap.
Nursing Home Loan.
The nursing home loan is an optional part of the Fair Deal Scheme. This loan applies where the person in nursing home care has assets including land and property. They may delay paying for their care until after their death, using these assets to secure the loan. As per the terms of the Nursing Home Support Scheme, the asset contribution towards your cost of care will not be payable during your lifetime. Instead, the HSE will pay this portion of your assessed contribution and it will be recorded as a loan, commonly referred to as the Nursing Home Loan. Following your demise, the loan will be retrieved by the Revenue Commissioners from your estate and registered as a charge on your property. If you have a partner residing in your family home and insufficient funds are available to settle the loan from your estate, the debt may be deferred until their death. There are implications for the executor of your estate after you die if loan isn't repaid in the time allowed. For more information click here.
A Lifetime Loan is a loan that uses your home as collateral and is designed to last for the duration of your life. The loan does not require any repayments and only becomes due if you die, sell your home, or no longer reside in it permanently. Since you are not making regular repayments, the loan accrues interest (compound interest), which causes the loan balance to increase over time until it is repaid. If you borrowed €100,000, on a house valued at €400,000, and paid nothing back, after 5 years of compounding interest at a rate of 6.45%, you would owe €134,861.76. If you borrowed $100,000, on a house valued at €400,000, and paid nothing back, after 10 years of compounding interest at a rate of 6.45%, you would owe €181,838.85.
The Health Service Executive (HSE) will not provide any reduction in property valuation for a life loan when evaluating an applicant for the Fair Deal assets. This decision can have significant consequences for the individual's care expenses. A person with a life loan cannot avail of the Nursing Home loan.
Read more on implications of a Life Loan here