Example One
| Typical Nursing Home Cost Per week | €1,000 | |
|---|---|---|
| Residents only income is a pension | €247.00 | |
| 80% of this income | €197.60 | |
| The Fair Deal Scheme will pay the balance | €802.40 |
This becomes more complicated if the resident has more income or owns assets.
In relation to cash in the bank the threshold is €36,000 per person. That is to say that you could have €36,000 in the bank and still qualify for the fair deal scheme mentioned above (€72,000 per couple).
Taking this further, everything over €36,000 carries a notional income of 0.075%.
Let’s say you have €100,000 in the bank. Adapting the above format would mean that:
| Typical Nursing Home Cost Per week | €1,000 | |
|---|---|---|
| Residents only income is a pension | €247.00 | |
| 80% of this income | €197.60 | |
| €100,000 – €36,000 = €64,000 * 0.075% | €92.30 | |
| The Fair Deal Scheme will pay the balance, per week | €710.10 |
Essentially your €100,000 in the bank means that you need to pay €92.30 per week from this fund as part of this cost towards your nursing home fees.
Example Two
Now we look at an example where you also own a house.
Let say that this Principal Private Residence (PPR) is worth €250,000 and you are the sole occupant.
The rule is that all assets are calculated at 0.075% of their value and are classed as notional income.
See example below;
| Typical Nursing Home Cost Per week | €1,000 | |
|---|---|---|
| Residents only income is a pension | €247.00 | |
| 80% of this income | €197.60 | |
| €100,000 – €36,000 = €64,000 * 0.075% | €92.30 | |
| €250,000 * 0.075% / 52 | €360.57 | |
| The Fair Deal Scheme will pay the balance, per week | €349.52 |
Your PPR stays on the fair deal equation for 3 years.
This means that after 3 years the value of your house and its notional income fall out of the calculations and the Fair Deal contribution will go up.
In addition, there are other complications where your spouse is still living in the PPR, or indeed if you have family living in the house. Adjustments are made for these eventualities.
Example Three
To take another example, the resident has a farm of land (100 acres @ €10,000 per acre = €1M) and a private pension €200 per week (€100,000 in the bank and PPR worth €250,000 as above).
| Typical Nursing Home Cost Per week | €1,000 | |
|---|---|---|
| State Pension | €247.00 | |
| Private Pension | €200.00 | |
| 80% of combined pensions | €357.60 | |
| €100,000 – €36,000 = €64,000 * 0.075% | €92.30 | |
| €250,000 * 0.075% / 52 | €360.57 | |
| Farm €1M *0.075% | €1,442.00 | |
| The Fair Deal Scheme will pay the balance, per week | NIL |
In this case your income and assets are too high so the Fair Deal Scheme would pay nothing. However, there is a bill going through the Oircheachtas currently which will change farmers entitlements to the Fair Deal Scheme, whereby the value of the farm will be excluded from the calculations.
Example Four – Auxiliary Loan Scheme
However, let’s take another example where the same farmer has no money in the bank and only lives off the state pension. IE – asset rich and cash poor.
For scenarios like this, there is an additional scheme added to the fair deal scheme titled Auxiliary Loan Scheme. This is a facility whereby the resident pledges 22.5% of the value of their assets to the exchequer on the basis that the Fair Deal Scheme will cover their cost of care. Effectively this a loan from the state using your assets as security and it’s repaid from your estate. This would entail engaging with your solicitor to register a charge on your assets.
This is an excellent facility for those who do not want to undergo the stress of having to sell the homestead/family business just to raise funds to pay for cost of care.
This is designed to protect farms and businesses and keep them viable for the next generation.