The Nursing Homes Support Scheme Act 2009 (or the Fair Deal Act) has been in operation in its entirety since 27th October 2009. It provides for the establishment of a scheme known as the Nursing Homes Support Scheme under which financial support may be made available to persons in respect of long term residential care out of resources allocated to the Health Service Executive (the “HSE”) for the purposes of the Scheme. This replaces the Subvention Scheme which had been in existence since 1993.
The Act is intended to make nursing home care more affordable for older people and to provide equal support for recipients of long-term residential care, whether they are in public, private or voluntary nursing homes. Under the new Scheme, each person will make a contribution to the cost of his or her care, based on their means and the State will pay the balance.
In order to apply for the Scheme, a person must be ordinarily resident in the State. Ordinarily resident means that they have been living in the State for at least a year or that they intend to live here for at least a year. There are three steps to the application process:
1. Care Needs Assessment
The first step is an application for a Care Needs Assessment. The Care Needs Assessment identifies whether or not a person needs long-term nursing home care. A Care Needs Assessment of a person comprises an evaluation of:
(a) the person’s ability to carry out the activities of daily living, including:
(i) the cognitive ability,
(ii) the extent of orientation,
(iii) the degree of mobility,
(iv) the ability to dress unaided,
(v) the ability to feed unaided,
(vi) the ability to communicate,
(vii) the ability to bathe unaided, and
(viii) the degree of continence of the person.
(b) the family and community support that is available to the person,
(c) the medical, health and personal social services being provided to or available to the person both at the time of the carrying out of the assessment and generally,
(d) any other matter that affects the person’s ability to care for himself or herself, and
(e) the likelihood of a material alteration in the circumstances referred to in paragraphs (a) to (d) during the lifetime of the person.
2. Financial Assessment
The second step is an application for State Support. This will be used to complete the Financial Assessment which determines a person’s contribution to their care and their corresponding level of financial assistance (“State Support”).
The Financial Assessment looks at income and assets to work out what the contribution to care will be. The HSE will then pay the balance of the cost of care.
Income and Assets:
Income includes any earnings, pension income, social welfare benefits/ allowances, rental income, income from holding an office or directorship, income from fees, commissions, dividends or interest or any income which a person has deprived themselves of in the 5 years leading up to their application.
An asset is any material property or wealth, including property or wealth outside of the State. Within the legislation, assets are divided into two distinct categories, namely Cash Assets and Non-Cash Assets. Cash Assets include savings, stocks, shares and securities. Non-Cash assets include all forms of property other than cash assets, for example a person’s principal residence or land. In both cases, the assessment will also look at assets which a person has deprived themselves of in the 5 years leading up to their application.
If a person is a member of a couple, the assessment will be based on half of the couple’s combined income and assets. A couple is defined as (a) a married couple who are living together or (b) a heterosexual or same-sex couple who are cohabiting as life partners for at least three years. The assessment will not take into account the income of other relatives such as children.
Contribution to Care
Based on the outcome of both these assessments, the HSE will decide on the payment of financial support. The scheme involves a co-payment arrangement between the person and the State. The person will contribute up to 80% of assessable income and up to 5% of the value of any assets they own towards the cost of their care. The State will then pay the full balance of the cost. However, the first €36,000 of a person’s assets, or €72,000 for a couple, will not be counted at all in the financial assessment.
It is important to note that a person will never pay more than the cost of their care regardless of the level of their means.
The “Three Year” Cap
The principal residence will only be included in the financial assessment for the first 3 years of a person’s time in care. This is known as the 15% or “three year” cap. It means that a person will pay a 5% contribution based on their principal residence for a maximum of three years regardless of the time they spend in nursing home care. After three years, even if they are still getting long term nursing home care, they will not pay any further contribution based on the principal residence. This “three year” cap applies regardless whether the person chooses to opt for the loan or not.
The “three year” cap will also extend to farms and businesses in circumstances where:
(i) the person has suffered a sudden illness or disability which causes them to need long-term nursing home care, and
(ii) the person or their partner was actively engaged in the daily management of the farm or business up until the time of sudden illness or disability, and
(iii) a family successor certifies that he or she will continue the management of the farm or business.
This measure is intended to ensure the financial sustainability of family farms and businesses in cases where a person suffered a sudden illness and did not have an opportunity to put appropriate succession arrangements in place.
Safeguards in the Financial Assessment
(i) Nobody will pay more than the actual cost of care.
(ii) The person will keep a personal allowance of 20% of their income or 20% of the maximum rate of the State Pension (non-Contributory) whichever is the greater.
(iii) If the person has a spouse/partner remaining at home, he/she will be left with 50% of the couple’s income or the maximum rate of the State Pension (non-Contributory), whichever is the greater.
3. Nursing Home Loan (“Ancillary State Support”)
The third step is an optional step which should be completed if a person wishes to apply for the Nursing Home Loan (“Ancillary State Support”). Where assets include land and property in the State, the 5% contribution based on such assets may be deferred. This means that a person does not have to find the money to pay this contribution during their lifetime. Instead, if approved, the HSE will pay the money to the nursing home on the person’s behalf and it will be collected after their death.
The Nursing Home Loan is effectively a loan advanced by the State which can be repaid at any time but will ultimately fall due for repayment on the person’s death. Its purpose is to ensure that the person does not have to sell assets such as their house during their lifetime. In order to apply for the Nursing Home Loan, a person must provide written consent to having a Charging Order registered against their asset. The Charging Order is a simple type of mortgage which secures the money loaned by the HSE.
If a person does not have the capacity to consent to the Nursing Home Loan and the Charging Order, a Care Representative will need to be appointed to act on his/her behalf. A person appointed under Enduring Power of Attorney or the Committee of a Ward of Court can also make an application in such circumstances.
Existing Nursing Home Residents
1. If a person is in a public or voluntary nursing home or in a contracted bed in a private nursing home before the start of the scheme, they continue with their existing arrangements. i.e. people who are already living in a public nursing home or a contracted bed in a private nursing home will not be affected, they will continue to contribute to their care on the same basis as currently.
2. Anyone already in a private nursing home is eligible for the new scheme provided their nursing home is approved for the purposes of the scheme. If a person is already in a nursing home and in receipt of a subvention which they are not happy with, they can switch to the new scheme.
3. The disadvantages of the old system were as follows:
(i) care recipients faced greatly different costs depending on whether they were in public or private nursing homes;
(ii) individual contributions in public nursing homes were based on a flat rate regardless of an individual’s wealth; by contrast, State support for individuals in private nursing homes is based on means testing;
(iii) many people in private nursing homes got no support;
(iv) even with subvention, people faced costs they could not afford;
(v) the subvention scheme imputes an income of 5% from housing assets and effectively assumes people have a higher disposable income than they actually have;
(vi) people were sometimes forced to sell or mortgage houses to pay for care costs;
(vii) the system was not predictable or sustainable for taxpayers.
4. If a person is currently in a nursing home and is in receipt of a subvention that they are happy with, they do not have to switch to the new scheme. They can choose to retain their exsiting arrangements or they can switch to the Fair Deal Scheme.
5. A person can choose to meet their full care costs privately if they wish. Tax relief is available.
6. If a person applies for the scheme and has been in the nursing home for three years or more, the financial assessment will only be based on income and assets other than their principal residence (and their farm/business in certain circumstances) i.e. the “three year” cap will apply.
7. If they are in a private nursing home which is not approved for the purpose of the scheme, they can retain their current subvention arrangements or they can opt to apply for the scheme and change to a nursing home on the list.
8. If a person is in an approved private nursing home before the start of the new scheme, they do not need to apply for a Care Needs Assessment. They can commence the process by applying for the Financial Assessment.