Fairer Deal for farm families in nursing homes
After years of lobbying from farming bodies, who claimed that the existing Fair Deal system was far from fair for farming families, and was a major obstacle to young people taking over the family business, an overhaul of the scheme is proposed which would dramatically reduce the burden on farm families and business owners.
The Fair Deal scheme, also known as the Nursing Home Support Scheme, is based on an assessment of all your income and assets in order to work out what your contribution to your nursing home care will be.
The HSE will then pay the balance of your cost of care.
Currently, the calculation for payment used is 80% of a person’s annual income such as pay entitlements or pension, and 7.5% of the value of the assets such as your farm or principal private residence.
In respect of the principal private residence, the maximum contribution that can apply is 7.5% of the value of the residence for the first three years of care.
Under the current regime, farm families and small business owners are required to set aside 7.5% of the value of their land annually to fund a place in a nursing home.
This means it does not have to be paid during your lifetime, and will be collected from your estate.
However, Jim Daly, Minister of State at the Department of Health with special responsibility for Mental Health and Older People, is proposing that this should be capped at three years.
This will give farmland and business assets the same status as the family home.
It is proposed that a number of safeguards will be put in place to prevent abuse of the scheme. The limit will only apply if the land is farmed by a close relative. Land that is leased to third parties will be counted as a normal asset. It will only apply to land that is being farmed by a close relative.
There will also be a ‘clawback’ mechanism, which means that farm or business assets sold or leased within six years of a person entering a nursing home will be subject to the annual 7.5% charge.
Nursing home residents who have been in care for more than three years will not be able to recoup contributions they have made beyond that period.
However, the changes will be backdated so that once, introduced, the cap will benefit anybody who has been in care for less than three years.
Forcing somebody to pay 7.5% of the farm’s market value indefinitely affects the ability of young people to take over the family business.
Many farmers in Ireland struggle to obtain a viable income from farming, and it is often the case that farmers are asset rich but income poor.
They are concerned that their children will be burdened with considerable nursing home bills after their death.
Ultimately, the existing Fair Deal scheme in most cases does not accurately reflect a farmer’s ability to pay nursing home fees.
And if selling a part of the farm is necessary to repay nursing home fees, it can render the remainder of the farm unviable, and can force a sale of the entire holding.
In addition, the fact that an applicant can be assessed on an asset that had been transferred a few years previously is causing huge difficulty and hardship.
Traditionally, farms are often held in the same family for generations, and farms are either transferred to other family members on death or during the lifetime of the existing owner of the land.
But there are real concerns that the viability of some farms is being undermined or lost while trying to meet the cost of care.
New proposals come as a huge relief for farming families and indeed anyone with a business, if they are signed into law.
Minister of State Daly said last week the Government has approved a proposal to change Fair Deal.
He looked forward to progressing the matter in the Oireachtas in the autumn session and said the changes will allow the affected families run the family business without the fear of losing it.
He clarified that the value of a person’s home is only included in the Fair Deal financial assessment for the first three years of their time in care, and the proposal approved by the Government is to extend this three-year cap to farms and businesses where a family successor continues to operate the farm or business for six years.
The Department of Health will now draft the general scheme of a Bill to provide for the necessary changes to the Nursing Homes Support Scheme Act 2009.
