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Care package provokes a fair deal of anxiety

Fears mount that the new Nursing Home Support Scheme will lumber land owners with massive fees Concern is mounting that farm transfers could be seriously affected by the Government's recently introduced Nursing Home Support Scheme.

Both tax and legal experts have warned that the HSE-operated 'Fair Deal' scheme could result in substantial debts being transferred with farms.

"The big question for farmers is whether this legislation is going to leave a potential hidden charge on a farm that has already been transferred," warned IFAC taxation expert Declan McEvoy.

"People will wonder 'what is the point in taking on a farm that has a huge debt coming with it?'" he said.

Mr McEvoy warned that there could be further implications for the person who inherits the farms.

"If there is an indefinite charge on the farm, the banks will not like it and there could be a situation where the son or daughter who inherits the farm could not be able to borrow against it," he warned.

"As it stands, the whole thing is up in the air. There are several unanswered questions about how the scheme will operate."

Introduced on October 27, the Fair Deal scheme allows a person who is in need of nursing home care to apply for State funding to pay a proportion of the nursing home charges.

The person must contribute 80pc of their income and 5pc of the value of any assets they hold towards their nursing care and the balance of the fee will be paid by the State.

For example, if the nursing home care costs €1,000/week and the person contributes €300, the HSE will pay the weekly balance of €700.

There is an option for the 5pc of the person's asset value to be deferred and paid back from their estate on death.

Called a Nursing Home Loan, this money will be collected by the HSE after death if the person gives their written consent to have a Charging Order registered against the property.

For the financial assessment, income includes any earnings, pension income, social welfare benefits/allowances, rental income, income from holding an office or directorship, incomes from fees, commissions, dividends or interest or any income which an applicant may have deprived themselves of in the five years leading up to their application.

For the assessment, an asset is any material property or wealth, including property or wealth outside of the State. These assets could be cash assets, such as savings, stocks, shares and securities, or non-cash assets that include all forms of property, for example, a person's principle private residence or land.

The five-year 'look-back' clause is particularly significant for farmers because it means that even though a farm could have been transferred four years prior to the land owner's application for nursing home care, the farm will still be caught in the financial assessment.

The five-year look-back clause in the legislation has effectively closed any potential loophole for anyone intent on transferring the land prior to seeking nursing home care.

Cathy Power, associate solicitor with Malcomson Law, has warned that farming families need to be particularly aware of the provisions of the new legislation.

"Land and farms are valuable and therefore more exposed," she said.

"Farmers need to be aware that their contribution under the scheme to nursing home care will account to 5pc of the value of their assets on their date of application, subject to an annual cap determined by the cost of the actual nursing home care."

Ms Power said that the annual 5pc payment would not pose a difficulty as long as there was disposable cash to meet it. However, if the farmer does not have enough cash available, he will be left with only two options.

"He can take out a Nursing Home Loan and agree to a Charging Order over his farm or he can sell some of his farm to make the annual payment," Ms Power said.

There are some exemptions from the financial assessment for the 80pc income payment and 5pc asset payment.

The first €36,000 of the applicant's assets, or €72,000 for a couple, will not be considered in the financial assessment.

A person's private home will only be taken into account for the financial assessment for the first three years of nursing home care. This three-year cap only applies to the principal private residence and other non-private residences will continue to be charged at 5pc of their value.

The three-year cap can be applied to farms and businesses in certain circumstances, but three strict criteria must be met:

The farmer has suffered a sudden illness or disability which causes him to need long-term nursing care;
The farmer or his partner was actively engaged in the daily management of the farm up until the time of the sudden illness or disability;
A family successor certifies that he/she will continue the management of the farm.

"These were included to ensure that family farms retain financial stability where someone suddenly becomes ill before he had put succession arrangements in place," said Ms Power.

However, she warned that the three-year cap on the 5pc annual asset charge would only protect farms where all three criteria were met.

"In other words, if the farmer does not fall within those three criteria, the 5pc charge will accumulate and apply to the farm until death or the individual leaves the nursing home," she added.

- Caitriona Murphy

Irish Independent

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