Fair Deal Scheme in Ireland: Are You Paying Double the Contribution Towards Nursing Home Care?

 

Fair Deal, the scheme which promises the elderly financial independence, often evokes curiosity in the minds of individuals. One of the common doubts for those investing in Approved Retirement Funds (ARF) and shares is whether this together with Fair Deal Nursing Home Scheme is charging double your contribution. Things like whether it’s worthwhile to divest assets before applying for the scheme is also a universal query among those approaching old age. If you are among them, then you are in luck today because the blog post is all about divesting, ARF and shares.

Is Divesting a Good Idea Before Applying for Fair Deal Scheme in Ireland?

Let’s admit that no one consciously wants to pay the State more than what is desired. Knowing that Fair Deal Scheme demands a 7.5% charge on assets, savings and investment, many individuals gift a certain part of their assets to a family member to evade and minimise the expense. The question is - how wise is the decision?

If you apply for the Nursing Home Support Scheme within 5 years of gifting them a fraction of your assets, there is no point in taking this step. That is because the financial contribution shall still cover the value of those assets that went into gifting. However, if you feel there are no chances of you seeking nursing home care anytime soon and can meet the 5-year threshold then divesting is a good idea.

What if you suddenly fall sick? In that case, you may delay applying for Fair Deal Scheme until you meet the 5-year threshold by spending for the bill from your pockets. However, it makes no sense to pay a hefty amount worth €100,000 towards the nursing home bill just to save a fraction of your assets.

What About ARF and Shares?

ARF, as we all are familiar with, is the control exercised over retirement savings by people serving the private sector. Under the scheme, the investor must withdraw at least 4% every year till the age of 71 years, after which it rises to 5%. Whether you take out from that account or not, you shall have to bear the brunt of the tax.

If anyone from that segment of the population, working in the private sector applies for Fair Deal Nursing Home Scheme then the 80% contribution from annual cash income shall apply on that withdrawal. The rest of the fund value is counted under 7.5% asset contribution. Now, many of you might question the State for charging you twice, once for nursing home care and the second time for the sake of income tax. People undergoing such a circumstance must know that the purpose of Fair Deal is to provide access to nursing home care to the needy and not save their assets. Despite that, the scheme is liberal enough to leave over 3/4^th of your family home value for your successors. However, if you still feel the contribution towards long-term nursing home care is exceeding the cost borne from your pockets, then Fair Deal Advice in Ireland feels it’s better to manage the expenses all by yourself though it’s not a very smart step to take. A word of advice would be to plan by checking the details of the Nursing Home Support Scheme in advance because health-related exigencies arrive uninvited.

Postscript:

An advisory body as impartial as Fair Deal Advice in Ireland can walk you through the process and eliminate all your misconceptions regarding the scheme introduced by the Irish Government. You just need to fix an appointment with the advisors as soon as you decide on taking financial help from the State and clear your doubts without falling for delusions.