Guidelines for Selling House To Pay For Fair Deal Nursing Home Loan Scheme

 

When a person residing in a nursing home under the Nursing Home Support Scheme owns a residence, it constitutes part of the care needs contribution. The Nursing Home Loan Scheme was introduced to defer this payment till after the lifetime of the resident, and then the repayment of the loan is collected through the distribution of the estate of the deceased person. 

There used to be certain “financially unattractive” aspects of this system, which imposed burdens on nursing home residents for selling their house and keeping the money from the sale proceeds because the net proceeds would then be charged under cash assets, and 80% of the amount would be gone to the HSE. 

But things have changed since the 3-year cap and many other upgrades have been amended, which alleviates most of the burden compared to the long-term contribution that residents previously had to shoulder. 

Now, whether you want to sell a residence that belongs to you, your parents, or a loved one who is in a nursing facility, this article offers some excellent news for you.

Availing of The Nursing Home Loan Scheme 

If the individual in need of nursing home care has assets, such as land, a farm, or a house, then using the Fair Deal Scheme Ireland would require the applicant to pay 7.5% of the total value of the property as their contribution towards the cost of care, while 80% of their income and "cash assets" have to be contributed.

Although there is no way to delay payments for cash assets, the Fair Deal Scheme's Nursing Home Loan Scheme gives residents of nursing homes the option to wait to pay for their care until after their passing. It may be sought at any time as a nursing home patient or while making the first application. After death, the nursing home loan must be repaid. You have until your death to decide whether to pay this back. 

How The 3-Year Cap Applies To the Sale of Family Homes 

People under the Fair Deal Scheme can now be able to sell their homes once their application is approved and they are in care. , according to the newly released guidelines. The net proceeds will be assessed as a cash asset for the first three years, but only while the client is a resident of the nursing home. The net proceeds will no longer be taxable after this period. 

The same system applies to Nursing Home Loan Scheme wherein, applicants would only have to pay a total of 22.5% of the value of the property in a span of 3 years. The loan amount can be deferred as it used to be. The new amendments to the scheme and the loan scheme will relieve many families of the burden of worrying about leaving their houses vacant, and it should ultimately speed up estate administration after the death of the applicant. 

Things To Consider When Selling Your Home While Availing the Fair Deal Funding 

There are specific rules for applicants who want to sell their homes, and even if you're selling beyond the 3-year period, you need to notify the HSE, which serves as the local nursing home assistance scheme office.

Failure to notify the HSE may result in unanticipated issues in the transaction.

In the event of misinformed behaviour, HSE may cancel the loan tenure and require you to repay the loan within 10 days of the sale.

When the situation is handled by solicitors or family members, the debt must be reimbursed within a year of the deceased person's death.

How To Manage Your Assets And The Nursing Home Support Scheme Cost of Care?

 

On November 1, 2022, the Health Service Executive (HSE) announced that it would lower the Nursing Home Support Scheme (NHSS) cost of care contribution rate assessed on income obtained from renting out primary private residences. Earlier, a 3-year cap was introduced on the contribution from assets on October 20, 2022. With the systematic reduction of amount percentages and the imposition of time limits like the 3-year cap, it is a sign that the HSE is attempting to make it simpler and more equitable for those with assets to take the Fair Deal Scheme.

 

What Are Assets Under The Fair Deal Scheme

Assets include property, investments, and loaned money, among others. The HSE segregates the assets from the income and includes both cash assets and non-cash assets, which go as follows:

 

➔    Cash as in savings

➔    Investments in stocks, shares, funds etc.

➔    Any pension or retirement funds savings

➔    Any money loaned out to another person or institution

➔    All kinds of cash assets sent out to other accounts in the past 5 years

➔    The primary residence - either complete ownership or shared ownership with a partner or family member

➔    Land - both in-land and overseas

➔    Farmland

➔    Business

The amount you must contribute to your nursing Home Support Scheme costof care is determined by a financial evaluation, which is the foundation for the funding. Your income and assets determine how much you must spend on nursing home expenses, which include just about everything from savings and investments to land and residences. You pay less if you make less money and have fewer assets. You pay more if you possess more.

Fair Deal Scheme: The 3-Year Cap Regulations and Guidelines for Assets

The 3-year cap is automatically imposed in the case of principal residences, and beginning with the fourth year, nursing home residents are not required to make payments.

Even if the resident or their family decides to sell the home, the 3-year cap would still apply, and there would be no requirement to pay the HSE out of the sale proceeds. However, the family is required to notify the local office of the Fair Deal Scheme, while you are planning the sale.

The 3-year cap would guarantee that you only have to pay 21.5% of the value of your assets and 11.5% for couples, although the payments on assets like homes, property, and farmland continue to be 7.5% for individuals and 3.75% for couples.

The 3-year cap also applies to the Nursing Home Loan Scheme, so borrowers who have used the loan can postpone payments against their assets so that the HSE can collect the money from their estates after their death. The sum is no more than either 11.5% or 22.5%.,

 

3-Year Cap for Farms and Businesses

How the 3-year cap works is a little different from how it works for homes. Under a mortgage-like system, the nursing home patient, their spouse, or other family members must consent to a charge in favour of the HSE.

The condition is that the person seeking nursing home care, their spouse, or the potential family successor must have actively managed your farm or business for at least three of the previous five years. The farm or business must be handed over to a family member who is willing to run it for at least six years.

 

How Rental Income Works Under Fair Deal Scheme

Under recent reforms intended to re-enter the rental market, nursing home residents who use the Fair Deal scheme will now be entitled to collect 60% of rental revenue rather than the 20% that was previously permitted.

If you are making a fresh application and wondering how to manage your property, family succession, and assets while getting long-term nursing home care, seek the assistance of a Nursing Homes Support Scheme Guide before making your first move.