The Nursing Home Support Scheme (Amendment) Bill 2021 has now been passed into law and will come into effect in late October 2021. The amendment has introduced many minor changes to the Principal Act but one of the major amendments relates to farmers and small business owners.
The amendment allows specific individuals who qualify to ring fence their farming and business assets, which will now be exempt from the annual 7.5% levy after the initial three-year period.
This change has been brought about following intense lobbying from various organisations including the IFA and will ensure the long-term viability of the family farms and businesses for the next generation.
Some of the key aspects and changes are set out in more detail, below;
- “Qualifying” farming families and business families may now avail of long term, quality Nursing Home care without facing an intense strain on the viability of their farm and/or business;
- The structure of the Fair Deal Scheme requires applicants to contribute a set portion of their income and assets to fund the cost of their Nursing Homecare. This contribution, when combined with allocated state funding, allows the Applicant to receive the Nursing Home care he/she may require for as long as he/she may require it;
- However, the contribution by the Applicant is far from insignificant with 80% of the Applicants income & 7.5% of the Applicant’s assets (including property investments and savings, etc.) owing on a weekly basis;
- Under the previous Fair Deal regime, there was no cap or limitation on how long farming and business assets could be caught by the 7.5% contribution. The Family Home was the only asset released from this levy after three years;
- The amendment to the legislation has the effect of “qualifying” families now only having to contribute to the cost of the care as against their farmland and business assets for the first three years of a family member’s participation in the Fair Deal scheme;
- In effect, this means that the three-year cap that previously only applied to the Family Home now applies to the farming and business assets of the Applicant:
- It is important to note that the levy on income (and cash and investment contributions etc.) will continue indefinitely for the period of time the Applicant requires Nursing Homecare. However, the cap on the farming and business assets will bring some level of financial relief for farming and business families.
- Additionally, Principal Private Residences (“PPR”) can now be sold after three years of the Applicant’s involvement in the Fair Deal Scheme and the proceeds will no longer be chargeable. This is a significant change in legislation.
- It is important to note that the benefits brought about under this new legislation will not be available for everyone, and certain conditions must be met to be considered as a “qualifying family” the most important of which ( in relation to farming families) are as follows;
- The family must have been involved in the day to day running of the farm for three out of the previous five years before the application is made and;
- The Applicant is expected to nominate a Successor who must run the farm for 6 years thereafter.
Consideration with regard to the Fair Deal Scheme should always be taken into account as part of succession planning whether by way of Wills, Living Will (Enduring Power of Attorney), or transfer to the next generation during your lifetime.