Fair Deal overhaul set to help farming families

A number of safeguards have been put in place to ensure the system cannot be abused under the new Fair Deal overhaul
A number of safeguards have been put in place to ensure the system cannot be abused under the new Fair Deal overhaul

The overhaul of the Fair Deal scheme will see the special situation facing elderly farmers acknowledged for the first time by the State.

Under the current regime, farm families and small business owners are required to set aside 7.5pc of the value of their land annually to fund a place in a nursing home.

However, Minister for Older People Jim Daly will today bring a proposal to Cabinet which will see this bill capped at three years. This will give farmland and business assets the same status as the family home.

The move comes after years of lobbying from farming bodies, who have claimed that the existing system was a major obstacle to young people taking over the family business.

It is understood Mr Daly will present ministers with a detailed memo today outlining his plan, with sign-off expected.

The proposal has been carefully scrutinised by Finance Minister Paschal Donohoe, who is believed to have had some reservations before finally relenting in recent weeks.

A number of safeguards have been put in place to ensure the system cannot be abused.

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.

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There will also be a ‘claw-back’ 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 7.5pc 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.

The changes will come at a cost to taxpayers, but ministers are expected to argue that it fits with an agenda of “helping rural Ireland”.

The State spends almost €1bn annually providing nursing home care to older people though the Fair Deal scheme, and this figure is expected to rise substantially in the coming years due to the country’s ageing population.

Under Fair Deal a person pays 80pc of their total income, such as a pension, to help fund their care. On top of this they commit 7.5pc of the value of their assets as a yearly contribution.

In the case of the family home, the contribution is capped at three years, or 22.5pc of the value.

At present, a farmer or a business person’s other assets, such as land, are hit with a 7.5pc charge every year for an indefinite time period.

Maura Canning, who was part of the IFA delegation negotiating with Mr Daly, confirmed it had been briefed on the proposed changes.

She told the Irish Independent that today’s move would be “a big plus for rural families”.

Ms Canning was part of an IFA delegation, including chairperson of the Farm Family and Social Affairs Committee Caroline Farrell, that has campaigned for change over many years.

While acknowledging that the Dáil will now have to pass legislation, Ms Canning said: “It’is a big relief to get this step. We would hope it will now happen by the end of the year.”

She said it was impossible to say how many people would benefit from the change, but the IFA was aware of a large number of cases where Fair Deal has affected the ability of a family to pass land to the next generation.

Mr Daly’s office declined to comment, other than to say that he hoped to fulfil a commitment to bring a memo to Cabinet before the summer break.

Fair Deal Explainer

What is Fair Deal?

Fair Deal is the shorthand for the ‘The Nursing Homes Support Scheme’, which provides financial assistance for people who require long-term nursing home care. It is operated by the HSE.

The scheme covers private, voluntary and public nursing homes.

What sort of financial assistance does it provide?

An assessment of all your income and assets is carried out in order to work out what your contribution to your care will be.

The HSE will then pay the balance of your cost of the care.

There are two elements to your contribution.

You will pay 80pc of your income (eg a pension) and 7.4pc of the value of your assets every year towards your care.

If your assets include land and/or residential property in the State, the 7.5pc contribution based on those assets can be deferred.

This means it does not have to be paid during your lifetime and will be collected from your estate.

Is the family home included in my assets under Fair Deal?

A person’s principle residence will be counted as an asset, but only for the first three years.

This is known as the 22.5pc, or ‘three-year’ cap.

Why have farmers and small business owners been unhappy?

Lobby groups have argued that the family farm and in some cases business should also qualify for the three-year cap.

They have said that by forcing somebody to pay 7.5pc of the farm’s value indefinitely this affects the ability of young people to take over the family business.

Minister Jim Daly (inset) will today propose that the three-year cap is applied to farms and businesses if they continue to be operated by a close relative.

Couldn’t this system be abused?

The minister plans to introduce a number of safety mechanisms, including a ‘claw-back’ rule that will allow the State to recoup some funds if the land is sold within six


When will the changes take place?

Mr Daly is expected to get approval from Cabinet to proceed to the legislative stage today.

The Dáil is on its summer break until September so nothing will happen before that.

There is broad political support for some form of change, so the minister and lobby groups will be hoping the necessary legal changes can be made by the end of the year.

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