The Cabinet has approved changes to the Fair Deal scheme for farms and small businesses.
The scheme provides financial support for those in long-term nursing home care.
The legislation will be examined by an Oireachtas committee before the Dáil recess in July but it is hoped that the changes would be passed in the Dáil and Seanad this autumn.
HOW THE FAIR DEAL SCHEME WORKS CURRENTLY
People using the scheme contribute annually up to 80% of their income and up to 7.5% of the value of any assets held towards their cost of care.
The value of a person’s home is only included in the financial assessment for the first three years of their time in care.
Currently, this unqualified three-year cap does not apply to assets such as farms and businesses.
This means that business assets (including farming assets) can be subject to an annul levy of 7.5% of their value for each year a person is resident in a nursing home.
This latest decision will extend the three-year limit to farms and businesses where a family successor continues to operate it for six years.
WHAT WILL THE PROPOSED CHANGES MEAN?
By extending this three-year cap to farms and businesses, where a family successor continues to operate the farm or business for six years, it is hoped that it will ensure the future of the farm within the family.
Minister of State for older people, Jim Daly, says the aim is to reduce stress and uncertainty for those who would benefit from the change.
In order to qualify for the new terms, the person entering a nursing home must appoint a successor who will sign a legally binding commitment to continue the family business, and young farmers will be tied to the land for at least 6 years.
CONDITIONS?
Conditions include a legal undertaking by the successor that he or she will repay the full amount of the State subsidy if they fail to complete the six-year period.
This is being seen as a way to identify genuine cases of families who qualify and prevent heirs from cashing in on their inheritance.
As part of a commitment to the ‘clawback’ mechanism, the successor must consent to a charge being applied on land or property if they break the terms of the contract.
Some flexibility will be applied in cases where the nominated successor finds themselves unable to continue working due to illness or death. In such incidences, the family will be able to select a new successor without being hit by additional charges.
HOW THE CHANGES AFFECT BUSINESS OWNERS
Reform for the business sector has been slow due to the legal complexity of the scheme.
The Department of Health also recently cited Brexit as a reason for the delay.
Although the heads of bill have been agreed, it will be the end of year at the earliest before the necessary legislation to implement the changes is ready.
WILL THE CHANGES APPLY TO PEOPLE WHO ALREADY AVAIL OF THE SCHEME?
The benefits will be applied retrospectively to anybody already in care or who enters a nursing home in the coming months. If a resident has been living in a nursing home for one year, their family will have to pay only the 7.5pc for another two years. Or if a resident is in a nursing home for more than three years, those 7.5pc payments will cease immediately.
They will not be able to recoup contributions they have made beyond the three-year cap period.
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