The Fair Deal Scheme and Agricultural Assets - Ongoing challenges in practice

The Nursing Homes Support Scheme (“Fair Deal”) plays a significant role in funding long-term residential care in Ireland.

While the underlying structure of the financial assessment element of the scheme is clear, its application in farming and family businesses continues to pose practical and policy challenges.

Overview of the Financial Assessment

Under the scheme, the individual pays a “contribution” to the costs of care, and the HSE pays the balance. How much a person contributes depends on their income and assets. In short, the less you have, the less you pay.

The converse is also true, and there are cases where the calculated contribution exceeds the cost of care, and thus the fair deal scheme is not appropriate.

Income Contribution:

Per annum, an individual will contribute 80% of their assessable income (40% in the case of a couple)

Asset Contribution:

Per annum, an individual will contribute 7.5% of the value of assets (3.75% if a couple). The first €36,000 (or €72,000 if a couple) worth of assets are exempt, and the family home can only be included in the assessment for 3 years.

Legislative changes have extended a similar three-year cap to farms and businesses, subject to specific conditions.

Farm and Business Asset Relief

The extension of the three-year cap to agricultural and business assets represents a significant development. However, its application is conditional.

Key requirements include:

i) the identification of an eligible “family successor” who will commit to running the farm or business for 6 years.
ii) evidence of active farming or business operation for at least three of the previous five years.
iii) agreement to place a charge on the farm or business.

In practice, these conditions restrict the availability of the relief. For example, farmland leased to third parties or situations where the owner has ceased active farming may fall outside the scope of the provision.

The five-year Look-Back rule 

A central feature of the scheme is the inclusion of assets transferred within the preceding five years, unless transferred for full value. This provision has particular implications for succession planning.

Even where a transfer has taken place as part of a structured plan, the asset may remain assessable if the transfer occurred within the relevant period.

The five-year rule has led to criticism that the rule can be seen to penalise individuals who have taken steps to reorganise their affairs and pass their farm or business on to their successor.

The Nursing Home Loan (Ancillary State Support)

If an individual is cash poor but has assets, they may struggle to meet their contribution. In circumstances where an individual lacks the liquidity to meet their assessed contribution, they may avail of the Nursing Home Loan.

This mechanism allows for the deferral of their contribution payments and operates like a mortgage. The loan is secured by a charge over property, e.g., their house, farm, or business. The loan is typically repayable within 12 months of death.

While this provides necessary flexibility, it may create pressure to realise assets within a limited timeframe, with potential implications for value and estate planning outcomes.

Administrative and Compliance Considerations

The application process requires detailed disclosure of all income and assets. Following death, the HSE may compare the application lodged for Fair Deal against the Probate application form. Discrepancies can result in recovery actions.

These recovery actions underscore the importance of accurate and comprehensive financial disclosure.

Additional costs outside the scheme

It is important to note that the scheme does not cover all services provided by nursing homes. Ancillary services such as therapies, personal care add-ons, and other non-core supports may incur additional costs.

These expenses must be met from the resident’s retained income or by family members.

Policy considerations and reform

While the Fair Deal Scheme remains a critical support, several issues persist in the agricultural context:

i) The rigidity of the five-year look-back period.
ii) The limited scope of the farm/business asset cap.
iii) The treatment of non-actively farmed or leased land.

Stakeholder organisations have called for further reform, including a reduction in the look-back period and broader eligibility criteria.

In parallel, there is increasing policy focus on developing a statutory home care scheme, which may offer an alternative model of support aligned with many individuals’ preference to remain in their homes.

Conclusion

The interaction between the Fair Deal Scheme and agricultural assets highlights the tension between social care funding and succession planning.

In practice, outcomes are extremely sensitive to timing, asset structure, and family circumstances. As such, the scheme continues to present both legal and practical challenges, particularly within the farming community.

For further advice or if you wish to discuss any other legal area please contact reception@lynchsolicitors.ie or telephone 052-
6124344.

The material contained in this blog is provided for general information purposes only and does not amount to legal or other professional advice. While every care has been taken in the preparation of the information, we advise you to seek specific advice from us about any legal decision or course of action.

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