Golden years are tarnished by savage Fair Deal costs
Many people in nursing homes see little of their weekly pension after the State dips in
A 94-year-old man who has been in a nursing home for three years has only €1.50 a week of his own money left to spend on himself after covering the cost of his care under Fair Deal - the State scheme set up to provide financial support to those in need of nursing home care.
John (not his real name) gets €256.60 into his hands each week - through his State pension and a small work pension. He also has savings of about €52,000 which he built up over his lifetime.
Under Fair Deal, you pay a contribution towards the cost of your nursing home care - with the State picking up the rest of the tab. The amount you pay depends on your income - as well as any assets, including savings, which you hold. You typically pay up to 80pc of your income towards the cost of your nursing home care. You also usually pay a percentage of the value of any assets you have.
John is paying €255.06 out of his weekly pension income of €256.60 to cover the cost of his care under Fair Deal.
That weekly rate includes the 80pc contribution of €205.25 from his pensions - and a contribution of €49.81 to reflect the charge on his savings. Of course, John could use his savings, rather than his weekly income, to cover the weekly charge of €49.81. However, he has chosen not to do so because he does not wish to see those savings gobbled up over time. He feels he needs those savings to pay for things which are not covered by Fair Deal - and to pay for his funeral bill when he passes away. John has already sold his home.
"My father could live for a good number of years yet and he needs his savings to give him some extra comforts in his declining years," said John's daughter. "Any expenditure in relation to clothing, prescriptions fees, some toiletries, newspapers, magazines, books, treats, presents and so on is taken out of those savings. We also have to ensure that there is enough money to pay for his funeral expenses whenever that unhappy day comes."
John is not alone in trying to use the small income he has to cover the entire cost of his care under Fair Deal - rather than to put his savings towards it. Many people try to cover the charge which Fair Deal puts on their savings or assets themselves - so that they will have something to pass onto their loved ones when they die.
Of course, there are merits to the Fair Deal scheme. For many people, the costs of staying in a nursing home are prohibitive and Fair Deal is their only hope of being able to stay in one. Some nursing homes charge as much as €1,500 a week for care. Without Fair Deal, the only other option for someone who needs nursing home care is to pay for the bills outright themselves. So Fair Deal can take a lot of financial pressure off people who need nursing home care - allowing them to use assets such as property or land to settle nursing home bills after they die.
However, Age Action believes that the rates that individuals must pay towards the cost of care under Fair Deal are too high. "The rates force people to sell family homes, reduce the value of assets built up over a lifetime and can put enormous pressure on the families of older people - as well as making the older people themselves feel guilty about family assets they'd hoped to pass on being diminished," said Justin Moran, head of advocacy at Age Action.
As well as contributing 80pc of your income, under Fair Deal you must also pay up to 7.5pc a year of the value of any assets you have (or 5pc a year if you applied for the scheme before July 25, 2013). Those assets can include savings, the family home (though there are limits to the extent that it can be used to fund the cost of care), land, property, stocks and shares. The first €36,000 of your assets (or €72,000 if you are married), will not be counted when deciding how much you should pay towards the cost of your care.
"Many people are paying the 7.5pc charge themselves - rather than having that charge against their home," said Eamon Timmins, chief executive of Age Action. "There is a mindset in Ireland of people wanting to leave a legacy to the family. There are a lot of emotional ties to the family home."
If you spend more than three years in a nursing home, no more than 22.5pc of the value of your family home can be used to pay for your care - or 11.25pc if you are a couple and your partner remains at home. In some cases, the same cap will apply to family businesses or farms.
As the three-year cap only applies to family farms in certain circumstances, farms can be put at risk when a member of the family signs up to Fair Deal. "The Fair Deal scheme has created significant financial difficulties for some farm families due to the potentially uncapped liability on family farms to pay for nursing home care," said Maura Canning, Farm Family and Social Affairs Chairperson with the Irish Farmer's Association (IFA).
When asked to comment about the concerns around the use of the family home and farm under Fair Deal, a spokeswoman for the Department of Health said: "The Fair Deal scheme is structured so that people don't have to sell their homes during their lifetime, and is based on the principle that participants contribute according to their means, so taking assets into account is valid in that context."
She also said that by international standards, Fair Deal is "very generous".
A spokeswoman for the Health Service Executive (HSE) said that the amount an individual must pay towards their nursing home bills is "based on the ability to pay".
The spokeswoman added that if your only assets are land and property, you can apply for a nursing home loan - and defer using these assets to pay for your care until you die.
Another problem being encountered by those who sign up to Fair Deal is the extra charges they are hit with when in a nursing home. Fair Deal doesn't cover the cost of everything - such as hair cuts, chiropody, physiotherapy and dental services.
Furthermore, residents are often being charged for things which they can't use, according to Timmins.
"We are seeing newspaper charges for people who can't read, and charges for social activities when people can't leave a bed," said Timmins. "We are getting some calls from people who say they're being charged for Mass."
Nursing homes themselves argue that the fees paid to them under Fair Deal are inadequate because they do not cover services essential to the health and wellbeing of nursing home residents.
"The fees payable to nursing homes under Fair Deal do not encompass the reality of the health and social care costs incurred to meet the day-to-day care and living requirements of persons requiring nursing home care," said Tadhg Daly, CEO of Nursing Homes Ireland.
Regardless of who is at fault here, nursing home residents only have the 20pc of the income which they have left (after paying the 80pc contribution under Fair Deal) to cover these additional costs. For someone who is relying on the State pension, that could be the equivalent of €50 a week - or less.
"The 20pc of your income that you're left with isn't enough for many people to get by on," said Timmins. "It has to go a long way. It's not enough to survive on with any dignity in the latter stages of your life."
It is time for change on this - and the other shortcomings around Fair Deal.
Sunday Indo Business