Huge care costs can be the biggest financial burden families ever face
The cost of nursing home care is often the biggest financial hit a family can face. Some 30,000 older people are in some form of long-term care.
Three-out-of-four nursing homes are in the private sector. The average cost is €1,000 a week, according to Tadhg Daly of Nursing Homes Ireland. But fees can be as high as €1,800 a week.
That is probably why so many opt for the State's Nursing Home Support Scheme, better known as Fair Deal. There are around 23,000 people who use the Fair Deal scheme.
It is a bit like a pooled insurance scheme. The State pays for all the care, and the nursing home resident contributes what they can, according to their income and assets. Here is a run-down of some of the detail of the scheme.
Q: You can't rent out houses if the owner is in the Fair Deal scheme?
A: That is not the case. The owner of a house is legally entitled to rent it out if he/she is in a nursing home under the Fair Deal scheme.
However, the rent from the property then becomes liable for assessment as income and someone getting support under Fair Deal needs to contribute 80pc of income.
Say an elderly person's income is €20,000. They have to contribute 80pc of that. This works our at €16,000 under Fair Deal, leaving €4,000. If they rent out the property, say that brings in €12,000.
That means the income is now €32,000, and 80pc of that has to be contributed, or €25,600. That leaves the older person with €6,400, according to Age Action.
Q: Will the insurance lapse because the property is vacant?
A: You can organise insurance for vacant houses, but it is best to be upfront with your insurance company.
Brian McNelis of the Irish Brokers Association says that the fact that no one is living in the home substantially increases the risk for the insurer, and is considered a material fact that needs to be disclosed.
Generally, a property is regarded as being unoccupied if it's been vacant for longer than 30 days, though policies will vary.
Vacancy will impact the cover offered by the insurers, with certain restrictions placed on the cover depending on how long the property is likely to stay unoccupied.
Most insurers will restrict cover to fire alone but will insist that all services are turned off, all combustible items are removed and that properties are regularly inspected, Mr McNelis says.
Age Action's Justin Moran says it is common for insurers to refuse to renew a policy if a property becomes vacant.
Q: Are there loopholes and can you cheat the system?
A: That happens, although it is a dangerous practice as Revenue oversees the part of the scheme where the home is being used to finance it.
However, a review of the Nursing Home Support Scheme in 2015, carried out by the Department of Health, found evidence that families were under-valuing the assets of the nursing home resident.
This emerged after the HSE reviewed assets of residents after their death.
A sample survey carried out by the HSE showed that in 30pc of the cases where a schedule of assets was available, almost a quarter had under-declared cash assets. It is an offence to provide false or misleading information to the authorities.
"The act [Nursing Home Support Act] enables the HSE to recover monies from the deceased's estate if there has been a non-disclosure or misstatement in relation to assets," the HSE said.
Q: Who pays the property tax on a house in the Fair Deal scheme?
A: If the house is empty for 12 months because the owner is in a nursing home it is exempt from the property tax. But a doctor has to certify that the older person will not return to live there.
If it is not empty, the owner of the property is liable for property tax as normal.
Q: Why not take the property tax valuation when valuing the house?
A: The legislation that set up Fair Deal required an independent valuation of the property for the purposes of the financial assessment.
This legislation pre-dates the introduction of the property tax.
Also, the property tax evaluation is based on the value of similar properties in a particular location, and isn't an evaluation of a specific property given its condition at the time of valuation. The 2015 Department of Health review of the scheme did suggest "that the HSE considers accepting the valuation bands used by the Revenue Commissioners for local property tax in order to minimise the cost and time for an applicant obtaining a property valuation".
Mr Moran, of Age Action, said his organisation is not aware what, if anything, has been done to progress that.
The HSE said it was bound by the 2009 legislation underpinning the scheme.