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The financial family dilemmas when frailty or illness hits

The financial dos and don’ts when a loved one needs care 


When a loved one is ill, finances are the last thing anyone wants to think about - yet for everyone's sake it's important that everything is tied up

When a loved one is ill, finances are the last thing anyone wants to think about - yet for everyone's sake it's important that everything is tied up

When a loved one is ill, finances are the last thing anyone wants to think about - yet for everyone's sake it's important that everything is tied up

Life is turned upside down when a loved one becomes ill, injured or very frail and has to move out of home for care for months, years or perhaps for good.

At times like this, finances are often the last thing people want to deal with – yet finances have to tackled.    

So what financial challenges could you face when a loved one needs care in hospital, a nursing home or elsewhere – and what’s the best way to grasp those nettles?

GDPR health cover challenge    

You could find it hard to ensure your loved one gets the hospital care or standard of accommodation that they’re entitled to under their private health insurance if they’re suddenly seriously ill or injured and are rushed to hospital. This could arise if you don’t know the number and name of their health insurance plan and your loved one is too ill to provide this information themselves. The natural thing to do in such instances is to phone the health insurer to get those details – however, don’t be surprised if the insurer advises you that it can’t discuss details of your loved one’s health plan with you due to the privacy and security law, General Data Protection Regulation (GDPR).

There are ways around this – though it will take time.  A health insurer will usually accept a letter from a doctor advising that your loved one is now too sick to manage their health insurance – and that you have consent to speak on their behalf (assuming you’re over the age of 18). Your private health insurer may also be able to take your loved one’s consent for such an arrangement over the phone.

Power of attorney – which is where you’re appointed to take actions on a loved one’s behalf –  will also help here. Health insurers will generally discuss a loved one’s plan with you if your loved one has given you power of attorney.

“We will deal with anyone who has power of attorney to act on behalf of another individual,” said a spokeswoman for VHI. “We require evidence of such power in writing and generally this would arise in cases where someone is permanently incapacitated.”

To prove that you have power of attorney, you will generally need to provide either a solicitor’s letter or a copy of the power of attorney.     

Laya Healthcare said that GDPR would not necessarily prohibit it from discussing the details of a parent’s plan with an adult child if the parent is incapacitated and in need of care.

“Laya would need to be satisfied that the person speaking on behalf of the main member is legitimately connected to the patient, and that the data processing and sharing of information would be necessary to protect the life of the member,” said a spokeswoman for Laya.

Household bills headache            

Another financial headache you will likely face when a parent or loved one goes into hospital or long-term care is the household and personal bills that still need to be paid on their behalf.

“Whoever’s looking after a person in care needs to be able to access their bank accounts so they can figure out what money is going out [of their account] – and where that money is going,” said Paul Kenny, course leader with the Retirement Planning Council of Ireland and the former Pensions Ombudsman.

“You need to be sure direct debits are handled and know what bills need to be paid, including regular and once-off bills.”

Getting access to a loved one’s bank account  and understanding the bills that still need to be paid can be difficult, particularly if you are not living with the individual. It may even be difficult to do this if you’re living with or married to the individual in care.

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Married couples or civil partners – or indeed anyone who holds a joint account with another individual – should check that each party to a joint account has equal access to it. You do not wish to discover that you can’t access or manage that account when your loved one becomes too ill to do so – particularly if your loved one has always managed that account as well as the household finances. 

This could come down to how the joint account was opened initially. With many financial institutions, there is full equal access to joint accounts from the day the account is opened. However, when initially opening the joint account, you or your partner or spouse may have been given an option to allow only one party to make payments from the account, depending on the bank. Should this option have been taken up, the mandate on the account will need to be changed so that the two parties on the account have equal access to it. 

Power of attorney is also useful in situations where you need to be able to access details of – and manage – bills on someone’s behalf.  

The nursing home bills  

Even if you do not believe your loved one needs nursing home care – or if your loved one is reluctant to enter a home, this is an avenue you may eventually have to go down.  “A lot of elderly parents end up in nursing homes by default,” said Kenny.

“Otherwise, arrangements may not be able to be put in place to ensure a parent is cared for – especially if the children are working.”

As you could easily pay about €1,000 a week for a place in a nursing home, nursing homes are expensive.  Fair Deal – the State scheme set up to provide financial support to those in need of nursing home care – can help here.

“Once a person is showing signs of becoming frail, start talking about Fair Deal,” said Kenny.

“The application for Fair Deal takes time – you have to get property valuations done and so on. Even if you never need access to Fair Deal, it pays to get ready for it in case you do need it .”

You will need to pay privately for care if you’re not approved for Fair Deal at the time your loved one needs to go into a nursing home. In such cases, you will need to wait until you’re approved for Fair Deal before the fees are covered.   

Anyone considering Fair Deal should however weigh up the pros and cons of doing so – and examine whether they would be better off making alternative arrangements to pay for nursing home care than to go through Fair Deal.

One of the advantages of Fair Deal is that there is a three-year cap on the extent to which the family home (that is, the home of the individual in care) can be drawn on to contribute towards the cost of nursing home care.

Under that cap, no more than 7.5pc of the value of the home a year (or 3.75pc a year if the individual in care is part of a couple) – up to a maximum of 22.5pc after three years (or 11.25pc in the case of a couple) can be used to contribute towards the cost of nursing home care.

This three-year cap also applies to the sale proceeds of the home if the home is sold when the individual is in care.

You can get tax relief of up to 40pc on nursing home fees as long as the person paying the fees pays, or is liable for, income tax.

The cost of independent living    

The right home care can be useful when an individual is struggling to live independently in their own home – particularly if the individual is not yet at the stage where they need full nursing home care.

You can get a certain amount of free home care through the HSE’s Home Support Service scheme –  if you qualify for it. You could face a wait for the HSE’s free home care though.

“Getting home care from the HSE can be difficult,” said Kenny.

Private home care is an option for those who need more home help than is available under the HSE scheme – or indeed if you find it difficult, or face a wait, to get the HSE’s home care. 

You could pay between €25 and €30 an hour for private home care – or €200 a night, though prices vary depending on the provider and the needs of the person being cared for. 

Another option is to pay for a private homecare package – rather than by hour or night – and the price of the package will depend on the level of homecare  provided.

Home Instead is one of the home care providers approved to deliver care under the HSE’s Home Support Service scheme. Home Instead also offers private home care.

An elderly person living alone who has recently become frail and who therefore needs someone to call in two to three days a week  would typically pay Home Instead about €100 a week for private home care, according to a spokesman for Home Instead.

The exact cost of the private home help however is specific to the individual’s needs, added the spokesman.

An elderly person living alone who requires a live-in home-carer could pay anything from €500 to €4,500 a  week for such home care, depending on the individual’s needs, according to Home Instead.

The higher €4,500 weekly charge could arise if round-the-clock 24-hour care seven days a week, involving multiple live-in carers, is needed. An individual could need multiple carers if a hoist is needed to get the person out of bed for example.

You may qualify for tax relief of up to 40pc on private home care.  

A retirement village may also be an option for an elderly individual or couple and for many this would be the ideal solution, particularly if your loved one is in a situation where they’re too well to stay in hospital, not yet in need of full nursing home care, but not deemed able to be living on their own in their current home.

However, there is a limited number of retirement villages in Ireland. 

“There should be more retirement villages here,” said Kenny.

As retirement villages could well be the way forward for senior citizens, let’s hope more of them crop up in the coming years.

Tips to make that financial path smoother

Set power of attorney early on

Setting up a power of attorney is worth doing as you – or your loved one – heads into old age.

There are various types of power of attorney. A general power of attorney allows an individual to take a wide range of actions on another individual’s behalf in relation to their property, business or financial affairs.

The enduring power of attorney applies when the individual who has granted the power of attorney becomes mentally incapacitated and is no longer able to manage their own affairs.

Should you be considering giving someone the power of attorney to act on your behalf, it’s very important that you trust this individual. Don’t give the power of attorney to too many people either as this could cause problems when decisions have to be made.

“Appoint one person as the power of attorney and another as the alternate to step in where the first person isn’t available,” said Paul Kenny, course leader with the Retirement Planning Council of Ireland. “To give two people equal power of attorney isn’t a great idea if you have the possibility of a disagreement between those people. You could have cases where siblings can’t agree where a parent will go [when the parent needs care or can no longer live independently at home]. You need someone who can make the decision around care and say that this is what’s going to happen.”

Automatic payments

Get your pension paid into your bank account rather than collecting it in person – or else encourage your loved one to do so. This will ensure that a pension continues to be paid automatically even if you or a loved one is in hospital or care and unable to collect it. For the same reason, pay bills by direct debit and standing order rather than manually so that bills due continue to be paid.

Know about tax relief

To be eligible for the tax relief on private home care or nursing home fees, you must be either paying – or liable for – income tax. Should you be a single elderly person whose only source of income is the State pension, you’re exempt from income tax (as your income is below €18,000 a year) and so for that reason, you would not qualify for tax relief on the cost of private home care if paying for that care yourself. You can however get a family member or relative to pay for the care on your behalf – and as long as the individual paying for the care is paying income tax, tax relief can be claimed. Relief can be claimed at the individual’s marginal rate of income tax (either 20pc or 40pc). Be aware of the other eligibility conditions which must be met to qualify for the relief too.

Know the Fair Deal rule changes

The Government recently agreed a plan to change the rules for rental income under the Fair Deal scheme, with nursing home residents to be able to keep 60pc of any money raised from renting out their own homes while they are in a nursing home. Currently, this figure stands at 20pc of the rent on the main home.

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