Your Money: Dilemma at the heart of Fair Deal
Families forced to make tough economic choices at time of personal upheaval
The housing market is in crisis but one demographic has a different set of problems to the rest, and that's the elderly.
On the plus side, the current retired generation is arguably the most asset-rich of any group. Many bought homes in the 1960s or 70s and own them outright. These are typically larger family homes and under-occupied. But a problem arises when they require full-time residential care (around 5pc of the population).
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Their home converts to an 'asset' whether or not they access the Fair Deal scheme, with families faced with the dilemma of selling it, renting it out, or boarding it up because of the anomaly in Fair Deal which commands 7.5pc of its value for just three years if it's left sitting there, but indefinitely if it's converted to cash via a sale. Rent it out to help defray costs and 80pc of the income will be swiped on top of that.
There are no precise numbers but reports suggest there may be up to 6,000 houses sitting idle because of this, in the middle of a housing crisis. According to the 2016 census, 4,165 homes are vacant for this reason but it is acknowledged the real figure is higher as reasons were not given in many cases.
It doesn't seem to make sense, but the otherwise excellent Nursing Home Support Scheme, to give it its proper name, is set up this way. Nor can it be used (yet) to fund home care packages which most elderly people would prefer in any event, since it keeps them in their own home for longer, and is far cheaper than either an acute hospital bed (where 50pc of intake comes from) or a nursing home bed.
Changing demographics will only exacerbate this, leaving families making choices based on economic reality at a time of personal upheaval.
There are around 400 private and 100 public nursing homes catering for 29,000 residents.
The Fair Deal scheme caters for around 23,000 residents at an annual cost of €985m. The fund is in deficit by some €17m. A waiting list of 800 has built up due to budgetary pressures - not because of lack of available beds. By 2031, 35,000 beds will be needed to meet demand. The average age of a nursing home resident is 82 and 70pc of all long-stay residents are over 80.
Some 92pc of adults over 50 own their own home; 83pc of them outright, says the ESRI.
The average stay in a nursing home is under three years. That would indicate it makes sense to sit out Fair Deal and let the family regain the home when their loved one passes on, with minimal impact - the maximum contribution that can be shaved off is 22.5pc after all.
The State wants inheritance protected by the taxpayer with generous tax-free limits (€310,000) allowable from parent to child. The Fair Deal scheme skews the holding of assets outside the Fair Deal scheme for wealthy individuals as a result, as those with high levels of income/assets prefer to pay private fees (and avail of generous tax relief to do so). There is no legal requirement to enter the Fair Deal scheme, so costs are not offset by the 'wealthy' in favour of the poor, as they would in a pooled arrangement. Poorer people get proportionately better benefits from the scheme as they would be unlikely to afford nursing home care on their income (see panel).
Cost of Care
It costs €896 per week on average for a nursing home bed. This rises to €1,300 per week in Dublin. Public nursing homes are paid far more by the HSE than private nursing homes, but they do have a higher dependency ratio of residents. Nobody on Fair Deal pays more than the cost of their care.