Wednesday 22 November 2017

Your Money: The ABC guide to the childcare digouts

The new childcare subsidies could slash your childcare bill by over €10,000 a year, writes Louise McBride

Cartoon by Tom Halliday
Cartoon by Tom Halliday
Louise McBride

Louise McBride

Katherine Zappone's new childcare plan was arguably the centrepiece of this month's Budget. However the scheme, which offers childcare subsidies to help parents with the crippling cost of childcare, has attracted as much criticism as it has confusion. Stay-at-home parents, as well as those who rely on childminders, feel let down by the scheme. So too do the squeezed middle as many of these earn too much to really benefit from it.

Yet the scheme, known as the Affordable Childcare Scheme, could save you over €10,000 a year on childcare. So don't make the mistake of assuming you're not covered by it - when in fact you are. Here's our nitty gritty guide to how the scheme works.

Why could the scheme save me money?

The Affordable Childcare Scheme offers two types of subsidies - a universal subsidy and a means-tested subsidy. Should you be eligible for the subsidies, they will bring down the cost of your childcare.

Who can get the universal subsidy and how much is it worth?

The universal subsidy is available to all parents who have children between the ages of six months and three years. It is worth up to €960 a year and is not means-tested. It pays a subsidy of 50c an hour for each hour of childcare used - up to a maximum of 40 hours a week. This 50c an hour is the minimum subsidy you can expect from the scheme if you have a child under three in childcare - regardless of your income. This is why it is called the universal subsidy. Should your income fall below certain limits, you will be eligible for a higher subsidy. This is where the means-tested subsidies come in.

How much do I need to earn below to qualify for the means-tested subsidies?

The means-tested subsidies cover children between the ages of six months and 15 years.

To be eligible for the means-tested subsidies, your 'net parental income' must be below €47,500 if you have one child under the age of 15, below €51,300 if you have two children under 15, and below €55,100 if you have three or more children under 15.

Even if your net parental income is below the qualifying limit, the subsidies vary. The higher your net parental income, the lower the rate of subsidy you're entitled to. You will qualify for the maximum subsidies if your net parental income is €22,700 or less. However, you will only qualify for the minimum subsidy (that is, the universal subsidy of 50c an hour) if your net income is above €47,500, €51,300 or €55,100 - depending on the number of children you have and assuming you have at least one child under three.

What is net parental income?

Net parental income is the income which is left after paying income tax, the Universal Social Charge (USC), PRSI, pension contributions and "certain other allowable deductions". As well as your take-home pay, other sources of income - such as certain social welfare payments and income earned from particular investments - are likely to be taken into account when determining your parental income. "It is intended that a wide range of income sources will be included within the definition of parental income, including a range of social welfare payments and income from investments," said a spokeswoman for the Department of Children and Youth Affairs (DCYA).

How much are the means-tested subsidies worth?

The means-tested subsidies are quoted in hourly rates - and the rate you qualify for will depend on the age of your child and your net parental income.

To calculate the weekly overall value of the subsidies that you're entitled to, you multiple the hourly subsidy that you're eligible for by the number of hours your child is in childcare. You cannot get subsidies for more than 40 hours of care a week.

Should your child be between the age of six months and one year, the maximum subsidy is €5.38 an hour. The highest subsidy is then €4.60 an hour for children between the ages of one and two; €4.40 an hour for children between the ages of two and three; €4.16 an hour for children aged between three and five; and €3.96 an hour for schoolgoing children under the age of 15.

You will qualify for the maximum subsidy if your net income is €22,700 or less. However, once your income goes over €22,700, the rate of subsidy you're entitled to starts to fall in line with what you earn.

For example, should you have one child - a seven-month-old baby - in childcare for 40 hours a week and have net parental income of €20,000, you would qualify for the maximum subsidy of €5.38 an hour. That subsidy would be worth €215.20 a week (or more than €10,000 a year) to you.

Should your net income be €40,000 rather than €20,000, you would qualify for an hourly subsidy of €1.98 - which would be worth €79 a week to you, according to the DCYA. Should your net income be €50,000, your income is too high to qualify for the means-tested subsidies so you will only be eligible for the universal subsidy of 50c an hour - or €20 a week.

Will I have to pay towards the cost of the care?

You will have to make a contribution (known as a co-payment) towards the cost of the care - even if you qualify for the maximum subsidies. However, should you be on the lower end of the income scale, you should only have to pay a small amount towards your childcare costs.

Must I have my child in 40 hours of childcare a week to qualify for the subsidies?

No. "There will be no minimum number of subsidised hours per week set by the scheme," said the DCYA spokeswoman. "The maximum number of hours per week that can be subsidised is 40 hours. It will be for the parents to agree with the childcare provider on the number of hours of childcare they require per week and the subsidy will be payable for that number of hours. So the scheme will provide for subsidised part-time childcare."

Can I get childcare subsidies if my children are in school or preschool?

Yes. As long as you're eligible for the subsidies, the Affordable Childcare Scheme will cover wraparound care for pre-school and school-age children. So as well as getting a free pre-school place under the Early Childhood Care and Education (ECCE) scheme, you can get subsidies for additional childcare outside the hours that your child is in pre-school. Should your child be in after-school care, you can get subsidies for that care.

Are childminders covered by the scheme?

The Affordable Childcare Scheme covers all childcare providers who are registered with Tusla - including creches, pre-schools, daycare centres and childminders. However, as only a small percentage of childminders are registered with Tusla, you could find it hard to find a local childminder who is covered by the scheme. Childminders who mind three or fewer pre-school children in their own home are exempt from childcare regulations - and therefore would not be registered with or inspected by Tusla. However, the DCYA is exploring ways to get more childminders covered by the scheme.

"There needs to be more done around the registration of childminders so that more childminders are covered by the scheme," says Orla O'Connor, director with the National Women's Council of Ireland. "Childminders are often used by those who do shift work and weekend work."

Childminders are also heavily relied on in rural Ireland as creches are often not that plentiful or easy to get to.

Can I get the subsidies if I'm a stay-at-home parent?

Yes - but they won't be worth much unless your child is under three (and so not yet in pre-school) or is on their school holidays. You're eligible for the universal subsidy if your child is under the age of three and in Tusla-registered childcare. Should you not need childcare for work or study reasons, you can get means-tested subsidies for up to 15 hours of childcare a week (as long as your income is below the limits set out by the scheme). Time spent by your child in school or pre-school is counted in these 15 hours - and you can't claim a subsidy for the hours your child is in pre-school (assuming you're covered by the ECCE scheme) or school.

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