Is Fair Deal really ‘fair' if it is effectively taxing savings from already taxed income?
How can a scheme be described as 'fair' when it is anything but? Yet, such is the so-called 'Fair Deal' scheme applicable to those in need of full-time care.
Personal savings are taken into account when calculating the weekly cost of such care – savings made from hard-earned pay which had already been heavily taxed at source.
As non-smokers and non-drinkers, who lived modestly during our 60+ years of marriage, and who regularly saved 'towards the rainy days' all during those years, we now find ourselves punished by the authorities for having done so – i.e. our taxed savings are being taxed all over again.
In retrospect, my advice to others considering putting money aside would be to think again. There must be some fairer way to manage your affairs other than leaving the tax man the opportunity to have a second bit at your hard-earned, taxed pay.
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Mr D.D.
I think there might be a basic misunderstanding here of the nature of Fair Deal or, to give it its more formal title, the Nursing Home Support Scheme. It could also be argued that there is a confusion on the purpose of savings as well.
The first thing to note is that there is absolutely no compulsion on anyone to avail of Fair Deal. It is not compulsory, any more than private health insurance is.
But if you choose not to avail of it, you eliminate one financial option to meet the cost of long-term nursing home care should you eventually need it.
No one I have come across would proactively opt to live in a nursing home where there was an alternative. I have heard there are such people – mostly those living alone who yearn for company but, certainly in cities, they are few and far between.
But if you get to a point where you can no longer live independently, you have limited options. You can apply to the HSE for home carer hours but these are inevitably constrained for budgetary reasons with waiting lists in some part of the State.
Even if HSE approves hours, it is likely to be no more than one or two hours a day: if you need more than that, you will be relying on family or on paying for private home care – presumably from those same savings.
If home care is no longer an option at all, you are looking at a nursing home. According to the HSE, this will be the reality for one in 20 older people.
Nursing homes in Ireland are run by the HSE, by voluntary groups and by the private sector. The one thing they share in common is that they will all cost you. How you pay is up to you. You can avail of Fair Deal which charges a portion of your means, or you can pay privately from your own resources.
According to HSE figures, the cost of care in a public nursing home will vary from €1,100 to €2,300 a week, depending on the individual nursing home. Costs for most tend to be grouped around the €1,800 to €2,000 area.
Private nursing home costs are around the same to be honest. And the private nursing homes would be delighted if you decided not to go down the Fair Deal route because they will get less under Fair Deal than they do if you pay privately.
Frankly, given the cost of care, whichever route you choose will involve you tapping your savings. So why bother with Fair Deal then?
Well, if you go privately, you are obliged to meet the full weekly cost regardless of your means. If that means paying over all your income and then topping that up from your savings – which is likely given the weekly costs – then that is what is required.
And there is no cut-off. If your savings run out, you will need to raise money from the sale of your home, taking out a lifetime loan secured on the home or some alternative. And, if you survive long enough in nursing home care, it could dissipate the entire value of your savings including the value of your home.
If you go via Fair Deal, they take a maximum of 80 per cent of your income plus 7.5 per cent of the value of your assets annually. But not all your savings. The first €36,000 is ring-fenced and not taken into account, lowering the charge to you. Also, the charge levied on your family home is stopped after three years, ensuring you retain a minimum of 77.5 per cent of its value.
If you have a spouse of partner still living in the home, the rates of deductions are halved to 40 per cent of family income and 3.75 per cent of assets. And the ring-fenced amount of savings is doubled to €72,000.
The balance between whatever figure your contribution comes to and the actual cost of your care comes from the State.
The choice, obviously is yours, but Fair Deal is an approach that allows people who would never otherwise be able to meet the cost of nursing home care to access that care when they need it, regardless of their financial status. To me, anyway, that seems relatively fair.
I'm guessing from your comments that you think the State should simply provide long-term nursing home care free of charge to those who need it. That's certainly an option. The question is whether you are prepared to pay the higher taxes that would be required to fund such an arrangement.
Doing so would, of course, inevitably have impacted the size of those savings you feel so strongly about.
Or should the State simply borrow the money to pay for it and inflict greater debt and fewer financial options on succeeding generations?
Coming back to the issue of the savings, the question that comes to my mind is what exactly are you saving for?
For most people, savings are money set aside either to allow them do something in the future that they would not be able to afford from their day-to-day income or for the rainy day – to meet the cost of unanticipated expenses should they arise.
We'd all love to spend the money on otherwise unaffordable treats, trips and experiences but, if that's not possible, it seems only fair that some of the money would go to meeting some of the cost of personal care in your later years, if required.
If it's any consolation, the average life expectancy of people in nursing homes is around three years. On that basis, over three-quarters of your savings will still be in your name ... not that you'll be around to enjoy the money.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to
dominic.coyle@irishtimes.com
with a contact phone number. This column is a reader service and is not intended to replace professional advice
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