Elderly fearful of taxing fee hike

By reducing tax relief on nursing homes, the Government has added to the difficulties elderly people now face

By reducing tax relief on nursing homes, the Government has added to the difficulties elderly people now face

THE GOVERNMENT'S decision to reduce tax relief on nursing home fees is causing additional anguish for elderly people already reeling from the collapse of their "nest eggs" as the value of investments crumble, it has been claimed.

Nursing Homes Ireland (NHI), which represents 300 nursing homes in the private and voluntary sector, has written to the Minister for Health, Mary Harney, outlining its concerns about the measure, while Opposition parties have urged her to rescind this "retrograde" step.

Age Action Ireland has also condemned the plan to reduce tax relief on fees from 41 to 20 per cent with spokesman Eamon Timmins commenting that being in a nursing home "is not a lifestyle choice" for people suffering from dementia and other debilitating conditions.

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The reduction, announced in the Budget and described by Fine Gael leader Enda Kenny as "a direct and brutal assault on the elderly in our community", will come into effect on January 1st, 2010. Tax relief on other medical expenses is to be reduced to the standard rate from next January, but according to the department, nursing home fees have been exempted for a year to allow the new Nursing Homes Support Scheme Bill, known as "Fair Deal" to come into operation.

A spokeswoman says that when the new scheme comes into effect, there will be "less justification for maintaining the tax relief" and that standard rating would be more equitable.

However, critics have argued that because there is so much uncertainty about Fair Deal and because the scheme is voluntary, it is unfair to penalise elderly people and families who struggle to pay fees of up to €1,000 a week, especially given the shortage of public nursing home places.

It has been estimated that there are now almost 19,000 private nursing home beds in the Republic compared to fewer than 9,700 in the public sector.

Fine Gael TD John Perry who exposed the illegality of nursing home charges in 2004, says that in the past few weeks, many elderly people had seen their life savings disappear overnight, following the collapse in the value of bank and other "blue chip shares.

He says some people who had investments of up to €250,000 have been left with a fraction of this and were now unsure how they would pay their nursing home bills in the future.

"Remember these people, retired public servants, bankers or professionals, do pay tax on their pensions and now they are being told that the tax relief is being cut dramatically. These people are terrified about the future," says Perry.

Tadgh Daly, chief executive of NHI, says that families who did not get any State subventions to help pay fees were going to be hit hard if they are to lose up to €10,000 a year in tax relief.

He says this was happening at a time when, according to the HSE, several hundred acute hospital beds were being occupied by elderly people with nowhere else to go. Daly says that even families lucky enough, following a rigorous means test, to get subventions of €300 a week, were struggling to pay nursing home bills and the existing tax relief was a crucial part of the family budget.

"The Minister keeps stressing that those with very low dependency will not qualify for the Fair Deal and should be in the community, but the supports are not in the community," says Daly.

"There are also people, for example, in rural areas, who for security reasons are happier to live in nursing homes and they would not be regarded as being dependent."

Recent research by NHI found that 12 per cent of residents in nursing homes were in the low-dependency category and so would not qualify for Fair Deal and would be hit by the new tax relief regime.

Daly says the sharp drop in tax relief will remove "the element of choice" for those hoping to opt out of Fair Deal or for those who will not qualify.

He says it is common for parents' homes to be sold or rented out to pay the cost of the nursing home care. "We have members who carry residents who cannot meet the costs. They will not put them out on the streets," he says.

Labour's Health spokeswoman Jan O'Sullivan says there are situations where the home has been sold, but given the high cost of nursing home care, the proceeds have been spent and families are still struggling to continue paying for care.

Pointing out that not everyone will qualify for the Fair Deal, O'Sullivan urges the Minister to "rescind this decision immediately".

Perry points out that the drop in tax relief has been announced at a time when families are seeing a sharp reduction in their living standards.

"This measure will hit two groups - the elderly person who, a few months ago, had a ball of money when, for example, Bank of Ireland shares were worth €18, but who today is wiped out because the same shares are now worth less than €1," he says.

"But it also hits families who are already on the floor, with maybe one partner laid off, people who have said goodbye to the two cars and to the two holidays every year and who just won't be able to help to manage if they lose this tax relief.''

Perry says he did not accept that the measure was justified on the basis of Fair Deal. "I wonder how fair the Fair Deal is and how constitutional. It is a legal quagmire," he says.

Timmins says that the move "makes no sense" given that the purpose of the Fair Deal was to take some of the hardship off families.

Under it, those in need of nursing home care will pay 80 per cent of their disposable income towards the cost and they may be charged up to 15 per cent of the value of their home and assets after death with the State picking up the balance of the bill. The Government says this takes the burden off family members.

Under the present subvention scheme, the State meets only 40 per cent of the estimated average cost of private nursing home care and approximately 90 per cent of the cost of care in a public facility.

Age Action says that the new regime imposes "a charge beyond the grave" for the first time into the Irish health service and so distinguishes between those who are made vulnerable by, for example, dementia or Parkinson's and those who access the health service through cancer or road accident, who can continue to be treated as public patients.

Age Action acknowledges that the current system whereby many families are forced to sell homes to pay private nursing home bills is not acceptable.

But Timmins argues that the Government is now "sending out mixed messages" in promising to take the burden off families, while sharply reducing tax relief for elderly people who will either fail to qualify for or not opt for the Fair Deal.

'If tax relief is cut, I can't bear to think how we'll cope'

Patricia is 85 and doesn't know that her nursing home bill recently rose by €900 a month to €4,500.

Her family know that she is luckier than many, because as the widow of a professional, she has a good pension and a home which is rented out to help pay for her care.

But every penny is accounted for and the family cannot afford the increase. As a result, Patricia has been moved into a smaller room in the home and has become disorientated and confused.

If the tax relief the family now depends on is cut, they are not sure what will happen. They are hoping she will qualify for Fair Deal, but are worried about the uncertainty over when this comes into effect.

"I have not had a proper night's sleep since the fees went up. We cannot afford to pay any more," says her daughter. "My mother has always paid tax on her income, but if the tax relief is slashed, I can't bear to think how we will cope."

The family has been keeping the financial worries from Patricia as she is frail and already stressed by the change in her accommodation.

"In the past six years, the nursing home bills have added up to over €250,000," says her daughter. "My mother's sisters lived into their 90s, so we know that we may have to sell her home in time.

"We applied for a subvention to help with the costs, but were turned down. We are all worried sick because we don't want to take her out of the place that has been her home for six years," says her daughter.

When Patricia became ill, she wanted to stay in her own home, but it soon became obvious to her and her family that the home care supports were not adequate for someone so frail .

"My father and mother always worked hard and paid their taxes, but when she was in hospital, they gave us two days to find somewhere to put her and we knew we couldn't care for her," says her daughter.

"If they cut the tax relief and the Fair Deal does not materialise on time, we don't know what will happen to her," she says.

Marese McDonagh

Marese McDonagh

Marese McDonagh, a contributor to The Irish Times, reports from the northwest of Ireland