Why is Grandad in Australia ? – Nursing Home Care – the mortgage of the future

Modern life is full of stresses and pressures but did you ever think that living too long could be one of them?

In the early part of the 20th century it would have been unusual for a person to live beyond their middle 50’s. (In 1910 the average life expectancy at birth was 54 years).

Now, as a result of improvements in infant care, immunisation, diet, health care and other scientific developments our life expectancy is increasing at the rate of 3.5 years in every 10. Within the next 50 years living to be 100 will be the norm.

So are we ready for this?

Hardly! We haven’t begun to consider or examine the potential implications whether social, economic or financial around living longer. One of the undoubted and obvious risks is the financial cost of living longer both for ourselves and our families but particularly where we need to enter some form of nursing home care.

Nursing home care is already costly with the Ombudsman reporting in November 2010 that some 23,000 of our over 65’s needed some form of long term nursing home care, representing 5% of that group. A subsequent report in October 2012 by Cardi estimated that an extra 2,833 people would need to avail of this care every year.

That’s a NET increase of c. 12% each year in the numbers needing long term nursing home care. And why are the figures not relatively static – well as any talking meerkat will tell you…”SIMPLES”. We’re all just living longer so it’s a natural consequence of longevity.

With an average annual cost of €55,000 per person each year, the current cost of Nursing Home care is c. €1.4 billion each year and is equivalent to 9% of the current health budget! And growing…… If you have a spare €½ million you could pay for yourself but what about your partner, or your Mum or your Dad and what about your Partner’s Mum or Dad? Now we’re up to €3million assuming nil medical inflation and they all only live for 10 years in need of nursing home care! Even if you’re receiving a Ministerial pension you’d find that difficult to manage!

So who’s going to pay this €1.4bn plus every year? At the moment the State subsidises the cost of nursing home care through direct subvention (for those who have inadequate income or means it meets 100% of the cost) or through a combination of direct supports and tax reliefs where the person and/or their family pay a part of the ongoing costs.

One such support comes in the form of the “Fair Deal Scheme” or to give it its correct title the Nursing Home Support Scheme. Under the “Fair Deal Scheme”, you’ve to give up 80% of your annual income and 7.5% of all assets every year while residing in a HSE approved Nursing Home. In return for this the State will (assuming you meet the care assessment and medical criteria) meet the balance of any cost.
Where you’re family home is one of the assets involved then the total annual contribution is capped at 3 years x 7.5% or a total of 22.5% of the value of your home.
The State also gives income tax relief on the costs we bear on certain health care. At the moment income tax relief is granted for the employment of a carer (limit is €50,000 each year) in a home setting or income tax relief at up to 41% in relation to nursing home costs we bear directly.

But with increasing numbers needing to avail of nursing home care and the high costs involves how much longer can we as a State continue to fund the NHSS and tax reliefs at their current levels?

Well if we have a reliable and broadly based tax base, then perhaps we could fund a scheme to meet the needs of a group of people who we’ve an obligation to look after and care for properly.

How do we build that base if approx. 22,000 of our young educated qualified people are emigrating to Australia and elsewhere each year thus rendering a substantial portion of our future tax base resident on the other side of the world? Unless we can retain these people or attract others to the country, our future demographic will be top heavy with dependant people with expensive healthcare needs.

There’s no philanthropic force out there writing cheques for nursing home or other health care costs. It’s the State – you and me, our children and grand-children who’ll have to pay this bill. So let’s start planning for the future rather than just arriving there.

After all there are now 3 certainties in life death, living longer and taxes….. Oh and by the way would anyone of tax paying age leaving the country please bring Granny and Granddad with you.