Participants in the Fair Deal Scheme should be obliged to rent out their houses

[Slim]

I think we need to look at the whole picture realistically: The social insurance model was never designed to pay for nursing home care - pension and unemployment yes but not residential NH care. General taxation was designed to pay for, as well as everything else, basic health care. The model of health care has developed over the last few decades, driven by medical and scientific research to the level we are approaching, which is laying massive costs on public health systems. General taxation has not kept up with the contribution needed to fund this, in a sustainable way. The NHS is under incredible pressure an is in danger of breaking apart.

The Fair Deal scheme was an innovative and compassionate scheme to assist people with end of life residential care. It incorporates the notion of people paying(80%) of their income along with a percentage of any assets(7.5%). This latter % should exhaust most assets in 13/15 years, not allowing for any growth. The notion of the sanctity of the 'family home' in Irish society led to the cap of 3 years on the home, also the fact that a spouse/partner may still be alive and living there was a factor. So, rather than sell or rent the property, the facility was included to provide the 'Ancillary State Support' i.e. the nursing home loan, which must be repaid after death of the surviving spouse. The mechanism is there to facilitate proper payment towards nursing home costs. There is no logic, financial or moral, that says the state, i.e. the taxpayer, should pay to preserve the inheritance for the children, which is what the cap does.

TL;DR - Therefore, the logical solution is to modify and remove the cap, say to 5%, but in place until the value equals the value of the house. This can be recovered by sale after death.

No doubt, the Irish solution will be to get around this by transfer pf property/assets etc but that is something the government would need to counteract.

It is not realistic to force people to rent out their PPR for a number of reasons, surviving spouse in it, state of the place, possible legal impediments, etc. To assign an imputed value of possible rental would seem unfair and subject to challenge, but may be workable. In that scenario, the capital contribution of value of PPR needs to be looked at again.

 

[Brendan Burgess]

Hi Slim

A good overview.

Just to clarify one thing. I had never intended to suggest that a home should be rented out if the spouse was living in it. In most cases I have come across it's a widow or widower who has left an empty house behind.

There is no logic, financial or moral, that says the state, i.e. the taxpayer, should pay to preserve the inheritance for the children, which is what the cap does.

Delighted to see someone else agreeing with this point.

It is not realistic to force people to rent out their PPR for a number of reasons,

Again, no one would be forced to. It's just that the state would not pay for their care if they were not prepared to rent out their house.

We cannot leave houses empty during a housing crisis. We have to get over the complexities involved in either selling the house or letting it out.

Brendan

 

[Brendan Burgess]

The social insurance model was never designed to pay for nursing home care - pension and unemployment yes but not residential NH care.

This is a really important point. Many posters have argued. They paid their taxes so the state should pay their nursing home care.

Brendan

 

[Early Riser]

General taxation was designed to pay for, as well as everything else, basic health care.

Precisely as most posters have been saying.

General taxation has not kept up with the contribution needed to fund this, in a sustainable way

Agreed - no argument there.

The Fair Deal scheme was an innovative and compassionate scheme to assist people with end of life residential care

This should be in bold - lest we forget.

Therefore, the logical solution is to modify and remove the cap,

Absolutely agreed. The point of debate for me is how to modify the cap. It is currently 7.5% for 3 years. You seem to suggest 5% open-ended? As I think 3 years is about the average length of stay(?) I would go for a higher rate for a limited period, eg , 12% for 4 years. After all this person was a taxpayer who has paid into the general taxpayer pool for healthcare. Why should everything he has be confiscated when Joe next door who happens not to need nursing home care gets to leave all his estate. We are either a society with some sharing of contribution and risk or we are not.

I do think there is an argument for a ring-fenced estate levy on all deceased to pay into a general pool for Fair Deal.

It is not realistic to force people to rent out their PPR for a number of reasons, surviving spouse in it, state of the place, possible legal impediments, etc. To assign an imputed value of possible rental would seem unfair and subject to challenge,

Absolute common sense. Not to mention how far away away it would be from the original concept of Fair Deal, as you have already outlined in your quote above in bold.

To add, Fair Deal should be extended for homecare packages.

 

[jjm]

Yes, and it should remain so.

And if an elderly person wants to pay for their own nursing home care and keep their family home empty, then let them do so.

But we should not pay for someone's accommodation when they are leaving other accommodation lying idle.

Brendan

Take your no 1 post
So you have no problem allowing this house worth large amounts of money in areas where there is high demand to lie idle if the 2 people who will finish up owning can pay for the person who is in a nursing home fees and get a large amount of money back in tax relief once they do not apply for the fair deal scheme whose house is fit for renting ,These 2 people will cost the state/taxpayers more than someone who applies for the fair deal scheme,

you would then put a large amount of red tape on someone else who may have to apply for the fair deal scheme whose house may not be fit to rent out or may not be in a area where there is no demand for rented out,

This will cost the taxpayers more Every day we see the state squandering large amounts of taxpayers money and human talent just doing what you propose ,

 

[Brendan Burgess]

So you have no problem allowing this house worth large amounts of money in areas where there is high demand to lie idle

I wouldn't say I have no problem. But if someone doesn't want to rent out their house and can afford not to do so, I wouldn't force them to do so.

get a large amount of money back in tax relief once they do not apply for the fair deal scheme whose house is fit for renting ,

That's an interesting point. One gets 20% tax relief on medical expenses but full tax relief on nursing home fees. I would certainly be open to reviewing that.

These 2 people will cost the state/taxpayers more than someone who applies for the fair deal scheme,

Can you show your calculations to show how you arrived at this conclusion. I don't think it's correct.

you would then put a large amount of red tape on someone else who may have to apply for the fair deal scheme whose house may not be fit to rent out or may not be in a area where there is no demand for rented out,

I don't think it's a huge amount of red tape.

Most houses are capable of being rented out. If it can't be rented out, then it should be sold.

You could impute a rent of 7% of the value of the property and tax that as well. This would mean that there would be an incentive to rent out the property.

The current system means that many people have no incentive to rent out their property even if it's a fine property in a high demand area.

Brendan

 

[Early Riser]

The current system means that many people have no incentive to rent out their property even if it's a fine property in a high demand area.

And I understand from press reports that providing some form of incentive to rent such properties is being considered. Very good. I have not read of any proposals for punitive measures to try to force people to rent.

 

[Brendan Burgess]

Hi jjm

If you make a statement like that, you really should provide the figures to prove it.

I have shown in this post that renting out is better for everyone

The owner
The new tenant
and
The taxpayer

https://www.askaboutmoney.com/threa...to-rent-out-their-houses.204672/#post-1525898

Brendan

 

[Brendan Burgess]

I started this thread last Saturday. It has nothing to do with government's strokes.

Brendan

 

[Thirsty]

Just curious, Brendan if your proposal extends to those needing Hospice care also? It costs around 4k per week for Hospice care - should that be recovered from the persons estate?

What about folks who aren't terminally ill but need respite or convalescence - does that become a bill to be paid after death?

Care allowance paid to parents of disabled children perhaps we should recover that as well?

After all if cancer patients are expected to use up all their savings/ assets I don't see why parents of children with disabilities should get away scot free.

 

[Thirsty]

A woman with a family home in Dublin worth €700k which would easily command a rent of about €3,500 a month is lying idle.

I doubt that many of those who are currently homeless could afford such a rent.

So if a house at €3,500 per month becomes available, the person taking that may be vacating a house at €2,000 a month and so on

Most unlikely - rent payment is a very price sensitive item in the household budget. Most tenants will look for the lowest rent they can achieve commensurate with the location/space they need.

Unlike mortgage payments where purchasers will often stretch their budgets to get extra space/better location etc., on the understanding that though it might stretch them now, over time that will improve. Tenants never have that cushion.

 

[Brendan Burgess]

Just curious, Brendan if your proposal extends to those needing Hospice care also? It costs around 4k per week for Hospice care - should that be recovered from the persons estate?

What about folks who aren't terminally ill but need respite or convalescence - does that become a bill to be paid after death?

Good questions.

The general principle is that the state should encourage people to provide for themselves. Where they can provide for themselves, they should do so and not rely on the state to pay it.

The state should pay only where the person can't afford it.

This principle extends to healthcare. I have used the public hospital system and I haven't been charged. I had to volunteer the €100 which I was supposed to pay. It's crazy. I should have been charged the full cost of the treatment I received.

The children issue is a bit more complex. Children can't provide for themselves. So they should not be expected to. That is why we pay for their education.

But if an adult can pay for their medical treatment, their nursing home care etc., then they should do so. I will repeat. I should not pay for your nursing home care, so that you can leave your assets to your children.

And I repeat that this is only one issue.

The bigger issue at the moment is leaving perfectly good houses which could accommodate people empty. We should be encouraging the owners to put them back into use.

Brendan

 

[Early Riser]

Just curious, Brendan if your proposal extends to those needing Hospice care also? It costs around 4k per week for Hospice care - should that be recovered from the persons estate?

What about folks who aren't terminally ill but need respite or convalescence - does that become a bill to be paid after death?

Care allowance paid to parents of disabled children perhaps we should recover that as well?

After all if cancer patients are expected to use up all their savings/ assets I don't see why parents of children with disabilities should get away scot free.

Thirsty - I think Brendan has already essentially answered that here:

But now that you mention it, people should pay for their own healthcare if they can afford it

I am pleased that this suggests that it is not just aimed at the aged and infirm. But it raises it own questions :

Should everyone be means tested for public healthcare ?

Should attachment orders (or something of that nature) be attached to the property of people who
avail of public healthcare? They can pay after they die.

Should we abandon the notion of universal services across the board or only in healthcare ?

What might be the broader (perhaps unintended) consequences of the application of this principle - including but not limited to economic consequences ?

Should we abandon the notion of a society with shared risks and shared contributions ? Or should this be left to the private sector (insurance?)?

If I have understood it all wrong and this not the principle proposed, why in the case of one aspect of healthcare (paid for by taxation) does the person face having having to lose all there property to pay nursing home costs while others in the community who are not afflicted with disability get off scott free (ie, pass on their full inheritance)?

Brendan's proposal seems to be a matter of principle rather than cost because he has avoided any discussion of reforming the funding model for Fair Deal -(eg, by increased contributions and/or a levy on all estates).

Finally, as regards the linking of Fair Deal to the housing issue, Brendan seems to continue to avoid endorsing the "incentive model", which would arguably be more effective, not least because it would be realistically implementable. I wonder if this suggests that the underlying issue is an ideological objection to Fair Deal, and that the housing issue represented a convenient hook on which to hang it?

Over to Brendan ?

Edit: Sorry Brendan - I posted this before seeing your reply to Thirsty above where you have addressed some of these matters.

 

[Early Riser]

The general principle is that the state should encourage people to provide for themselves. Where they can provide for themselves, they should do so and not rely on the state to pay it.

The state should pay only where the person can't afford it.

We have a progressive taxation system. People pay tax towards providing the public health system, which they may or may not need at any point in time. It is effectively equivalent to insurance. Are you saying that those "who can afford it" should not claim if they can pay for it themselves? Should this apply to private insurance also?

Or those who can afford to pay to pay for their childrens' education - Should they not use the public system?

Perhaps the health element in tax should be separated out into a discrete fund but that is a different matter.

You should have been charged the appropriate fees for your use of public healthcare.These would have represented a contribution towards the cost.

Perhaps people with means should be expected to pay a proportion towards their treatment. But this should be on a fair and rational basis - rather than a "loser loses it all" basis, as you seem to be suggesting in relation to nursing home care.

 

[odyssey06]

The general principle is that the state should encourage people to provide for themselves. Where they can provide for themselves, they should do so and not rely on the state to pay it.

I don't see anything in your proposal to encourage people to provide for themselves.
I see plenty in your proposal which will encourage people not to make provision for themselves, in the certain knowledge that the state will pickup 100% of the tab.
Why make provision for yourself if your will end up in the same situation as if you had not done???

The state should pay only where the person can't afford it.

Why? They had ample opportunity in their lifetime to make provision for themselves.
They should have done so and not relied on the state to pay.

Either we are all in this together or we are not. If we are not in this together, fine, the state should not provide healthcare free to anyone except children. The state should not provide nurisng home care to anyone, either in whole or part funded.
The people going into nursing homes now were paying taxes for decades before that.
Show me the balance sheet of what they put in and what they took out then tell me that you are paying for their care. You are not, you are paying for the care of all those who did not make provision for themselves.

 

[Brendan Burgess]

a "loser loses it all" basis, as you seem to be suggesting in relation to nursing home care.

What have I proposed?

An amendment to the Fair Deal Scheme so that those in receipt of it should rent out their houses. This will make more accommodation available in time of great scarcity and it will reduce the cost to the state.

This is far better than leaving the house empty and getting me to pay for your care when you can well afford it. In the vast majority of cases, they will still leave plenty of assets to their children.

That would not involved a "loser loses it all".


Thirsty asked about the principle and we should discuss the principle. We are not paying anything near enough in taxes to provide for our pensions, health care and elderly care. Yet we expect high pensions, health care and to be able to leave our homes and other assets to our children.


Brendan

 

[Brendan Burgess]

Show me the balance sheet of what they put in and what they took out then tell me that you are paying for their care. You are not, you are paying for the care of all those who did not make provision for themselves.

Hi Odyssey

I fully agree that the system we have encourages dependency. I have written and spoken on this often:

https://www.askaboutmoney.com/threads/we-must-dismantle-our-culture-of-dependency.200086/

But the balance sheet is €200 billion of national debt and underprovision of €300 billion for state and OAPs.

One of the advantages of encouraging people to pay for themselves is that they would realise the true cost of it.

Brendan
https://www.askaboutmoney.com/threads/we-must-dismantle-our-culture-of-dependency.200086/

 

[Brendan Burgess]

Overall I would like a system where the PRSI that people pay go into a fund in their own name to pay for their pension and unemployment benefit.

Those who never work and never contribute to a fund would get a lot less than they are getting now in non-contributory benefits.

Those who work should be prioritised in terms of housing - location and quality.

And, those who can pay for their nursing home care, should do so.

But the fact that our social welfare system encourages people not to work, should not be a reason for not reforming the Fair Deal Scheme.

Brendan

 

[odyssey06]

One of the advantages of encouraging people to pay for themselves is that they would realise the true cost of it.

Not if half the population isn't paying a cent and expects the other half to pay everything for them AND pay their their own way. Only so much weight can be borne by the load. This proposal puts even more strain on the people who are already shouldering the whole weight therefore I cannot agree with it.
I'm not sure which will collapse the system sooner:
(a) Too much strain overloading the people bearing the load.
(b) Proposals that drive people from the side bearing the load, to the side enjoying a free ride.

You have to leave the people trying to make their own way with something.
Or else why bother?

If you want to talk about proposals that encourages ALL the people to pay for themselves, then I'm all ears.

If you want to talk about proposals that just look at putting more strain on the people trying to pay their own way, I refer you to my earlier point. I cannot agree with that.

 

[Brendan Burgess]

Hi Odyssey

I have made many points about reducing the strain. In particular cutting non-contributory social welfare and putting everyone's PRSI into an account in their own name.

I said last week on the radio that the dole should be abolished for anyone under the age of 26. If they are not prepared to work, then they should not be getting social welfare. Of course under my proposal, if someone had been working and had a PRSI fund in place, they could draw that down.

Brendan