ISE23/15-16

• Long-term care services for the elderly have been trending away from institutionalization and moving towards home care around the world in recent years. This was reflected in a significant increase in the ratio of elderly people receiving care at home among the selected advanced places, from 59% in 2000 to 65% in 2013.^{1Legend symbol denoting See OECD (2013).} Given the choice, many elderly people may prefer living out their years for as long as they can in their own homes to institutional care facilities, but this would require home care assistance. As the delivery of home care relies heavily on family members who may need to quit the workforce and sacrifice work income, some governments offer cash benefits to these informal caregivers both as a recognition of their contribution and also as an incentive to retain them in providing informal home care.
• In line with the global trend of "ageing in place", the Hong Kong Government launched a pilot scheme on granting living allowance for carers of elderly persons in June 2014. This pilot scheme offers a monthly allowance of HK$2,000 to at most 2 000 caregivers from low-income families for two years. In the 2016 Policy Address, the Chief Executive has announced that the pilot allowance scheme will be extended from carers of elderly to carers of disabled persons in October 2016.
• While offering cash allowance to informal carers is "new in Hong Kong", it has been a well-established practice in Finland and the United Kingdom ("UK") for more than three decades. Moreover, both countries have fine-tuned the policies to encourage more home care. This issue of Essentials provides a quick overview of the key developments of cash allowance for informal carers in both places.

Carer allowance system in Finland

• In the early 1980s, some municipal governments in Finland introduced cash allowance for informal caregivers of elderly, disabled and chronically ill persons on an experimental basis. In the following two decades, additional measures such as respite care and monthly rest day were introduced to support carers. Yet this carer support scheme was not a mandatory nationwide scheme, as it was entirely up to the local governments to implement such scheme.
• In face of a looming fiscal burden arising from increasing demand for institutional care for the elderly amid the ageing trend, the federal government of Finland formalized the carer allowance system and made it mandatory throughout the country in 2005. With a view to encouraging a shift towards home care for cost savings, the Finnish Parliament passed the Support for Informal Carers Act 2005, which made financial payment directly to the informal carers for the care work performed. The following are the key features of the carer allowance system in Finland:
  
  

  (a)	Non-contributory and non means-testing: Cash allowance granted to caregivers is non-contributory. It does not require means or asset test for both carers and care recipients;
  (b)	Minimum level of allowance: While the monthly amount of carer allowance may differ across municipalities, the law has established a minimum rate across Finland. The minimum monthly allowance in 2016 is set at €387 (HK$3,338) for taking care of one elderly person, and this can be increased to €775 (HK$6,665) if the caring work is particularly demanding.2Legend symbol denoting Demanding care includes an end-of-life care situation or care recipient's recovery from a serious surgery. In Helsinki, the allowance can be as high as €1,500 (HK$12,900);
  (c)	Taxable and pensionable income: Similar to remuneration to paid job, the carer allowance is taxable and accountable in pension accumulation, offering retirement protection to the carers;
  (d)	Contract between carers and local government: Carers need to sign a care agreement with the municipal government, stating clearly their obligations and rights. These in particular include (i) the amount of allowance and hours of care provided by carers per month; (ii) list of care services; (iii) supportive measures for both the carers and care recipients; (iv) rights for the carers to take leave; and (v) training and education opportunities for the carers; and
  (e)	Work life balance for carers: Finnish carers were entitled to at least three days of respite care,3Legend symbol denoting In Hong Kong, respite care is just a temporary residential care service for elders who require certain degree of personal care provided by family members or relatives. By contrast, respite leave in Finland is a mandatory and statutory entitlement of carers. relieving their care pressure even though they are taking care of their family members. Apart from statutory leave, carers are also entitled to take break each day outside home to participate in day activities, rehabilitation or training. Carers might request substitute care from the municipalities or additional funding to hire private caregiver during these breaks.

• Over the past two decades, the total number of carer allowance recipients in Finland have more than tripled, from 13 000 in 1994 to 43 200 in 2014. Matching with 133 000 elderly people currently receiving informal care in the country, around one third of elderly recipients of informal care benefited from the carer allowance system.
• According to an evaluation study conducted by an academic on the basis of the dataset provided by the government, development of informal care including the carer allowance system has considerably reduced public expenditure on elderly care in Finland.^{4Legend symbol denoting See Kehusmaa, S. et al. (2013) and Ministry of Social Affairs and Health (2014).} It is estimated that the annual cost of informal care for an elderly person was just around €4,900-€6,000 (HK$42,140-HK$51,600), less than a quarter of the respective cost of around €25,300 (HK$217,091) in formal and institutional care.

Carer allowance system in the United Kingdom

• In the UK, carer allowance was first introduced in 1976 for certain segments of carers who quitted the job to take care of disabled family members. This entitlement was gradually extended to include a wider group of carers in response to changing demographics and care needs of the elderly.^{5Legend symbol denoting When first introduced in 1975, the allowance was only available to men and single women of working age who had given up paid employment to care for disabled family members. The allowance scheme was then extended to individuals caring for distant kin and friends in 1981, to married women and people caring for non-relatives in 1986, and to those over the age of 65 in 2003.} It is underpinned by the Social Security Amendment (Carer's Allowance) Regulations 2002.
• According to the official policy papers, the UK Government has positioned carer allowance as "income maintenance" for carers, rather than a "payment for informal care provided". The following are the key features of the carers allowance system in the UK:
  
  

  (a)	Non-contributory and non means-testing: Similar to Finland, cash benefits paid to caregivers in the UK is non-contributory and non-means-tested;
  (b)	Monthly amount of allowance: For carers of those in receipt of the five qualifying state disability benefits, they are entitled to a flat-rate allowance of £248.4 (HK$2,944) per month in 2016;6Legend symbol denoting The five qualifying disability benefits are: (a) Personal Independence Payment (daily living component); (b) Disability Living Allowance (middle or highest care rate); (c) Attendance Allowance; (d) Constant Attendance Allowance (at or above the normal maximum rate with an Industrial Injuries Disablement Benefit or basic (full day) rate with a War Disablement Pension); and (e) Armed Forces Independence Payment.
  (c)	Taxable and pensionable income: Similar to Finland, carer allowance in the UK is taxable and accountable in national insurance contributions, with retirement protection;
  (d)	Eligibility threshold: Carers in the UK must provide care for about 140 hours per month and their personal earning from paid work must be under £440 (HK$5,214). For carers who are in study, they must provide care for at least 84 hours per month. By contrast, the number of hours of informal care of each caregiver vary in Finland, depending on agreements between carers and municipal governments;
  (e)	Legal right to request support from local governments: Carers in the UK are protected by a number of legislation.7Legend symbol denoting The main pieces of legislation and policy directives include (a) Carers (Recognition and Service) Act 1995; (b) National Carers' Strategy in 1999; (c) Carers and Disabled Children Act 2000; and (d) Carers (Equal Opportunities) Act 2004. Under the Carers and Disabled Children Act 2000 and Carers (Equal Opportunities) Act 2004, all carers in England and Wales are granted the legal rights to request a comprehensive assessment of their care load, abilities, physical and psychological well-beings, housing and social needs, wishes relating to work, leisure, education and training; and
  (f)	Support services for carers: In the light of the assessment findings, local authorities are obliged to provide support services to the carers. Examples of such support services are (i) help with housework; (ii) provision of a computer to enable the carers to keep in touch with family and friends; and (iii) flexible work arrangement and unpaid leave from employers to assist those carers who are still in employment to take care of their family members.

• In 2015, there were about 769 000 recipients of carer allowance in the UK, representing a 54% increase over the respective figure recorded in 2010. Matching with some 6.8 million informal carers in the UK, it is estimated that just around 10% of carers come forward to claim the carer allowance. According to a study, this low coverage ratio may be partly attributable to the aforementioned eligibility threshold for carers in the UK on the one hand, and stringent qualifying disability criterion for care recipients on the other.^{8Legend symbol denoting The main pieces of legislation and policy directives include (a) Carers (Recognition and Service) Act 1995; (b) National Carers' Strategy in 1999; (c) Carers and Disabled Children Act 2000; and (d) Carers (Equal Opportunities) Act 2004.}

Prepared by Phoebe TANG
Research Office
Information Services Division
Legislative Council Secretariat
13 July 2016