Direct Payments Explained
What are Direct Payments?
Direct payments refers to a system whereby the State provides funds directly to
People With Disabilities (PWD) to allow them purchase a variety of support
services with a view to accommodating them to live independently in the
community. Direct payments can be used to purchase Personal Assistance
Services (PAS), therapies, technical aids and equipment. Direct payments have
the potential to be both a cost-effective and user friendly way of providing
services to PWD.
What happens in other countries?
The UK, Germany, Holland, Belgium, Sweden and Finland are among the
European countries that provide direct payments to qualifying PWDs.
In the UK, funding emanates from the local authorities. A report published by the
PSSRU at the London School of Economics & Political Science in 2007 (‘Direct
Payments: A national survey of direct payments policy & practice’) found a range
of variations in direct payment arrangements. The survey, which was undertaken
across the UK, implies that direct payment packages are provided to people
receiving more ‘hours of care’ per week than the average ‘social care recipient’.
They also found significant disparities between local councils in relation to the
proportions of eligible people receiving direct payments as well as hourly
payment rates, which could affect how individuals attain a fair stake in the market
for ‘social care’. This evidence suggests that in the UK councils don’t tend to
provide the same service to everyone and the service provided varies according to
region. In other words there is no proper standardisation of service throughout
the UK.
In Sweden, since the introduction of the 1994 Swedish Personal Assistance Act,
service users receive payments from the Social Security Fund for the purchase of
personal assistance services as a legal entitlement that is independent of the
State agency’s’ financial situation and independent of recipients’ and their
families income or property. Eligibility and amounts are not dependent on
whether they buy services from a provider or employ assistants themselves.
‘Assistance Need’, expressed as the number of assistance hours needed, is
assessed by the tax-funded Social Security Fund. Each month recipients get an
amount that corresponds to the total costs of these hours including white wages,
full social security benefits together with the user’s and providers’ administrative
costs.
What about Direct Payments for PAS in Ireland?
Currently there is no formalised system in the Republic of Ireland whereby direct
payments are operated. There have been exceptional cases where PWD have
negotiated a direct payment with the HSE for the purpose of employing personal
assistance. In these cases, the amount paid to the individual is based on an
agreed hourly pay rate to a PA. This pay rate includes a payment to cover certain
overhead costs associated with employing an individual, like training PAs and
service users, employer’s liability insurance, payroll administration costs,
employer PRSI contributions and an allowance for unsocial working hours.
Is there a Right to Direct Payments for Personal Assistance Service?
At the moment, PWDs here do not have a right to a direct payment which would
enable them to employ a PA it’s done very much on a case to case basis and at
the discretion of the HSE.
How would I go about employing a PA once I secure Direct Payments?
The main employment models that have emerged for direct payment recipients
to employ personal assistants are;

The self-employ model -this is where the PWD uses their direct payment to
employ a 3rd party as their PA. The PWD is the employer and consequently
all of the responsibilities which normally attach to any employer are now
their responsibility.
 The self-employed model - this is similar to the self-employ model except in
this model the individuals employed as a PA are themselves registered as
self-employed persons. Self-employed persons are responsible for
managing their own tax affairs and social insurance.
 The supported model - this is where a small group of people come together
to support an individual to use a direct payment and to manage their
service. It typically comprises of family members, friends and appropriate
people from the local community. An example of such a group is Micro
boards.
When will I have a right to opt for Direct Payments?
In 2010, the then Minister of State for Equality, Disability & Mental Health, John
Maloney T.D., announced that he would draw up plans to introduce a system of
direct payments to enable people with disabilities in here to purchase their own
support services. This would consequently replace the current practice of
allocating blocks of core funding directly to service providers. We still await
same. Supporting PWD to control their own financial affairs is a key provision of
the UN Convention on the Rights of Persons with Disabilities – a hugely significant
Human Rights Treaty which has been ratified by 120 countries but not by Ireland.
A report from the Department of Health in the UK in 2008 highlighted a number
of issues with a pilot programme of individual budgets which should be examined
in light of the Minister’s proposal. The report observed that one of the most
significant challenges in implementing the pilot system was to ensure that each
local authority was willing to support creativity and flexibility to allow the client to
determine how each individual budget would be spent. It was found that
combining disability funding streams along with the resources from adult’s social
care also proved extremely challenging in the UK - similar issues could arise here
in Ireland.
Source – www.humanrights.ie
How do Direct Payments operate here?
At the moment in Ireland, the direct payments system is not yet formalised and
there is little information or advice about how to negotiate with the HSE for a DP,
or the steps required to set up the model. To apply to the HSE, one would be
advised to plan and research how one would manage any hours which would be
allocated; then undertake a self-assessment and a daily work schedule to
determine how many hours of service are required per week to live
independently. The HSE may be able to fund a PWD directly to employ a PA.
However, they may not provide a sufficient amount of PA hours to enable the
PWD to live independently.
First, you would need to agree the rate of pay to cover the wages of the PA, the
overheads & the costs associated with setting up and administering the DP. To
estimate the cost of the service, you would usually factor in gross wage cost,
including PRSI contribution, employers insurance liability, administration costs &
an allowance to cover the outsourcing of an accountant for the payroll & end of
year accounts. The HSE usually provides the PA training for manual handling &
lifting. Then you might incorporate a company and set up a separate bank
account for the business to ensure accountability. You would then need to create
business invoices, time sheets, medical clearance forms & safety statements. An
accountant would usually produce monthly pay slips for all Pas, deduct taxes &
PRSI, & make monthly returns to the revenue commissioners. Hiring a PA through
a local commercial agency may be restrictive; some find hiring a PA through FAS
to be more effective as well as cheaper.
The PWD usually trains the PA themselves and directs their own service. The PAs
tend to be paid the same standard rate per hour as the HSE pays their support
staff. The disadvantage is that the funding that the HSE provides doesn’t take into
consideration other OHs associated with employing a PA. The DP isn’t indexlinked & any increase in the payment will have to be negotiated with the HSE on
an annual basis. Due to the lack of indexation, the number of PA hours that can
be purchased with a DP will fall as wage costs rise. There is usually difficulty in
obtaining employers’ liability insurance as most insurance companies don’t
understand the concept of a PA or the nature of their work. The lack of options in
relation to employer’s liability insurance may mean that some PWD will have to
extend their general HH insurance to ensure maximum protection. Some PWD
may have to extend their domestic insurance to cover employing a PA as a lot of
insurance companies don’t quote for PA employer liability as a stand-alone policy.
If a PA is required to drive, then they must be insured & the PWD bears this cost,
usually via an open drive insurance policy.
There is also a lack of peer support groups which could help sustain and promote
DPs, primarily to pool knowledge. Most info tends to be acquired via experience,
trial & error and self-learning. Whilst the DP allows the PWD the freedom to
direct their own service cutting out 3rd parties, the PWD usually has more
responsibility and must ensure compliance with a variety of laws & regulations.
However if you are interested the Center for Independent Living can put you in
touch with PWDs who have Direct Payments.
How could Direct Payment schemes be made easier to operate?
Basically, there are seven key areas which need to be addressed to make the DPs
scheme easier to operate;
1.
Shared accountancy service
2.
shared payroll service
3.
group insurance
4.
peer groups for PA employers
5.
peer groups for PAs
6.
hours provided should be based on the level of assistance that each
individual requires
7.
standardised model/policy for the DPs system in Ireland.
How do I set up as a sole trader?
Should a PWD choose to operate as a sole trader for the purpose of employing
their PAs, then their main legal obligation is that they must register as a selfemployed person with the Revenue Commissioners and if you wish to use a
business name you must register that name with the CRO.
What about setting up a company?
A company with limited liability is deemed to be a separate legal entity in the eyes
of the law. What this means is that the employees & the employer in most cases
are not personally liable for the debts of the organisation, apart from their own
personal investment in the company. So in the event of business failure, they are
limited by guarantee and their financial liability is limited solely to the value of
their investment in the company. By contrast, a sole trader is personally liable for
all the debts of the business, which means that their personal assets can be seized
in the event of business failure.
The key requirement for employers is that they must register with the Revenue
Commissioner for PAYE purposes if they pay €40 or more to employees, including
domestic employees. So while DPs do enhance freedom and choice, they also
incur responsibilities together with potential liabilities. The HSE have in some
cases provided a cash payment to a PWD to purchase PA hours if they are not in a
position to meet this request themselves, & this direct payment is then managed
solely by the PWD to purchase PA hours. The responsibility of hiring a PA lies with
the PWD. They must advertise & conduct the interviews themselves. Some PWD
prefer to do the induction & training themselves, & devise up an employment
contract with the terms & conditions. At the moment in Ireland, there tends to
be a lot of uncertainty & lack of security. Most PWD don’t have a formal contract.
What is the AT Network?
The AT Network is a user led organisation founded in October 2010 whose aim is
to pilot the system of direct payments. Their main aim is to advocate for a
successful formation of a policy on direct payments. Their proposed model is one
that seeks to guarantee maximum accountability & security to funders of the
service. This model aspires to allow for the security of public money while
protecting the individual.
AT is currently developing its resources to support its members to employ and
manage their own PA services as individuals. The main activities it supports are
the creation of a peer support network, the development and provision of
supports to increase their capacity to participate and contribute the peer support
network, as well as the creation of a comprehensive support structure to advise
potential members an new members during the transition to self-directed
services.
What are the advantages of Direct Payments?
There are a variety of personal benefits of direct payments for a PWD. These
include:
 acquiring greater independence, choice, control, flexibility & privacy.
 It may also allow people to return to work, & this has a positive knock-on
effect of raising feelings of self-respect & dignity.
 As direct payments give the opportunity to be independent, and this
reduces reliance on family & friends, thus resulting in better relationships.
 Direct payments recipients tend to value their power to decide who works
for them & especially in the case where personal care or support for a child
is involved.

for statutory funders there is the potential to get better value for money
from the service & better outcomes for a PWD.
 There is also the possibility of a reduction in staff numbers involved in
delivering the service, thus, a reduction in staff costs.
 Direct payments are essentially an opportunity for growth via responsibility
and realising the true meaning of independent living.
 Direct payments help to instil confidence and competence, which can
encourage the PWD to achieve more in the workforce & education. This
tends to have a variety of positive knock-on effects for the person’s wellbeing, as well as the economic benefits.
What are the disadvantages of Direct Payments?
 Direct payments are not index-linked.
 Direct payments don’t include a wide variety of associated overheads.
 Direct payments may instead be used for training the service users & the
Pas.
 A variety of services, such as admin, tax, etc. create a lot of burdensome
bureaucracy & the cost is usually bore by the PWD. There is currently no
support for this in Ireland.
 There are currently no support organisations or peer network of DP users in
place in Ireland although the AT network may become a template.
 There is currently no insurance provider who provides specialised PA
insurance for IL. Most PWD have to extend their own insurance and bear
the cost themselves.
 At the moment, the HSE do not provide any guidelines on DPs for the
purposes of employing a PA, even though there have been instances
whereby DPs have been negotiated via the HSE.
 Lack of information/confusing information
 Unnecessary paperwork
 Perceived difficulty in recruiting staff
 Process is perceived as too complicated and long drawn out
 Currently there is no legislation in Ireland which sets out a framework
within which direct payments might work. Direct Payments can operate
without specific legislation as exampled by the HSE Home Care Support.
 Direct Payments result in consumer choice which would mean service users
moving between different providers. A consequence of such a consumer
model could give rise to commercial companies looking to compete in the
sector
 Direct Payments recipients tend to find it difficult to recruit and retain staff
in today’s competitive employment market, e.g. pension plans cannot
always be offered.
 Individuals may choose to contract with providers who can offer them a
service which is tailored to their particular needs. Service providers would
therefore need to be highly flexible in offering services to a multiplicity of
service users requiring very different levels of support.
 If a State Body were to implement a model of direct payment there would
be costs associated with policy formation and with the building of the
architecture necessary to support and administer the scheme.
What concerns are there about Direct Payments?
The potential to misuse funding should not be underestimated. If a direct
payment is made to a PWD living in a family setting there is a risk that the
payment may become part of the ‘family budget.’ If this was the case and the
individual was not benefiting from the Direct Payment as intended it may leave
the funding agency ‘open’ to charges of not fulfilling their statutory obligation.
Currently, funding to employ personal assistants flows through the provider
organisations. If direct payments were to emanate from a State Body directly to
PWD, and were this to become an established model, it may prove more difficult
and politically unpalatable, to limit or cut back on budget allocations during
periods of economic downturn. Statutory agencies are obligated to ensure public
funds are fully accounted for and used by individuals and organisations for the
purpose intended. If a State Body were to implement a model of direct payment
there would be costs associated with policy formation and with the building of
the architecture necessary to support and administer the scheme.
The concept of ‘growth through responsibility’ has not gained traction in Ireland
among service users who have become accustomed to a service with minimal
personal responsibility. The same concerns which are being currently expressed
about the lack of regulation and quality monitoring in HSE funded NGO’s will also
apply to direct payments. Some PWD and their families believe they could obtain
better value for money and better personal outcomes from a direct payment.
Yet, service users fear ‘a race to the bottom’ in terms of quality of service with
service users using minimum wage to extract maximum hours in an unregulated
market with little support and no recognition of the significant overhead required
to administer such a model.
What about other forms of Direct Payments?
The Department of Social Protection operates a variety of direct payment
schemes to qualifying PWDs and to qualifying ‘carers’. Some of these payments
include disability benefit, invalidity pension, carers allowance, carers benefit and
DCA. The Department of Health directly pay qualifying persons a mobility
allowance and motorised transport grant.
Name
Caitriona Moore
Qualification
BComm, NUIG; PGradDip Economics, TCD;
Reason
I am currently volunteering with CIL & produced this work when undertaking
research into the cost-effectiveness of direct payments.