If you are a family caregiver for a loved one, you are far from being alone. Family caregiving is the backbone of caregiving in the United States, with an estimated 41.8 million adults providing caregiving to adults 50 and over. This number will grow to account for aging baby boomers and the fact that people live longer, therefore requiring more care.
Adding to the challenge of increasing complexity of care is the financial toll that caregiving has on families. Approximately 66% of caregivers are women. Many of them take time off of work or quit their employment altogether to care for an aging family member. The financial impact of women providing care is approximately $148 billion to $188 billion a year. Add to that the fact that many caregivers find it difficult if not impossible to re-enter the workforce after caregiving.
Everyone realizes that caregivers need help – financial and otherwise. The good news is that a bipartisan proposal called the Credit for Caring Act would give family caregivers a $3,000 tax credit to help defray the costs of caregiving.
Unfortunately, a coordinated system of financial support for caregivers doesn’t exist. But there are government and state programs that might help. As with all things related to aging, advanced estate planning, knowing the costs of care and understanding alternatives will help you make informed and prudent decisions. Let’s take a look at some of the options.
Many families try to augment the time they contribute as caregivers with private duty-caregivers. This choice can be great, as long as you have planned for the costs of this type of care. Unless you have a long-term care insurance policy that provides a daily rate for private caregiving or meet other federal and state criteria for help, you will be on your own.
There are two factors to consider in hiring an agency to help you provide care. One is the state where you live. Why does this matter? Because every state dictates the tasks that caregivers are allowed to do. For example, in one state, a caregiver can perform insulin checks, dispense medications and provide injections. In other states, the caregivers are only permitted to help with activities of daily living such as bathing, dressing, cooking and transportation.
The second consideration is cost. According to Genworth, the hourly median cost of care in 2020 was $23.50 an hour. This price will be more or less depending on where you live and the number of hours of care you need. To give you an idea of how the hours and cost can add up, let’s say you contract for four hours a day, seven days a week, for your loved one. Based on the median cost of care, that adds up to $2,632 a month. It’s less than assisted living, but no small amount.
The majority of programs that assist family caregivers require that you qualify for Medicaid. That is a good news-bad news scenario in that many middle-income families don’t meet the strict financial criteria to qualify. And each state has different qualifying criteria depending on the program. In general, the person qualifying for Medicaid must have depleted their assets to a very low level and have limited income. States sometimes have waiver programs that reach populations that would not typically qualify. Call your local Area Agency on Aging to get state-specific information on help for family caregivers. Here are some of the programs worth looking into.
Medicaid self-directed care
Medicaid self-directed programs allow qualified individuals to direct their own care, including hiring a family member to provide that care. Each state will have different guidelines, but in general, the recipient has a person-centered plan of care, an individualized budget controlled by the client, and other support services. The advantage of this program is that it keeps people at home and out of nursing home care. Program names vary state by state like Consumer Directed Care, In-Home Supportive Services, or Cash and Counseling.
Medicaid asset protection is a complex and specialized estate planning strategy, and you will want to make sure that you and your loved one’s estate is protected to the extent that it can be. Medicaid has what is referred to as a five-year “look-back” period that prohibits family members from gifting money to children or others in order to qualify for Medicaid. Consulting with a financial professional and an experienced attorney will give you peace of mind.
If you or your spouse qualify for veteran’s benefits, some caregiver support programs are worth investigating. As with most government programs, the criteria are complicated, and the application process is lengthy.
Here’s where things get complicated. Most states, but not every state, have Medicaid programs that will pay caregivers to provide care to qualified individuals. Some of these programs are called home and community-based services. Through the Affordable Care Act, states now have the authority to expand Medicaid eligibility to individuals under the age of 65 with incomes below 133% of the federal poverty level. The purpose of HCBS programs is to keep people in their communities by providing support for activities of daily living, home modifications, adult day care, respite, transportation and case management.
You can think outside the box at creative ways to pay for care that make sense for your long-term financial plans. Giving up or reducing your employment may not be the best option due to the future consequences of that decision. Some ideas you may not have thought of:
At some point, you may decide that caregiving has become too much of a burden financially and psychologically. With full time or 24-hour caregiving, whether by family or private caregivers, the cost may exceed the price of assisted living.
According to Genworth, the median cost of assisted living is $4,300, but prices could be lower or much higher where you live. Most assisted living communities can provide almost all of the care that your loved one needs. At that point, if your family member owns their home, they can sell it to pay for assisted living and continued care.
As you can see, paying for family caregiving is complicated but possible. Financial planning is the best strategy against unexpected and catastrophic costs of care. Also, involving your loved one in discussions about their personal preferences for care and how to pay for it will ensure a smooth transition through the caregiving journey.
Alliance America is an insurance and financial services company dedicated to the art of personal financial planning. Our financial professionals can assist you in maximizing your retirement resources and achieving your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling (833) 219-6884 today.