In 2013, the AARP conducted a family caregiving study that found that Americans donate their time at an estimated yearly amount of $470 billion. In other words, millions of people are providing care to their loved ones without pay. In a similar study completed in 2016, the AARP discovered that, on average, an American family caregiver spends $6,954 on out of pocket care costs every year.
These studies prove two things: there are a lot of Americans offering unpaid care to family members, and this care has a serious financial cost. From cutting spending on entertainment or vacations, to reducing retirement savings, family caregiving has a major negative impact on finances.
If you’re facing a family caregiving situation, you need to not only prepare emotionally, but also financially. Use these tips to help you:
- Have A Conversation – The first step is to talk with family and loved ones about potential scenarios so you can plan and save accordingly. If your parents get sick, will they move in with you or will they move into a care facility? If distance is an issue, will you move to be closer or will you pay to move your parents? These are just a few of the questions you need to discuss.
- Plan For Insurance – Oftentimes the time commitment of family caregiving can reduce work hours, which can put your work insurance plan in jeopardy. Put a plan in place to solidify your insurance plan, as caregiving means a lot of spending on healthcare.
- Decide Who’s Paying – You might not have to be responsible for the cost of are all on your own. It’s very common for siblings to split the cost of care for parents, or for parents to have savings in place for care. If your siblings aren’t in a position to help financially, you can always have a conversation about them helping in other ways.
If all your planning fails, or your caregiving situation comes unexpectedly and you didn’t have time to prepare, there are lots of ways you can get financial aid including:
- Medicaid – Aid is often available for low-income, elderly loved ones. Some states even have Medicaid Cash & Counseling programs that give cash allowances to eligible families.
- Insurance – Long-term care insurance is a great way to help cover care costs. However, not every plan covers family caregiver payments. You can learn more on the American Association for Long Term Care Insurance
- Tax Breaks – The government offers more financial caregiver support in the form of tax incentives and tax breaks. There are several requirements a caregiver must meet to be eligible, but you can find out more about these requirements and eligible medical expenses on the IRS website.
- FMLA – The Family Medical Leave Act, or FMLA, dictates that employees that have worked for a business with more than 50 employees for more than 12 months are eligible for 12 weeks of leave for family caregiving.
Caring for a loved one is honorable and generous, but that doesn’t change that it can be expensive and stressful. Use these tips to help you make your caregiving finances smoother and more planned.
Here are some books to help you:
- Essential Resource Guide for Caregivers: Save TIME, Save MONEY, Save Your SANITY! (Third Edition 2018)
- The Complete Eldercare Planner, Revised and Updated Edition: Where to Start, Which Questions to Ask, and How to Find Help
- The Caregiver’s Toolbox: Checklists, Forms, Resources, Mobile Apps, and Straight Talk to Help You Provide Compassionate Care
- The Emotional Survival Guide for Caregivers: Looking After Yourself and Your Family While Helping an Aging Parent
- Caregiver’s Handbook: A Practical, Visual Guide for the Home Caregiver
Did we miss any helpful tips? Comment below! Don’t forget to check out our other family caregiving articles for more information.