An estimated 48 million Americans care for someone over the age of 18. Many of them are family members caring for an elderly parent or older relative, and the value of this unpaid care is estimated at around $600 billion a year, according to a recent report. by the AARP.
Daphne Taylor, Debbie Taylor and Shelia Miller know firsthand the cost of care. These sisters began caring for their 87-year-old mother after she suffered a stroke four years ago. Coincidentally, all three retired at the same time. Miller and Debbie Taylor live in Alexandria, Virginia, while Daphne Taylor lives in Washington, DC
“We started off saying, ‘Okay, this is our life now,’ and we’re going to do trial and error,” said Debbie Taylor, now 63, recalling how the sisters stepped in to provide round-the-clock care to keep their children. mother at home.
“It was all a learning process,” said Daphne Taylor, 65, a retired project manager. She took the lead in creating worksheets to coordinate care, monitor medications, and watch her mother’s progress. She says the ups and downs of her mother’s health and the coordination of needed services have been frustrating. “I’ve always managed to do what needed to be done in the working world,” said Daphne.
Sisters Shelia Miller, Debbie Taylor and Daphne Taylor, from the Washington, DC area, care for their mother, Ernestine Taylor.
Managing health-related and long-term care expenses is also a challenge. Trying to provide health care quickly and efficiently, the sisters paid out of pocket for medical equipment, transportation and supplies that were not covered by Medicare or insurance, including a $5,000 hospital bed.
“We are trying to take care of our mother 24/7,” Debbie said. “There’s just no way in the world you’re going to have the time to try to figure all this out.”
The alternatives to being the mother’s primary caregivers are also expensive. The average cost of a private room in a nursing home is over $100,000 a year and is over $60,000 a year for a home health aide, according to a Genworth survey.
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Meanwhile, family caregivers spend more than a quarter of their annual income on care costs, according to a 2021 report from the AARP. Many of them stopped saving money or went into more debt to pay for these expenses.
Planning ahead for long-term care can take some of the financial pressure off, says Barry Glassman, certified financial planner and member of CNBC’s FA Council, but few families actually do it. “It’s difficult because a person in their 80s doesn’t really know when they might need help, or what help they might need, if at all,” said Glassman, who is president of Glassman Wealth Services, with offices in Vienna, Virginia. . and North Bethesda, Maryland.
Experts say following these five steps can help prevent burnout and financial stress for many family caregivers.
1. Seek help from government and non-profit organizations
Medicare and most health plans generally don’t pay for long-term care. However, if a senior is eligible for Medicaid or a US veteran, there is a good chance a family member will be paid to care for them.
Family caregivers may be paid by Medicaid, depending on their state of residence. The value of resources may vary according to the needs of the elderly and the average salary paid to home health aides in that state. Visit the American Council on Aging website at medicaidplanningassistance.org to find out if your loved one is eligible for a Medicaid long-term care program that pays family members.
In many states, former service members can manage their own long-term care, including choosing a caregiver, who can be a family member, and their military pension can also cover care costs. The US Department of Veterans Affairs Caregiver Support Program website can provide more information on how a caregiver of a military veteran can qualify for financial assistance.
Also consider getting respite care for your loved one. While options for family members to be paid for care are limited, you may be able to get help paying someone else to give you a break. Check state and federal funding, as well as private sources that may be available to help you pay for respite care, on the ARCH Respite Network and Resource Center website.
Research other government health and disability programs in your state, as well as nonprofit and disease-specific organizations that may provide funding for caregivers, on the Family Caregiving Alliance website.
2. Take advantage of tax breaks
If your parent or elderly relative lives with you and qualifies as a dependent, you may be eligible to claim them as a dependent on your federal income tax return.
You may deduct health and medical expenses for yourself, your spouse and your dependents that exceed 7.5% of your adjusted gross income on your federal income tax return. Eligible expenses may also include home modifications, equipment, and transportation.
You may also qualify for a dependent care tax credit for a percentage of up to $3,000 in skilled care expenses for one person or $6,000 for two people.
3. Ask about employer benefits that can help
You can save even more money by taking advantage of a Health Savings Account, or HSA, and Flexible Spending Account, or FSA, offered by your employer and using that money to pay for eligible medical, dental, and eye care expenses for a dependent. .
Generally, you need to be enrolled in a health insurance plan with a high deductible to contribute to an HSA that allows up to $7,750 in contributions for a family in 2023. If you are age 55 or older, you can contribute an extra $1,000. Contributions are tax-free, earnings are tax-free, and you can also withdraw tax-free cash for qualifying medical expenses. You can make contributions to a 2023 HSA through the tax deadline next April.
You can contribute your pre-tax income to a health FSA as well as a dependent care FSA. A health FSA covers eligible health care expenses. The contribution limit is $3,050 in 2023. An FSA for Dependent Care allows you to save pre-tax money to cover household or childcare expenses for a dependent of any age while you are at work, up to $5,000 per family in 2023.
Consult an accountant to find out if these bills, as well as other tax breaks, will provide some financial relief for your care situation.
Find out if your employer offers other care benefits, such as paid time off for caregiving, mental health and counseling services, remote work and flexible hours.
4. Find support from a care group or specialist
Emotional stress and burnout can increase the financial pressure of caregiving. Connecting with other caregivers in a support group can alleviate or help you better manage the multifaceted aspects of caregiving. Search online for caregiver support groups that meet in your area or virtually.
A care manager can be another form of support that you can engage even before a crisis. “We can be their ‘black umbrella,’ being there in the corner for them when it starts to rain,” said Anne Sansevero of the Aging Life Care Association. . “But they have it in the closet and they have it organized.”
Care managers are often social workers or nurses who can help create, assess and monitor a plan to help you care for your loved one. They can make referrals and provide a list of resources in your area for home care, adult day programs, and other services. The rate can range from $125 to $350 an hour, Sansevero said.
5. Plan ahead for costs and decision making
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Finally, a key strategy for saving money and reducing the emotional stress of care is to plan ahead.
If your parent or older relative is reasonably healthy and under 70, consider helping him buy long-term care insurance if he can’t pay premiums on his own, recommends CFP Ivory Johnson, founder of Delancey , based in Washington, DC Wealth Management and member of the CNBC FA Board.
Cash flow, family dynamics and personal preference are all factors to consider when looking at long term insurance. And make sure you understand the fine print. “You can absorb all the risk, you can transfer all the risk, or you can do a little bit of both,” said Susan Hirshman, director of wealth management at Schwab Wealth Advisory and the Schwab Center for Financial Research. “There is no general rule.”
And discuss with older parents your wishes about who will make financial and health decisions if they cannot. Find out where they keep the legal documents that specify those wishes, power of attorney or power of attorney for health care, living will or advance medical directive, and durable power of attorney for your finances.
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