The Costs of Being a Caregiver
Becoming the caregiver for a sick or disabled loved one
can be stressful physically, emotionally, mentally – and
The National Alliance for Caregiving (NAC) and the American Association of Retired Persons (AARP)
estimate that 44 million American adults provide assistance to elderly and disabled adults in their
community without any compensation. The market value of that care exceeds $306 billion annually,
almost twice the amount spent on nursing home care and home health care costs combined.1
Another study done at Georgetown University in 2004 calculated that of adults who receive long-term
care at home, 78 percent get all of their care from family and friends (unpaid), 14 percent from a
combination of family and paid assistance, and 8 percent from paid care alone. The National Women’s
Health Information Center estimates that two-thirds of unpaid caregivers work a full- or part-time job,
most are women, and most are 35-64 years old.
Becoming a caregiver, either part-time or full-time, can dramatically impact your
finances. Even assuming that the person receiving care has sufficient income
streams, becoming a caregiver could require you to reduce your work hours or
quit working entirely. If the person requiring care does not have adequate
income, you may need to help by covering expenses or taking that person into
your home. Social Security, Medicare and Supplemental Security Income (SSI)
may provide some help, but qualifying can be difficult and complicated. For
example, having too many assets in a disabled child’s name can limit his or her
eligibility for SSI.
Many people mistakenly assume that Medicare or Medicaid will pay for nursing
home care. Unless your family member is indigent, he or she won’t qualify for
Medicaid. Medicare, which covers retirees over age 65, covers only the highest
level of nursing home care – skilled care, provided by trained medical
personnel around the clock – and only if your loved one goes from a three-day
hospital stay directly to the nursing home. Even then, the payments are limited.
For the first 20 days, Medicare pays 100 percent. For days 21-100, the
individual pays $97 per day. Beyond that, the individual pays the full cost.
Long term care insurance can provide coverage for nursing home and home
health needs, but it must be in place before the insured needs those services.
Many individuals purchase a long term care policy when in their 50s, although
some financial professionals recommend doing so earlier. Pricing for long term
care policies varies with the age and health of the individual. If there’s a
question of ability to pay out of pocket for years of nursing home costs, you may
want to discuss long term care insurance with your spouse, your parents and
anyone else for whom you may wind up responsible.
You and your spouse may also want to consider disability insurance. Thanks to
advances in medicine, conditions that once led to death now often lead to
disability. The individual and family wind up in a Catch -22 – losing the income
that person would have produced, while having the same, or greater, living
costs for that person. Social Security does provide income to permanently
disabled individuals, but those payments rarely come close to replacing the wages or salary that person
earned before becoming disabled.
Financial issues related to caring for an elderly or disabled loved one can be complicated. You may have
time to plan as a family member ages or a disease progresses, or you may not if an accident suddenly
renders a loved one unable to work or live independently.
1 Arno, Peter S., “Economic Value of Informal Caregiving,” presented at the Care Coordination and
the Caregiving Forum, Dept. of Veterans Affairs, NIH, Bethesda, MD, January 25-27, 2006.
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