Elder Care and Money: A Shock for Many Family Caregivers

Today, most long-term care doesn’t happen in an institution, rather it takes place in our homes. This is one reason that family caregivers are a rapidly growing demographic across the U.S. It is estimated that 95% of community-dwelling seniors today rely on help from unpaid family or friends. Family caregivers are providing high levels of care to loved ones and juggling other competing priorities in their lives. This makes family caregiving a pretty overwhelming experience. 

Care needs change, often, and many times in ways that are out of control of the caregiver. There are countless tasks that need to be completed daily, taking considerable time out of the caregiver’s schedule. It’s all enough to make most caregivers throw up their hands. But then there’s the expense of elder care. The fact that caregiving requires so much out-of-pocket spending is often a major surprise to caregivers, and a big contributor to feelings of overwhelm and stress. 

This month, we partnered with Elder Care Solutions to highlight key topics related to the costs of care. They work with families across the nation to tackle the financial strain of elder care and guide them towards a more financially positive caring and aging experience. 

Let’s start by taking a look at the realities of care costs. Here’s a breakdown of the types of care and their costs so you can make informed decisions about the level of care that’s right for your elderly loved one(s). 

The Realities of Care Costs

Type of care	What it is	Costs and coverage options
Home Care / Homemaker Services / Home aides	Help when you need an extra hand.  Home care staff typically includes certified nursing assistants to support individuals staying at home.  Usually available 24-hours a day and 7-day a week, including holidays Will create tailored care plans for occasional or ongoing assistance. Services can be scheduled in increments (i.e. 2-hour block up to 24 hours) Types of care tasks provided:  Laundry Dog walking Companionship Taking out garbage Making bed Changing linens Organizing/cleaning closets Meal preparation Transportation for errands, shopping, doctor appointments Bathing  Dressing  Hygiene	National average hourly rate is $26/hour Covered by insurance policy: SOMETIMES   Covered by Medicare: NO (unless you are also getting skilled nursing care) Covered by Medicaid: YES Covered by VA benefits:
Adult Day Care	Daytime care for loved ones that can not stay home alone safely.  Usually available for a 12-hour window during the day (i.e. 7AM to 7PM). Have professional staff to assist with various health needs during the day.  Enrichment activities are offered including music, group outings, art, exercise, games, etc. Provide meals and snacks during the day.  Individualized care plans. Most have support groups for family caregivers. Types of care tasks provided:  Medication management Memory stimulation Meals  Health assessments Health monitoring Dementia care  Post-hospitalization recovery care  Physical, occupational, and speech therapy	National average: $78 per day Covered by insurance policy: SOMETIMES   Covered by Medicare: Most often NO Covered by Medicaid: YES Covered by VA benefits: YES
Home Health	Comprehensive care for individuals with the aim to get better from their illnesses.  Available 24-hours a day and 7-days a week.  Professional nursing and therapy services. Individualized care plans.  Many provide family caregiver and patient education.  Types of care tasks provided:  Medication management Pain management Care coordination Wound care Nutrition management Injections	National average: $27 per hour Covered by insurance policy: SOMETIMES   Covered by Medicare: Covers physical, occupational, and speech therapies at home. Covered by Medicaid: YES Covered by VA benefits: YES
Hospice	Comprehensive care for individuals facing life-limiting illnesses.  Available 24-hours a day and 7-days a week.  Care is overseen by a physician and comes with a healthcare team including nurses, social worker, dietitian, physical therapists, occupational therapists, respiratory therapists, speech therapists, pharmacists, etc.  Many offer additional therapies such as music, art, pet, and bereavement. Types of care tasks provided: Medication management and monitoring Patient and caregiver education Pain management Skilled nursing Tube feedings and enterals IV medication administration  Comfort care	National average: $160-$200 per day for Level 1 in-home care 2-3 days a week. Covered by insurance policy: SOMETIMES   Covered by Medicare: YES Covered by Medicaid: YES, if the physician deems “terminally ill”. Covered by VA benefits: YES
Assisted Living	Personalized care for elderly loved ones in a residential living situation.  Provides 24/7 care, but only to a certain level.  If a resident needs higher levels of care, home health agencies can come in and provide nursing care, for an additional cost.  Care is provided by professional staff. Types of care tasks provided:  Medication management Assistance with bathroom, dressing and grooming Housekeeping Meal preparation Laundry Transportation services  Socialization Memory care in some	National average: $4,500 per month Covered by insurance policy: NO  Covered by Medicare: NO Covered by Medicaid: May cover specific services within the assisted living facility. Covered by VA benefits: Some under the Aid and Attendance benefit.
Nursing Home	A nursing home provides long-term residential care by licensed practical nurses and nurse aides under the supervision of a registered nurse. The goal is to provide a safe, comfortable and caring environment for people who are unable to live independently. Types of care tasks provided:  Dressing and bathing Meals Physical therapy Occupational therapy Speech therapy	National average: $7,900 per month for semi-private room$9,000 per month for private room Covered by insurance policy: Possible Covered by Medicare: Only if at the skilled nursing level of care. Covered by Medicaid: YES, for certain services within the nursing home. Covered by VA benefits: YES
Skilled Nursing Care	Skilled nursing care is residential care provided by trained registered nurses in a medical setting under a doctor’s supervision. It’s similar to the level of nursing care you get in the hospital.  Many times patients go from the hospital to a skilled nursing facility to continue recovering after an illness, injury or surgery.  The goal is to get well enough to go home. Types of care tasks provided:  24/7 nursing care Meals Bathing Physical therapy Occupational therapy Speech therapy Wound care IV therapies Injections	National average: $7,900 per month for semi-private room$9,000 per month for private room Covered by insurance policy: YES Covered by Medicare: YES, typically for 100 days. Covered by Medicaid: YES Covered by VA benefits: YES
Palliative Care	Specialized medical care for serious illnesses.  The focus is on relief of symptoms and quality of life. Not necessarily just for dying patients. Can be provided alongside curative care. Care is provided 24/7 by specially trained doctors, nurses, and other specialists.   Types of care tasks provided:  Pain management Management of depression and anxiety Management of nausea Emotional support Spiritual support	Covered by insurance policy: YES Covered by Medicare: YES, typically for 100 days. Covered by Medicaid: YES Covered by VA benefits: YES

Let’s look now at some common financial concerns for caregivers. As we talk about each, we provide a tip to help you start considering how this might apply to your situation. 

Financial Concern 1: Medicaid 

As you can see from the chart above, having Medicaid makes paying for care a whole lot easier. Medicaid is society’s safety net for providing long-term care service when we’ve outlived our financial resources. Problem is, most people today ARE outliving their financial resources! 

Many families start thinking about Medicaid eligibility when they see care costs piling up. So why doesn’t everyone use Medicaid to cover their care needs? Well, it’s really tricky. Here are some major reasons why. 

1. There’s a lot of paperwork required to tap into this benefit. Not just a lot, but also fairly complicated to complete. So, it’s best to assume Medicaid could be a real need in the future and plan for eligibility early. Most families wait until the need has already arrived and then realize significant consequences for having waited that long. 
2. The qualifications are scary. It is entirely possible to be flat broke, needing care, and still be ineligible for Medicaid according to their rules. Medicaid acceptance is based on financial eligibility. This means that total assets cannot exceed the criteria, which is around $4,000 for a married couple. Checking and savings accounts, retirement accounts, annuities, and cash-value life insurance plans are all counted, to name some. This makes eligibility a really difficult decision for families, especially when they’ve worked hard to save and want to leave a legacy. There are tactics, however, for families to become eligible and protect assets. 
3. There are penalties. There is a 5-year lookback period for Medicaid applicants related to any prior gifts made by the applicant. These will be penalized or could result in Medicaid denial. The rationale is that since the benefits are need-based, the applicant’s gifts made prior to application should be considered as countable assets. One guarantee for everyone applying for Medicaid is the surfacing of any mistakes. They will reveal themselves. Better to learn about them earlier, when a plan can be put into place to mitigate them, then they pop up during a worse time.

Tip: Becoming eligible for Medicaid is separate from using it. The best plan is one where timing is the top concern. WHEN will funds hit the critical figure so it’s time to pull the trigger on using Medicaid? Your best planning partner here is an attorney specializing in Medicaid eligibility. It is common for your first consultation to be free, so tap into that resource soon.

Financial Concern 2: Taxes: ‘Tis the season! What family caregivers should know about taxes.

When it comes to long-term care and taxes, carefully consider the following. Benefits from long-term care insurance are generally non-taxable and the premiums are deductible. Although, state laws may differ, so best to learn as soon as you start using a policy. Additionally, pay attention to previous non-taxed income years, as well as when certain expenses qualify as deductible. The key here, recruit help from a tax expert. 

The good news is there are tax benefits! 

1. The 2017 federal tax law expanded the Child Tax Credit (CTC) to allow taxpayers to claim up to $500 as a nonrefundable “Credit for Other Dependents,” including elderly parents. There are some criteria that have to be met. 
2. Care costs are normally deductible, but only to the extent that they exceed 7.5% of your Adjusted Gross Income. 
3. You may use Flexible spending accounts (FSAs) and health savings accounts (HSAs) to pay your dependent’s medical bills, copays, insurance deductibles, over-the-counter medical supplies, personal protective equipment, and even for some treatments not covered by insurance. Remember, if you pay using an FSA or HSA, you cannot take a tax deduction for that bill as a medical expense.
4. For the 2021 tax year, you can claim a portion of up to $4,000 in caregiving costs for one person and up to $8,000 for two or more. This tax credit does not require that your loved one qualify as your dependent in certain circumstances. But there are rules for when you can claim it.

Tip: Tax law is constantly changing, obtaining professional tax advice, preferably from a CPA is critical. If possible, one who works regularly with caregiving tax issues. You’ll find these professional fees will pay for themselves twice; often in measurable tax benefits. Check out the AARP article about taxes HERE to dive deeper into the criteria for tax benefits above.

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Financial Concern 3: Getting Paid: With so many family caregivers providing 21+ hours a week on care tasks, it’s easy to wonder if this could be a job you can get compensated for. Can a family caregiver get paid for the care they provide?  

1. Some Medicaid-funded programs are available to pay family caregivers.
2. Most Long-Term Care insurance policies will permit the family member who has earned certain credentials to be paid at market rates.
3. The VA pension benefit for wartime veterans has a program under which family caregivers can be paid.

Tip: Because most family caregiver paid programs exist either through or in conjunction with Medicaid, your residential state will impact what is available to you. The Family Caregiver Alliance has a Services by State tool. After finding your state, check the “Caregiver Compensation” section to see what is available. 

While finances can be a shock when caring for loved ones, there is empowerment in knowing some solutions. You can start down a more empowered path when you start accessing tools, like the CircleOf app, and resources to overcome your unique care challenges.