November is National Caregivers Appreciation Month. Throughout the month, we recognize the incredible work they do each and every day. It’s no secret that in-home care can be expensive, and to save costs, many Americans are turning to caring for loved ones themselves. However, staying at home isn’t always the affordable option. Here’s what you need to know.
Caregiving never stops and it’s crucial when a person reaches an older age that is in need of assistance. According to insurance company Genworth’s 2020 survey on the cost of long-term care, the national average bill for a home health aide is $4,576 a month which has many desperate family members becoming caregivers themselves.
Older Americans determined to stay in their own homes are likely to need help at some point — for a few hours a day or 24/7 — with household chores, nursing services and personal care. And with the 65+ population projected to grow from 56 million in 2020 to 73 million in 2030, the need for home health care will only increase.
Many are also hesitant to move a loved one to a residential care facility for many reasons. Some include the concern about the quality of care they might receive, or the expenses associated with long-term care. Here’s a look at four costs of caregiving that should be considered before committing to becoming the full-time caregiver for a loved one.
In 2021, caregivers spent approximately 78% of their income on out-of-pocket expenses for caregiving purposes. COVID-19 had a significant role in making caregiving more difficult and spending more money at home while being in lock down.
One-fifth of caregiver spending went towards direct payments for healthcare providers, hospitals, therapists, medical equipment and devices, in-home care, and adult day care. This is especially difficult for someone who has reduced their hours in order to take care of their loved ones, or begins to work part time.
Today’s caregivers are more likely to be employed than in the past. Approximately half of all caregivers to older adults were employed either part- or full-time. Of those caregivers who worked, 69% were employed at least 35 hours weekly. Caregivers spend an average of 24.4 hours per week providing care, and nearly 1 in 4 spends 41 hours or more per week providing care.
It’s not surprising that caregivers often have to take time off, either paid or unpaid, while some have to reduce their work hours. Researchers, advocates, and observers have raised concerns that the demands of caregiving negatively impact their ability to stay in the workforce. This jeopardizes their income, job security, personal retirement savings, Social Security, retirement benefits, career opportunities, and overall long-term financial well-being.
Loss of Savings and Retirement Funds
Family caregiving is rewarding, but most people are unaware of the impact that care has on your life, not just financially but emotionally, socially, and physically. Caregivers have to cut back on personal spending in order to meet caregiving expenses. Approximately one-third of caregivers say they’ve also had to dip into their savings in order to cover caregiving-associated out-of-pocket costs.
One of the reasons why caregiving is so expensive is due to them spending more time providing care than they anticipated. The average duration of a caregiver’s role is four years, with only 30% of caregivers providing care for less than a year. Nearly 25 percent of caregivers provide care for more than five years and 15 percent provide care for 10 or more years.
It’s important to not lose sight of a retirement account while caregiving. When people are faced with having to cut their hours and compromise work, they forfeit their pay and benefits. This has them miss out on 401(k) matching contributions as well as reduced savings and investments. Fortunately, there are plenty of great resources available to help you plan for retirement.
- Start by utilizing retirement calculators to see where you’re at and how much you’ll need once you reach retirement age.
- Add up your source of retirement income, (social security, employer pensions, 401(k) savings, part-time work)
- Look at your medicare options, as healthcare is the biggest cost of caregiving
Physical and Mental Strain of Caregiving
Not only do costs for caring for a loved one put financial strain on caregivers, but caregiving also has an impact on the physical health of caregivers.
According to The National Center for Biotechnology Information, the associations between physical and psychological health and being an informal caregiver are well established:
Factors linked to caregiver’s physical health include the care recipient’s behavior problems, cognitive impairment, and functional disabilities; the duration and amount of care provided; vigilance demands (such as constantly having to watch a person with Alzheimer’s disease to prevent self-harm); and caregiver and patient co-residence. Feelings of distress and depression associated with caregiving also negatively affect the caregiver’s physical health.
Caring for a patient with dementia is more challenging than caring for a patient with physical disabilities alone. People with dementia typically require more supervision, are less likely to express gratitude for the help they receive, and are more likely to be depressed. All of these factors have been linked to negative caregiver outcomes.
Greater degrees of depression and stress and low ratings of subjective well-being in caregivers are consistently associated with the following factors:
- the care recipient’s behavior problems
- the care recipient’s cognitive impairment
- the care recipient’s functional disabilities
- the duration and amount of care provided
- the caregiver’s age, with older caregivers being more affected
- the relationship between caregiver and care recipient, with a spousal relationship having a greater effect
- the caregiver’s sex, with females being more affected
As is the case with physical health effects, caregiving for someone with dementia is associated with higher levels of distress and depression than caring for someone who doesn’t have dementia.
Getting the Help You Need
Those without long-term care insurance often start out relying on an unpaid family caregiver, but eventually many need to turn to paid help. And that can be expensive, too: According to insurance company Genworth’s 2020 survey on the cost of long-term care, the national average bill for a home health aide is $4,576 a month. To pay for these bills, many cobble together a care budget from multiple sources, according to AARP, among them:
- Investments and savings
- Life insurance policies that can be used for qualified home-care expenses through cash value or an accelerated death benefit
- Borrowing, for example by taking out a reverse mortgage or home equity loan
But these often-risky resources aren’t a long-term solution. There are other resources out there to think about…
- Government help: If you don’t have insurance, Eldercare Locator is a public service of the U.S. Administration on Aging that connects you to services for older adults and their families. You can also check the National Council on Aging’s Benefits Check Up to find out what programs you may qualify for.
- Medicaid: All 50 states and the District of Columbia offer self-directed Medicaid services for long-term care. Benefits, coverage, eligibility and rules differ from state to state, but in some states this can include hiring a family member to provide care.
- Original Medicare can cover the full cost of medically necessary home health care on a limited basis for beneficiaries who are unable to leave home without assistance. That could include:
- Skilled nursing care
- Occupational, physical and speech therapy
- Home health aide services, if the recipient also needs therapy or skilled nursing
- Taxes: If you pay for at-home home care services, the IRS may let you deduct the cost from your annual taxes.
- Veterans Help: Veterans have four plans that they may qualify for: Veteran Directed Care, Aid and Attendance (A&A) benefits, Housebound benefits and Program of Comprehensive Assistance for Family Caregivers.
- Long-Term Care Insurance: If your loved one has long-term care insurance, it probably covers some costs for home health care and personal care services. However, not all policies extend that coverage to paying spouses or other family members living in the home. Click here to complete The American Association for Long-Term Care Insurance’s online questionnaire and be connected with an expert in your area to find out whether you can health qualify for long-term care insurance and what coverage costs.
It’s important for caregivers to know their options when it comes to spending on healthcare and saving for retirement. If you’re considering getting in-home elderly care, consider the above criteria to see what costs to expect and the different payment options available for this type of care.
At Johnson Wealth Management, we offer financial advice and plans to help safeguard your retirement. If you are a caregiver that needs advice on protecting your retirement, or an individual concerned about healthcare costs in your retirement years, contact us here today.
Whether you are a professional caregiver or in-home family help, this National Caregivers Appreciation Month, we’d like to say a huge THANK YOU for the invaluable support you provide every day.
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