Caregiver Debt 101:

The Cost of Caring

Caregiving has a cost. According to a recent report by AARP, In 2021 the estimated economic value of family caregivers’ unpaid contributions in the United States alone was approximately $600 billion. These 38 million family caregivers provided an estimated 36 billion hours of care to an adult with limitations in daily activities. 

Caregiving is a sacrificial role that often comes with more expenses than can be forecasted. According to US News & World Report,  almost 50% of caregivers say their efforts have negatively impacted their finances:  ”Many feel they have no choice but to withdraw money from savings, take on debt, pay bills late or cut back retirement contributions.“  Whether you offer care personally or you’re supervising your relative’s stay at a nursing home, here are some ways to keep your finances safe while your loved one is in your care. 

1. Don’t just Sign on the Dotted Line:
Never Sign Anything Without Proper Legal Advice

One critical way to avoid facing a financial disaster or falling into a debt trap is to ensure you seek legal advice before signing documents. This is particularly true when it comes to dealing with nursing homes and other forms of care. If you feel pressured or rushed to sign an agreement, or the representative helping you claims there is no time for you to review the document you are about to sign with a lawyer, that in and of itself is a red flag and a clue for you to step back and slow down the process. Any upstanding agreement can withstand the scrutiny of a close read.

There are also certain terms you should be mindful of when reading contracts such as “responsible party” and “joint and several liability.” The former tends to bind you to covering payments if some aspects of the agreement aren’t handled correctly while the latter immediately ties you to the financial responsibility along with your loved one or client. Always have a full understanding of the financial ramifications of any document before agreeing to sign it.

2. Wishy Washy Won’t Work:
Be Clear on Your Financial Role as You Offer Care

The same afore-mentioned study also states that “on average, family caregivers spend roughly a quarter of their incomes in out-of-pocket costs for caregiving activities.” When you are offering care, you don’t necessarily need to do it at your expense. Have a clear discussion with your loved one or client regarding finances. In most cases, you may receive legal permission to handle the funds of the person you are caring for by way of a power of attorney. 

As the person legally empowered to handle your client or loved one’s finances, there are scenarios where you can be liable and experience caregiver debt. Be sure to seek the guidance of a legal expert to avoid potential pitfalls.

3. Don’t Leave Money on the Table:
Seek Available Opportunities for Compensation

Often, loved ones aren’t financially stable and you may end up leaning on your resources. There are entities and policies that are in place to support your efforts.  Getting paid to care for your loved one at home through Mass Care Link can help. You can also explore government assistance programs, nonprofit organizations and insurance policies to uncover compensation or financing. 

• Tax Breaks: Dependant Care Tax Credit and medical and healthcare deductions are just a few ways to save.
• Government Assistance Programs: Programs tied to Medicare, state programs, federal assistance and veterans affairs all offer support for which you may be eligible.
• Nonprofit Organizations: Local elder care and community organizations can offer financial programs and legal advice.
• Adult Foster Care: Mass Care Link can help you receive a monthly payment for caring for your loved one.

Caregivers in the United states are spending an average of $7,000 per year out of pocket essentials such as housing, health care and transportation. Don’t forget to protect your financial future while caring for a loved one.

Looking for more info on caregiver finances like how to cut costs and increase savings? Visit the Mass Care Link Support Center for these and other resources.