By R. R. Fletcher, Contributing Writer
REGION – Americans spend roughly $190 billion per year on their care recipients for out-of-pocket expenses. Closer to home, according to AARP, over 844,000 Massachusetts residents help their loved ones as part-time or permanent caregivers.
Unfortunately, 67% of those who’ve incurred expenses for caregiving have had to reduce living expenses to provide care.
Common sacrifices by caregivers
A Northwestern Mutual study found that the sacrifices made by family caregivers are comprehensive and complex:
- 68% of family caregivers provided financial support.
- 63% have used savings or sold assets to provide care.
- 32% have stopped or reduced contributions to savings to provide care―termed an “indirect” financial cost of caregiving.
- 21% of them have borrowed money to provide care
And 34% of caregivers spend between 21% and 100% of their monthly budget on caregiving expenses.
Caregivers sell homes, move, and quit jobs to “do the right thing.” And these life changes and expenditures are rarely looked at as sacrifices. But, without a long-term plan, they can negatively affect the caregiver’s future.
Luckily, there are ways to protect assets and reduce out-of-pocket expenses―or eliminate them.
The importance of planning
- Plan before your loved one gets sick. We all say it, and everyone agrees it’s necessary. And then life takes over, and planning falls by the wayside. In fact, 48% of us have not yet planned for the inevitable.
- Review plans frequently―at least quarterly. Things change, and laws change. Even a change in medication or diagnosis can alter a loved one’s legal standing or ability to make sound financial decisions.
- Consider long-term care insurance before it’s needed. Medicare does not pay for extended care or assisted living except in particular circumstances. Also, not all long-term care policies are the same―they usually involve waiting periods and other considerations. And the older one is at the onset of the insurance, the more expensive the policy will be.
- Sell or rent a dormant property. At the very least, discuss a plan to make assets work harder for your loved one. Even a small amount of residual income can make a big difference later down the road.
- Investigate in advance specialty income. Additional benefit income for all veterans is available and can be substantial. But applying for these stipends can take up to two years, depending on the individual and the need. Also, many private company pensions have additional benefits. Don’t wait until a loved one is in the emergency room to ask. Advance research also applies to Medicare and state Medicaid. Most states have supplemental financial and care programs, and some, such as Massachusetts Mass Care Link, pay for a family caregiver, easing their financial burden. However, there are requirements.
- Establish separate savings or investment accounts. Designate them as solely for long-term care or caregiving responsibilities. Adult children can set up accounts planning for future needs. Or seniors can designate funds to be used only for their care expenses.
- Document a caregiver’s identity in a loved one’s medical records. Health care and social services systems often ignore caregivers for older adults. It is prudent to record decisions and support actions with documentation, including listing the primary caregiver’s name and contact information on all documents.
- Develop a caregiver relationship or contract. Even though the loved one is family, a partner in care agreement can benefit and protect both parties.
- Financial responsibility: Financial caregivers are, in a sense, fiduciaries with a responsibility to act in the best interests of their loved ones. If one uses a loved one’s money for anything, they are a financial caregiver. Many states have “senior” laws that protect loved ones.
- Keep careful records. As with medical decisions, proper documentation is encouraged and required when acting in a financial capacity. Keep financial records well-organized and current, including assets and debts, which streamlines all financial transactions.
All in the family
Life is hectic, and families are complicated. Family members can be distant geographically, personally, or right on your doorstep in times of need. But ultimately, families need to be aware of and agree upon a caregiver’s role.
When caring for a loved one, keeping family members in the loop while respecting a loved one’s privacy is difficult. One suggestion is to schedule a quarterly family meeting, including your loved one. Discuss openly things like current care, financial issues, caregiver concerns, and end-of-life wishes. And if necessary, record everyone’s responses.
There is no easy or perfect way to care for a loved one. Whether for a child or a parent, caregivers make sacrifices. But with a bit of planning, these loving gestures do not have to create enduring financial hardship.