How to prevent burnout and financial stress when caring for an aging parent or relative

An estimated 48 million Americans care for someone over the age of 18. Many of them are family members who are caring for an aging parent or elderly relative, and the value of such unpaid care is estimated at about $600 billion a year, according to a recent report. from AARP.

Daphne Taylor, Debbie Taylor and Shelia Miller know firsthand the cost of care. These sisters began caring for her 87-year-old mother after she suffered a stroke four years ago. Coincidentally, the three had all retired around the same time. Miller and Debbie Taylor live in Alexandria, Virginia while Daphne Taylor lives in Washington, DC

“We started by saying, ‘Okay, this is our life now,’ and we’re going to do trial and error,” said Debbie Taylor, now 63, recalling how the sisters stepped in to provide around-the-clock care to keep their mother awake. home.

“It was all a learning process,” said Daphne Taylor, 65, a retired project manager. She took the lead in creating spreadsheets to coordinate care, track medications, and track her mother’s progress. She says the ups and downs of her mother’s health and coordinating needed services have been frustrating. “I’ve always been able to get what needed to be done in the business world,” said Daphne.

Managing health care and long-term care expenses is also a challenge. Seeking to arrange care quickly and efficiently, the sisters paid for medical equipment, transportation, and supplies out of their own pockets that weren’t covered by Medicare or insurance, including a $5,000 hospital bed.

“We are trying to take care of our mother 24/7,” Debbie said. “There’s just no way in the world I have the time to try to figure this all out.”

Alternatives to being one’s mom’s primary caregiver are also expensive. According to a Genworth survey, the average cost for a private room in a nursing home is over $100,000 a year and more than $60,000 a year for a home health aide.

More from personal finance:
This age group is the one that is managing the greatest longevity the worst way
Household debt is high but was worse in 2008, the report finds
Three steps can help cover the rising costs of higher education

Meanwhile, family health care workers spend more than a quarter of their annual income on care costs, according to a 2021 AARP report. Many of them have stopped saving or taken on more debt to pay for these expenses.

Planning ahead for long-term care can reduce some of the financial strain, says Barry Glassman, a certified financial planner and CNBC FA Council member, but few families actually do it. “It’s difficult because an 80-year-old person doesn’t really know when they might need help, or what help they might need, if at all,” said Glassman, president of Glassman Wealth Services, with offices in Vienna, Virginia, and North Bethesda, Maryland.

Experts say taking these five steps can help prevent burnout and financial stress for many family health care workers.

Medicare and most health insurance plans generally don’t pay for long-term care. However, if an elderly individual is eligible for Medicaid or a U.S. veteran, there’s a good chance a family member could be paid to care for them.

Family caregivers can be paid by Medicaid, depending on their state of residence. The amount of funding can vary based on the needs of the older person and the average salary paid to home health aides in that state. Go to the American Council on Aging website at medicaidplanningassistance.org to find out if your loved one is eligible for a Medicaid long-term care program that pays family members.

In many states, ex-servicemen can manage their own long-term care, including choosing a caregiver, who can be a family member, and their military pension can also cover the costs of the care. The U.S. Department of Veterans Affairs’ Caregiver Support Program website can provide more information about how someone who cares for a military veteran can qualify for financial assistance.

Consider getting respite care for your loved one as well. While your options for allowing family members to get paid for care are limited, you may be able to get help by paying someone else to give you some respite. Check out state and federal funding, as well as private sources that may be available to help you pay for respite care on the ARCH Respite Network and Resource Center website.

Research other government health and disability programs in your state, as well as disease-specific and non-profit organizations that may offer financial resources to health care providers, on the Family Caregiving Alliance website.

If your parent or elderly relative lives with you and qualifies as a dependent, you may be eligible to claim them as a dependent on your federal income tax return.

You can deduct health care and medical expenses for you, your spouse, and your dependents that exceed 7.5% of your adjusted gross income on your federal tax return. Eligible expenses may also include home modifications, equipment, and transportation.

You may also be eligible for a dependent care tax credit for up to $3,000 in qualified care expenses for one person or $6,000 for two people.

You may be able to save even more money by taking advantage of a Health Savings Account, or HSA, and Flexible Spending Account, or FSA, offered by your employer and using that money to pay qualified medical, dental, and eye care bills for a dependent. .

You generally must be enrolled in a high-deductible health insurance plan to contribute to an HSA that allows up to $7,750 in contributions for a family in 2023. If you’re 55 or older, you can contribute an extra $1,000. Contributions are tax-free, earnings are tax-free, and you can withdraw the money tax-free even for qualifying medical expenses. You can contribute to a 2023 HSA through the tax deadline next April.

You may be able to contribute your pre-tax income to a health FSA and a dependent assistance FSA. A health FSA covers qualifying health care expenses. The contribution limit is $3,050 in 2023. A Dependent Care FSA allows you to set aside pre-tax money to cover home or day care expenses for a dependent of any age while you’re at work, up to $5,000 per household in 2023.

Consult with a tax professional to find out if these accounts, as well as other tax breaks, will provide financial relief for your care situation.

Find out if your employer offers other caring benefits, such as paid caring leave, mental health and counseling services, remote working, and flexible hours.

Emotional distress and burnout can add to the financial strain of caregiving. Connecting with other caregivers in a support group can ease or help you better manage many aspects of care. Look online for caregiver support groups that meet in your area or virtually.

A care manager can be another avenue of support you can take even before a crisis. “We can be their ‘black umbrella’, being there in the corner for them when it starts to rain,” said Anne Sansevero of the Aging Life Care Association. . “But they have it in their closet and they have everything organized.”

Care managers are often social workers or nurses who can help you create, evaluate and monitor a plan to help you care for your loved one. They can refer you and provide you with a list of resources in your area for home care, adult day programs, and other services. The rate can range from $125 to $350 an hour, Sansevero said.

Finally, a key strategy for saving money and reducing care-related emotional distress is planning ahead.

If your parent or older relative is reasonably healthy and under 70, consider helping them purchase long-term care insurance if they can’t afford the premiums on their own, advises CFP Ivory Johnson, Founder of Delancey based in Washington, DC. Wealth Management and CNBC FA Board Member.

Cash flow, family dynamics, and personal preferences are all factors to consider when considering long-term insurance. And make sure you understand the fine print. “You can absorb all the risk, you can transfer all of it, or you can do a little bit of both,” said Susan Hirshman, director of wealth management at Schwab Wealth Advisory and the Schwab Center for Financial Research. “There is no general rule.”

And discuss with older parents their wishes about who will make health care and financial decisions if they are unable to. Know where they keep the legal documents that spell out these wishes: power of attorney or health care power of attorney, living will or advance medical directive, and enduring power of attorney for their finances.

REGISTRATION: Money 101 is an 8-week learning course on financial freedom, delivered weekly to your mailbox.