The Costs of Being a Caregiver
Becoming the caregiver for a sick or disabled loved one can be stressful physically, emotionally, mentally – and financially.
Sixteen percent of the U.S. civilian population were eldercare providers from 2013-2014, according to data from the U.S. Bureau of Labor Statistics. These American adults provide assistance to elderly and disabled adults in their community without any compensation. The costs associated with being a home care caregiver run an average of $20 an hour, according to Genworth’s 2015 Cost of Care Survey.1
Becoming a caregiver, either part-time or full-time, can dramatically impact your finances. Even assuming that the person receiving care has sufficient income streams, becoming a caregiver could require you to reduce your work hours or quit working entirely. If the person requiring care does not have adequate income, you may need to help by covering expenses or taking that person into your home. Social Security, Medicare and Supplemental Security Income (SSI) may provide some help, but qualifying can be difficult and complicated. For example, having too many assets in a disabled child’s name can limit his or her eligibility for SSI.
Many people mistakenly assume that Medicare or Medicaid will pay for nursing home care. Unless your family member is indigent, he or she won’t qualify for Medicaid. Medicare, which covers retirees over age 65, covers only the highest level of nursing home care – skilled care, provided by trained medical personnel around the clock – and only if your loved one goes from a three-day hospital stay directly to the nursing home. Even then, the payments are limited.
Long-term care insurance can provide coverage for nursing home and home health needs, but it must be in place before the insured needs those services. Many individuals purchase a long-term care policy when in their 50s, although some financial professionals recommend doing so earlier. Pricing for long-term care policies varies with the age and health of the individual. If there’s a question of ability to pay out of pocket for years of nursing home care, you may want to discuss long-term care insurance with your spouse, your parents and anyone else for whom you may wind up responsible.
You and your spouse may also want to consider disability insurance. Thanks to advances in medicine, conditions that once led to death now often lead to disability. The individual and family wind up in a Catch-22 – losing the income that person would have produced, while having the same, or greater, living costs for that person. Social Security does provide income to permanently disabled individuals, but those payments rarely come close to replacing the wages or salary that person earned before becoming disabled.
Financial issues related to caring for an elderly or disabled loved one can be complicated. You may have time to plan as a family member ages or a disease progresses, or you may not if an accident suddenly renders a loved one unable to work or live independently.
1The Genworth 2015 Cost of Care Survey
Securities offered through Securities America, Inc. Member FINRA/SIPC. Jose R. Rodriguez, Financial Consultant. Advisory Services offered through Securities America Advisors, Inc. An SEC Registered Investment Advisor, Jose R. Rodriguez, Investment Advisor Representative. Rodriguez Financial Strategies LLC and the Securities America companies are unaffiliated. Written by Securities America for distribution by Jose “Rafi” Rodriguez, Retirement Income Certified Professional®. SAI# 1104310.2 Securities America and its advisors do not provide tax advice. Please consult with your tax professional regarding your individual tax situation.