Family caregiving may be a privilege, but it can also create great strain and stress. The cost of caregiving often leads to emotional and mental burnout, physical exhaustion and even financial strain. Make sure you’re protecting your own financial health while caring for your aging loved ones.
Be aware of the potential financial burden
For many people, family caregiving happens over time and grows incrementally. Perhaps you start driving your parents to their appointments and picking up groceries. Over time, those small errands and activities may turn into much more, and your finances can be negatively impacted if you don’t notice the increasing costs of caregiving. If a monthly grocery trip turns into a weekly trip, out of your own pocket, the expense can become significant. This doesn’t mean you should stop helping your parents, financially or otherwise; however, to protect yourself and your financial future, you need to know what you can afford, set clear limits, and stay within them.
“In addition to the financial challenges that many caregivers face, the financial aspects of caring for someone else may raise issues that are just not familiar,” explained Sonya Edwards for Guideposts.
Edwards, a financial professional herself, confessed that dealing with the financial costs and complications of family caregiving is overwhelming.
“I realized that I was exhausted and almost every area of my life was in disarray,” she said.
Protecting your financial health means more than keeping track of expenses; you also need to get help, take breaks, and give yourself time to keep your own finances organized.
Take steps to protect your financial health
Protecting your own financial health may seem like a lower priority than caring for your parents, especially if you’re in a crisis situation. A sudden illness, accident or decline in mental health may have thrown you into a caregiving situation with no preparation. As soon as possible, set aside a few hours to go over your own financial situation, and take steps to guard your financial well-being while still being there for your family:
- Start keeping track of caregiving expenses. Keep receipts of all purchases, and note caregiving-related items on your financial statements.
- Document changes in your caregiving situation that impact your finances. For example, if a parent has moved into your home, even temporarily, make note of the dates and the additional expenses incurred.
- Set up a separate account or credit card to pay for caregiving expenses.
- Get an accurate monthly cost of what you’re contributing financially as a family caregiver.
- Set a budget for what you can reasonably contribute without creating financial strain for yourself.
As you get a clear picture of the cost of caregiving, you can work with your parents to set up a plan for ongoing care. This will involve making decisions about how to simplify their finances, provide financial caregiving, consolidate assets, handle daily finances, and pay for long-term care needs.
Learn about tax breaks for caregivers
Family caregivers may qualify for some tax breaks and deductions, which can help reduce your financial load. The Child Tax Credit expansion of 2017 may allow you to claim a deduction for elderly parent care. Find out if you qualify with this tool from the IRS.
Two other potential tax deductions may be of use, according to financial writer and editor Constance Brinkley-Badgett for Credit.com. The dependent care credit may cover the cost of caregiving help, and if you’re financially responsible for your parents to some degree, you may qualify for a medical expense deduction.
In addition, a new Credit for Caring bill, if passed, could provide a significant tax credit for family caregivers who qualify. The best way to handle tax deductions is to keep clear records and work with a CPA or other tax professional.
Claim flexibility at work for caregiving
Family caregivers are usually juggling their job with a caregiving role. Fortunately, protections are in place to provide flexibility in your work while you’re caregiving. The Family and Medical Leave Act (FMLA) protects your right to take time off work (up to 12 weeks) without losing your health insurance or jeopardizing your position.
If FMLA isn’t a good option for you, talk with your employer about adjusting your schedule, working reduced hours, or taking time off when needed. Some states have programs to provide compensation for family members providing needed care. Check this chart to see what your state offers.
Receive compensation as a caregiver
While there are ways for a family caregiver to be compensated, it’s not a simple or clear-cut process. A few possibilities, with different requirements, are available:
- Some states have Medicaid programs to provide payment for caregiving, which could be used to pay a family caregiver. Check availability in your state.
- Long-term care insurance may provide compensation for a family caregiver. Talk to your insurance provider about options.
- Some states have programs that provide funding for family members as “Personal Care Assistants.”
While there’s always some research and form-filling required for tax credits, deductions and compensation, it’s worth the effort to protect your financial health.