Families and close friends are the most important source of support to older people and adults with a chronic, disabling or serious health condition. They already take personal responsibility for providing increasingly complex care to the tune of $470 billion (as of 2013). That figure, representing family caregivers’ unpaid contribution in dollars, roughly equals the combined sales of the four largest U.S. tech companies (Apple, IBM, Hewlett Packard and Microsoft, $469 billion) in 2013.
The out-of-pocket hit
Caregiving families feel great uncertainty and high anxiety about how they will continue to pay for long-term services and supports (LTSS) for a relative or close friend with increasing self-care needs. And for good reason. Family caregivers not only provide help with daily activities and carry out complex medical and nursing tasks, they also spend a considerable amount of money out of pocket for caregiving.
Out-of-pocket spending for caregiving generally refers to the purchase of goods and services on behalf of the person the family caregiver is helping. This can include housing, medical and medication premiums, copays, meals, transportation, mobility and other assistive devices, supportive services (such as adult day services and paid home care), and other goods and services.
A recent AARP research study finds that more than 3 in 4 family caregivers (78 percent) report incurring out-of-pocket costs as a result of caregiving. In 2016, family caregivers of adults on average spent nearly $7,000 on out-of-pocket costs related to caregiving, amounting to 20 percent of their total income. Among racial or ethnic groups, out-of-pocket spending for caregiving was highest among Hispanic/Latino family caregivers. They spent an average of $9,022, representing 44 percent of their total income in 2016.
Caregiving, therefore, can have a major impact on one’s current and future financial situation. A consensus report from the National Academies of Sciences, Engineering, and Medicine concludes that family caregiving for older adults poses substantial financial risks for some family caregivers. Especially vulnerable to financial harm are families caring for older relatives with significant physical impairments or dementia, low-income family caregivers, and those who live with or live far away from their older relative who needs care.
Family caregivers can ill afford to shoulder more of the human and financial costs of caregiving.
Burdened by these expenses, family caregivers may even need to decrease spending on themselves, and that can undermine their health and well-being and put them in greater financial peril. The new AARP research shows that as a result of out-of-pocket costs, family caregivers of adults report dipping into savings, cutting back on personal spending, saving less for retirement, taking out loans to make ends meet, and forgoing treatment for their own health problems to cover caregiving costs.
Most family caregivers today work at a paying job, and they make up an increasing proportion of the labor force. Yet family caregivers may lose income, Social Security and other retirement benefits, health insurance, and career opportunities if they have to cut back on work hours or leave the workforce because they cannot afford to pay for outside help for their relative.
These financial burdens, as well as the emotional and physical strains of unpredictable and prolonged LTSS, are beyond the capacity of many caregiving families.
While the unpaid contributions of family caregivers fill big gaps in health care and LTSS, policies that view LTSS as only a personal responsibility do not work anymore. The degree to which our society cares for its older citizens and persons with disabilities is one of the most consequential issues of our time as our population ages and we face a growing care gap.
It is time to provide access to dignified, compassionate and affordable care. Better financial relief is sorely needed to help address the financial challenges of caregiving. This is the right thing to do and a social and economic imperative.
Lynn Friss Feinberg is a senior strategic policy adviser for the AARP Public Policy Institute. She has conducted policy analysis and applied research on family caregiving and long-term services and supports for more than 30 years.