Making Ends Meet When Money is Tight

Family Caregiver Alliance

According to an AARP Public Policy Institute online publication that details the growing contributions and costs of family caregiving, family caregivers provide an estimated $450 billion worth of unpaid care annually to elderly, disabled or ill loved ones (Valuing the Invaluable: 2011 Update). Caregiving is already stressful, yet many family caregivers also find themselves struggling to figure out how their loved one will afford both long-term care and day-to-day necessities like the phone or utility bill each month. Here are some tips that other families have found helpful:
Seniors Managing Finances
1. Budget the costs in detail
First, take a look at your last year’s worth of expenses for home care, medications, medical supplies and household expenses. Based on this information, outline a budget that includes the total monthly cost of living for your loved one. This budget may have to be revised every six months to a year, depending on the types of services they need or where they are living.

2. Account for income sources
Next, look at the incoming dollars like pension or Social Security benefits. If monthly incoming funds are not enough to cover the expenses in the budget, consider utilizing money from other assets (such as non-monthly income generating investments, annuities or stocks).  Seniors over the age of 62 who own a home may also qualify for a reverse mortgage based on the equity in their home. A counseling session is required prior to receiving this type of mortgage, and the National Council on Aging also has a helpful guide.  When considering things like selling assets or taking out a reverse mortgage, it’s important to meet with a knowledgeable elder law attorney who can help guide you and your family through the tax and other implications.

3. Pinch pennies where you can
Since budgets can easily spiral out of bounds with an unexpected catastrophe, creating an emergency fund can be helpful. One way to create an emergency fund is to spend less money on expenses each month than income, and put the extra money into the emergency fund. Some programs may help with lowering costs, for instance, many pharmaceutical companies have patient assistance programs.  One such program is the Partnership for Prescription Assistance. Utility companies may also offer programs for seniors or people with low incomes. Some stores, restaurants, and services also offer senior discounts once a week.  In some states there are programs to help seniors with the costs of property taxes- the local county assessor’s office can answer questions about whether or not such a program exists in your area. A good “one-stop shop” for all government benefits is the National Council on Aging (NCOA)’s “Benefits Checkup” site.

4. Look for government options
If your elderly loved one does not have savings or investments that can help supplement the cost of elder care, they may qualify for government services to help subsidize long-term care costs. For example, low-income seniors may qualify for Medicaid. There is an application process for Medicaid, and as part of the process, the applicant will have to submit income and asset information and records.

In some states, if the person you’re caring for qualifies for a Medicaid waiver, they could “hire” you as their caregiver which may alleviate some of the financial burden.  However, there are a number of restrictions, and these types of programs are intended for people who would otherwise be in a nursing home because of the level of care that they need. First, this type of Medicaid waiver and the ability to “self-direct” (hire/fire your caregivers) is not offered in every state. Second, in most cases, your loved one will need to qualify for Medicaid, which includes asset and income tests. However, some states have programs with slightly higher income/asset tests and/or will allow a person to do a Medicaid “spend-down” that allows people with high medical bills to still qualify for Medicaid. Spousal impoverishment policies are another policy to ask about- they allow the “well-spouse” to retain some assets and income while the spouse in need of services still qualifies for Medicaid.

Third, there are specific eligibility rules for Medicaid Waivers, which may include age, type of disability (for example, a traumatic brain injury), and the level of care needed.  Fourth, because of budget challenges, many states use “interest lists” in Medicaid to triage services to people who are most in need first. To learn more about interest lists, also known as waiting lists, read our previous blog here.  Finally, some states also limit what types of relatives are allowed to be compensated.

While not all states allow caregivers to be compensated, it can still be worth looking into Medicaid, especially if it will open the window to services like home health care that will give a caregiver a break. A good place to start is our Family Care Navigator,  which lists Medicaid programs as well as the phone number and website for your state’s Area Agencies on Aging who can help navigate these programs.

5. Supplement with family income
In many cases, family members end up using their own money to pay for the long-term care costs of a loved one. Depending on the family structure, this can be complicated because of the ability of each member to contribute. If family members are contributing to the costs of long-term care, there are a few strategies to consider that may reduce conflict or tension.

First, the primary caregiver may already be giving their time, especially if they have quit their job in order to care for a loved one.  If other family members aren’t able to contribute time, it’s worth asking if they can contribute to the monthly expenses associated with long-term care.  On a related note, if a parent is paying a family member to provide their care, it’s important to document this arrangement and to make sure all family members are aware of it. If the parent ever applies for Medicaid then they will need to explain why they were transferring money to a family member. Having a signed agreement can help prove that the parent wasn’t just transferring assets in order to qualify for Medicaid. Second, sharing this information with all family members at the beginning can avoid hurt feelings later.

For many families, being a family caregiver means more than just taking on the responsibilities of providing care: it may also mean taking on the burden on making ends meet when money is tight. These strategies should help alleviate some of the financial burden faced by family caregivers. Do you have any tips or strategies to share with your fellow caregivers?

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