Decreasing the costs of elder care is no easy feat. According to a 2021 AARP Caregiving Out-of-Pocket Cost study of 2400 caregivers, “On average, family caregivers are spending 26% of their income on caregiving activities.”
Unfortunately, caring for an aging loved one often comes at a significant cost to the caregiver’s social, emotional, and financial well being. Though each caregiver will be impacted differently depending on their personal support network and financial situation, it’s a good idea to know what caregiver resources and programs are available that can lighten your financial load.
Start by enlisting guidance from financial advisors, estate planning attorneys, accountants, and other available financial professionals, to lower the cost of care and strengthen your caregiving circle.
Following are two major areas of focus where you should concentrate your efforts when looking to reduce the cost of caring for your parent or loved one:
Take Advantage of Tax Credits and Deductions
Financial professionals like certified public accountants and certified financial planners who specialize in eldercare and gerontology will be the most experienced in the financial and emotional costs of caregiving. Caregivers are advised to work with an accountant who is well versed in tax law specific to caregivers and older adult tax credits and deductions, such as:
- The Medical Expense Deduction: According to the IRS, you can deduct “unreimbursed expenses for preventative care, treatment, surgeries, and dental and vision care as qualifying medical expenses. You can also deduct unreimbursed expenses for visits to psychologists and psychiatrists. Unreimbursed payments for prescription medications and appliances such as glasses, contacts, false teeth and hearing aids are also deductible. The IRS also lets you deduct the expenses that you pay to travel for medical care, such as mileage on your car, bus fare and parking fees.” More information on deducting elder care medical expenses can be found on the IRS.gov website.
- Tax Deductions for Home Renovation Costs: Expenses related to renovating your or your parents’ home for things like wheelchair ramps, bathroom grab bars, and handrails may be tax-deductible as medical expenses. Look for price reduction and rebate programs when shopping around, and check with your accountant to see if your renovations qualify.
- Long-Term Care Expense Deductions: The federal government reports that about two-thirds of us will need long-term care at some point, which is very expensive and not typically covered by Medicare, disability insurance, or health insurance. Some expenses related to long-term medical care and insurance premiums can be taken as medical expenses. Check your policy and the policy of your loved one to see if an assisted living facility may be covered; you can also check to see if a Medical Alert system is covered, offering 24/7 emergency coverage for your loved one aging in place.
- The Dependency Deduction: Even if they don’t live with you, aging parents in your care may still qualify as a dependent. The threshold for claiming a parent as a dependent requires that you have provided more than half of your parent’s support during the tax year, and the amount of support provided must exceed their income by at least one dollar. The IRS outlines these support requirements, and other income considerations, but if your parent meets the requirements as a dependent, you are eligible for additional tax deductions, so it’s definitely worth investigating.
- A Multiple Support Declaration: If you have siblings, look into a multiple support agreement so you each can have a turn benefitting from the tax deduction. To file, you submit a signed document by two or more caregivers who collectively provide financial support for a single dependent, allowing multiple people to take turns claiming the parent as a dependent on their tax returns. Any family member or other person providing care who is contributing more than 10 percent of the support can qualify to claim the exemption.
Rebate and Financial Assistance Programs for Caregivers
When caring for an aging loved one, it’s important to build a support network of individuals who can help lighten the load by taking on some of the daily tasks, including resource gathering, appointment scheduling, and researching other means of financial assistance and care support. Following are some great resources to help ease the financial burden of caring for your parent or loved one.
- Take advantage of pharmaceutical rebates and cost-reduction programs. There are major cost savings to be found through pharmaceutical company programs designed to reduce the cost of prescriptions, devices, and supplies for older adults and others. A few dollars off may not seem like much, but the savings add up over time, especially when there’s a long list of medications and other needed items. Visit the Medicare Pharmaceutical Assistance Program page to see which companies offer programs for people in a Medicare (Part D) drug plan.
- Enlist the help of government agencies and nonprofits. Many people don’t realize that there are government agencies and nonprofits set up to offer financial assistance to seniors and their families who care for them, as long as certain criteria are met. The AARP offers a great Guide to Public Benefits, a free online resource to help identify Federal and State Financial Assistance for seniors. Alternatively, you can check with your local department of aging or ask area senior centers for assistance.
- Find helpful resources on housing, insurance, and other expensive costs. The U.S. Department of Health & Human Services’ Eldercare Locator is a public service of the U.S. Administration on Aging that is easy to use and connects you to services for older adults and their families in need of financial and other types of assistance. Their website offers easily searchable information on social services, housing, transportation, elder rights, insurance benefits, veteran support services, and more.
- Invest in peace of mind. Whether the parent in your care lives with you or somewhere else, wearable emergency response systems take a lot of the worry out of caregiving. Medical Alert systems give seniors immediate access to call for help with the push of a button – and the added fall detection can detect falls and call for help even without a press. Call your insurance provider or CPA to see if the cost to carry a Medical Alert system may be covered under your plan or as a tax deduction. Often, systems that maintain medical information (which Medical Alert can do) may be deductible as a medical expense.
- Sign up for Senior Drop-in or Daycare Facilities. Give yourself a break. The most important thing to realize on your caregiving journey is that you don’t have to go it alone. Low-cost drop-in or daycare facilities for older adults are available and offer your parent or loved one a great place to socialize with peers, get out of the house for a while, and participate in activities that can help to keep their mind sharp. You can also look to local senior centers, nonprofits, or faith-based visitation programs for additional support services, including volunteers who make meals, run errands with/for your loved one, or offer drop-in activities geared toward older adults so you can get a few hours to yourself to run errands or just relax.